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Disadvantages of Continuous Audit

1. Alteration of Figures
The records and figures in the books of accounts, which have already been checked by the auditor, may be altered after the audit is over. A dishonest clerk can do it do defraud the accounts.

2. Expensive
Continuous audit is more expensive as compared to other kinds of audit, because the auditor has to devote more time to this audit.

3. Inconvenience
In this audit, the auditor visits the client’s office at regular intervals to check the accounts and records these frequent visits made by the auditor may dislocate the work of his client and cause convenient to him.

4. Mechanical Work
The work of audit becomes too mechanical because it remains continue throughout the year.

5. Queries Problem
If the auditor’s two visits interval is long then so many queries remains outstanding.

6. Small Business
Continuous audit is not fit for small business concerns. A small business has few transactions so there is no need of audit for whole one year. The owner as manager can know facts behind books as details audit is burden.

7. Client Work
The demerit of continuous audit is that the work of the client suffers due to clash of duties and the client staff remaining busy for the whole years. When the audit work is started work of accounting staff as books are not spare.

8. Staff Initimacy
The accounting staff and audit staff work side by side for the whole year. Friendship among the employees and auditors may lead to error and frauds. The sympathetic view of audit staff may fail to show true and fair view.

9. Missing Link
In the audit the auditor has to come at regular interval to check the accounts and hence the link between the past and present work cannot be maintained. Consequently the thread of work is very likely to be lost.

10. Low Income
The continuous audit keeps the staff busy for one year. They are not able to start and complete many audits at the same time. The given to one business is much higher as compared to final audit. So it is not suitable for audit staff from financial point of view.

11. Spoon Feeding
Frequent visits by the auditor may induce the client’s staff to depend upon him even for minor things.

12. Expensive
A continuous audit is an expensive form of audit in that the more frequent visits by the auditor means the higher fees of auditor.

13. Wastage of Time
This type of audit is not helpful for the auditor because in this time period they cannot conduct any other audit. So this is low-income audit for the auditor.

14. Words of Client
Another disadvantage of the audit is that the works of the client staff suffer due to the work of both positive. The books of the accounts are not free for the other party to do.

15. Type of Business Concern
This is not fir for the small type of business concern. In the small business concern, there are only few transactions. So there is no need for this concern.

16. Mechanical Work
In this type of audit, the auditor has to repeat all the products as bookkeeper does where as audit work by nature should not be under thinking and boring.

17. Extensive Notes Taking
In this type of audit possible alteration after audit can be avoided by taking note on diary regarding audit of internal control. So the continuous audit requires the compilation of bundle of notes.

18. Chances of Collusion
Frequent visits of auditor may establish some unhealthy relationship between the client’s staff and auditor’s staff. Thus there are chances of moral check. Upon them and there may be collusion between them.

Fahim Patel

By Fahim Patel

Fahim Patel is the Content Manager of guesspapers.net. A graduate from Karachi University, he has intensive experience in content production.