Concurrent Audit

Also known as ’round the year audit’, a concurrent audit is a structured and timely inspection of financial records at pre-decided intervals decided by the management as per their requirement to ensure accuracy, authenticity, compliance with procedures and guidelines.

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it is a continuous evaluation of the business transactions to figure out whether the internal control mechanisms are effectively functioning and at the same time to detect areas of improvement to improve efficiency. The stress under concurrent audit remains on meaningful examination of transactions not test checking of the same. The concept of concurrent audit has been introduced to lower down the time gap between the occurrence of transactions.

Know Concurrent Audit

To understand concurrent audit, one must know what continuous audit is. When the accounts are audited all round the year by the audit staff under the supervision of an auditor, it is called a continuous audit. Continuous audit needs huge involvement and the auditor has to report to the management at regular intervals without failure. A continuous audit is desired, if the financial transactions to be audited are in abundance and/or if the internal control system seems weak in certain areas. Coming back to concurrent accounting, banks conduct continuous audits which are otherwise known as concurrent audits in big branches. It would be easier to interpret concurrent audit if we look at the meaning of “concurrent” i.e. occurring at the same time. Assessing the financial statements parallelly with the transaction or at the same time when they are taking place.

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Concurrent Audit Prerequisites

Concurrent audit is a management process crucial to the establishment of internal accounting functions and effective controls and setting the tone for a heedful internal audit to prohibit the incidents of significant errors and fraudulent manipulations. In order to perform a concurrent audit in UAE, the auditor generally requires:

Cash balance
KYC policy
Loans & advance checking
Deposits
Forex
Income leakage
Housekeeping & computer
Remittance
Other checks such as cheque clearing process, bills of collection and other bills

The main focus while conducting a concurrent audit is to ensure that transactions are in adherence with the systems and procedures laid down. Any violation of procedure is brought to light.

Concurrent Audit Services in UAE

Periodic assessment of the financial matters of a business establishment in the UAE by conducting various audits is vitally important. But what’s important is difficult to deal with at times and needs expert brains. To make sure your important tasks are performed by experts in the field only, it is advisable to outsource the functions that matter the most to your business. Adam Global is the address of your system audit specialist. Hire the best concurrent auditors in UAE to keep your business hale and hearty by clicking here

FAQ

What is a concurrent audit in UAE?ADAM Global2022-01-05T06:52:57+04:00

What is a concurrent audit in UAE?

It implies verification of transactions of a year on a continuous basis. The period of verification is primarily determined by the auditor. Financial statements are not prepared. Assets & liabilities are verified only at the time of finalization at the year-end.

How concurrent audit is different from an internal audit?ADAM Global2022-01-05T06:53:38+04:00

How concurrent audit is different from an internal audit?

Conceptually similar, both the audits intend to help the auditee in making decisions, to monitor and improve the efficiency and effectiveness of the internal controls, procedures followed by the audited company and so on. The only differences between the two are –

Concurrent audit, as the name suggests, is a regular, ongoing process and is performed side by side with the operations of the audited entity, whereas internal audits can be periodic.
The concurrent audit report may not be produced in the end but the internal audit report is always there.
Concurrent audit is carried out by an independent Chartered Accountant whereas internal audit is done by internal audit department.

Why do concurrent auditors need to look into income leakage during the process?ADAM Global2022-01-05T06:54:17+04:00

Why do concurrent auditors need to look into income leakage during the process?

Concurrent auditors in UAE put revenue leakage or income leakage on a pedestal while auditing a company because it’s crucial to find income leakages and treat them. Income leakage can arise as a result of:

Undercharged processing fee, upfront fee and other charges by the bank during loan disbursements.
Incorrect interest rate entries in the system
Wrong calculations of profit in a forex transaction

Fortunately, determining, retrieving and avoiding revenue leaks is possible by thoroughly examining contracts and processes critically.

How do concurrent auditors overcome income leakages present in the organizations?ADAM Global2022-01-05T06:55:14+04:00

How do concurrent auditors overcome income leakages present in the organizations?

Although the banks use highly intelligent software, human errors can have them slip money through their fingers. But it’s possible to find and minimise or prevent these income leakages through concurrent auditing. To succeed in dealing with revenue loss the concurrent auditor thoroughly checks the calculation and authenticity of the various charges. The revenue manual is provided by the client and ICAI both to the appointed auditor to go through so they can decipher the whereabouts of the leakage. Then the auditor produces different MIS reports from the system and analyse them up to the hilt. For instance, if the income leakage arose because the bank has undercharged the fees then the loss of income may result in a fall in market share price due to the weak performance of the bank. Contrary to this if the bank has overcharged the fees, then the false performance can mislead the client and stakeholders. It’s the auditor’s duty to present the true and fair performance report to the auditee.

Do concurrent auditors check housekeeping maintenance of the auditee bank?ADAM Global2022-01-05T06:55:48+04:00

Do concurrent auditors check housekeeping maintenance of the auditee bank?

Yes, they do. Besides inspecting overall housekeeping maintenance, the concurrent auditor has to cover all the areas possible while auditing an organisation including the location of the entity, trail of remittances made, foreign exchange transactions, KYC policies in practice, safety vaults adopted by it, the safety of lockers, computers being used, the software they are working on, and all the security measures taken to protect the information to draw true and meaningful conclusion and remedies to deal with the loopholes if found any.

What’s the disadvantage of a continuous audit?ADAM Global2022-01-05T06:56:16+04:00

What’s the disadvantage of a continuous audit?

The expenditure towards continuous audit can burn a hole in the pocket of the auditee as the audit is performed throughout the year and the auditor fees are high. The auditor may not re-verify the accounts relating to the period for which the verification is conducted earlier.