CMA Intermediate · Corporate Accounting and Auditing · Nature, Scope, Objectives and Significance of Auditing
Kapoor Engineering Ltd has its auditor visit the office at regular intervals of a few days each month throughout the year, checking transactions as they occur, and a final visit after the year-end to finalise the accounts. This is best described as:
This is a continuous audit. The auditor attends at intervals during the year, checks transactions as they happen, and then makes a final visit at year end. Other types differ: a final audit begins only after books are closed, and management audit assesses managerial efficiency rather than transactions.
- AContinuous auditCorrect
- BBalance sheet audit
- CFinal audit only
- DManagement audit
Explanation
Continuous audit involves staff of the auditor attending at regular or irregular intervals during the year, examining transactions as they occur, with a final visit at year end. A balance sheet audit focuses on verifying assets and liabilities at the year end. A final audit starts only after the books are closed. Management audit evaluates managerial efficiency.
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