Interim audit definition

What is an Interim Audit?

An interim audit involves preliminary audit work that is conducted prior to the fiscal year-end of a client. An interim audit can also refer to a full audit that is conducted for an interim period, such as for a quarter or half-year. This is a relatively uncommon event, since publicly held companies only need to have a review conducted at quarterly intervals, not a full audit.

Advantages of an Interim Audit

There are several advantages associated with conducting an interim audit, which are as follows:

  • Earlier identification of issues. An interim audit allows auditors to identify any errors, discrepancies, or compliance issues well before the year-end audit. This can lead to quicker resolution and minimize potential risks.

  • Strengthens internal controls. During an interim audit, auditors often test the company’s internal controls. This gives the organization an opportunity to assess and improve its control environment in real time

  • Faster final audit. An interim audit compresses the period needed to complete the final audit. Doing so benefits the client, which can issue its audited financial statements sooner.

  • Reduced pressure. By engaging in interim audits, the external auditors have more time available during their peak audit season to engage in activities for other clients.

  • Evens out work flow. Interim audit work keeps auditors busy during slower periods in the audit year.

Related AccountingTools Courses

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