What are the Interim Audit and Final Audit?
The final audit is a section of the audit test (What is Reasonableness Test?) that the auditors will usually perform on their customer’s financial statements after their customer has generated their company’s financial statements or at the end of the year.
Under most circumstances, the audit scope (Also see Audit Procedures for Small Businesses) on those financial statements is one year, for example, from 1 January 2020 till 31 December 2020. According to the auditor’s audit strategy, they may choose to conduct the audit in two parts.
Besides the final audit, there is another type of audit test, which is the interim audit. The interim audit allows the auditors to review the financial statements for six or nine months. By using such a strategy, the auditors can work more efficiently.
Now, let us look at the interim and final audit that the audit firms in Johor Bahru may conduct.
The auditors will usually perform this to some financial statements of their customer, for instance, for six or nine months. By doing so, the auditors may have less work to do at the final audit or the end of the year. However, they do not need to do so to all audit assignments as this depends on the auditor’s audit strategy.
Nevertheless, most businesses that operate on a large scale require an interim audit. By doing so, the auditors can understand the company better. Sometimes, the customer may request the auditors to conduct an interim audit as they need the interim report, or they intend to minimise their collaboration with the auditors during the end of the year. Also, in some cases, the companies do so because the local regulators require them to have the interim audit, particularly when they are listed on the share market.
Most auditors will choose to perform their audit work during the final audit. This may include a substantive test and the tests for internal control (Also see How to Ensure an Efficient Internal Audit?). The auditor will conduct the final audit after negotiating with the customer, and they will agree on a time frame where they will have the audit.
However, in most circumstances, they will have the audit at the end of the year as they need to submit most audit reports to the related authorities early next month.
In such a situation, the auditors would only focus on the remaining last three months or six months from an interim audit they carried out before. There is no difference between the audit procedures of the interim audit and final audit.