Interim and final audits

In this lesson

1. 0:00 Interim and final audits explained
2. 0:34 Interim audit focus and limitations
3. 1:22 Final audit on year end balances
4. 2:12 Interim audit practice question
5. 3:09 Audit documentation and working papers
6. 3:50 What audit documentation must include
7. 6:01 Key information for working papers
8. 8:09 Permanent and current audit files
9. 9:59 Retention and security requirements

About this lesson

You'll discover what work can be done during an interim audit—such as testing controls and updating system notes—and why certain procedures must wait until year end. You'll also explore audit documentation (working papers), understand what information must be recorded, and learn how auditors organise their files to support quality control and future audits. The interim audit takes place during the financial year before year end and focuses on understanding the entity and testing controls. Because year end balances don't yet exist, auditors cannot test account balances at this stage; instead, they perform preliminary analytical procedures and tests of transactions to spread the workload and identify issues early. The final audit then happens after year end and concentrates on year end balances—assets, liabilities, equity, income, and expenses—while following up on any concerns flagged during the interim phase. Audit documentation, or working papers, forms the auditor's record of work performed, evidence obtained, and conclusions reached. These must include essential details: client name, year end date, the specific balance being tested, a unique reference number, who prepared and reviewed the work, when it was completed, the testing objective, the procedures performed, and the conclusion reached. This level of detail ensures that any experienced auditor can understand what was done and why, which is critical for quality control reviews and for future audits. Auditors organise working papers into two types of files: the permanent audit file, which holds information of continuing importance such as engagement letters and legal documents, and the current audit file, which contains information specific to the current year's audit, including draft financial statements, the audit strategy, and working papers. ISA 230 requires that audit documentation be prepared on a timely basis and retained for at least seven years in a secure location to maintain client confidentiality.

Duration: 10m