A continuous audit is one in which the auditor‟s staff is engaged continuously in checking the accounts of the client the whole year round or when for this purpose the staff attends at intervals, fixed or otherwise, during the currency of the financial period. This is when an audit conducted up to a particular date within the accounting period. The auditor may attend the audit the figures for a month for a quarter, as the work
may require. It would differ distinctly from the final audit in the extent of the work carried out; verification of assets; for example, would be left until the final audit.
In continuous audit, the work is conducted throughout the course of the financial year but is not taken to a specific accounting period, as in an interim audit. It might be that during the course of the continuous work interim figures are being audited, but the significant factor here is that the auditor will be engaged continuously on the audit throughout the financial period. Staff may be in residence throughout the period or may come and go at irregular intervals, but most of the time, the audit staff is present at the location.
Thus, in case of continuous audit, the audit staff is present at the client‟s premises almost during the entire accounting period.
Advantages
Errors are discovered earlier facilitate in timely rectification
Due to frequent presence of auditor opportunities of committing frauds are reduced.
The attendance of audit staff acts as a moral check to the client‟s staff.
Accounts are always kept up to date