Concurrent Auditing Services in India

Preventing a failure is better than reacting to one

What is Concurrent Auditing?

Concurrent audit is a systematic and real-time examination of financial transactions as they happen. Instead of sample checks as in case of Internal Audit and Statutory Audits, the Concurrent Auditing Services involves auditing of every transaction that fall under its scope. It is done on-site, on an ongoing basis with following objectives in mind:

To ensure appropriate authorization of transactions,
To ensure arithmetic accuracy of transactions accounted,
To ensure accuracy of applicable taxes on transactions,
To ensure availability of valid supporting documents for each transaction, and
Compliance with policies, procedures and guidelines issued by management.

When is a concurrent auditing necessary?

It is a common myth that concurrent audits are applicable only to a banking business. In reality, concurrent audits are applicable to all such transactions that have high materiality and financial impact. Some examples of transactions where concurrent auditing can be applied include:

Purchase and expense bill passing for high value transactions
Calculation and payment of statutory dues
Banking transactions such as KYC, loan sanction, disbursement, income leakage, etc.
Transactions involving foreign currency payments and receipts

Why external concurrent auditor is preferred for conducting concurrent audits over internal resources?

Concurrent audit, undertaken by concurrent auditor for critical and high value transactions where the inherent risk levels are medium to high including risk of fraud. In such a case it is wise to choose an external auditor that ensures independence and objectivity and who will not succumb to pressures from mid-level and senior management to approve transactions that are not approval worthy.

What are the Benefits of Concurrent Audit?

Following are the benefits of Concurrent Auditing Services:

Transactions are reviewed and approved by an independent auditor
Improved accuracy of transaction recording
Prevention of unauthorized transactions
Prevention of excess/unwarranted payments
Improved financial reporting
Reduced risk of penalties and interest due to non-compliance
Generate critical MIS Reports
Contributes significantly towards improving Internal Financial Controls
Acts as a support for the existing Accounting Team
Reduced queries and observations during Internal Audits and Statutory Audits
Facilitates timely closure of books of accounts

What are pre-payment audits?

A pre-payment audit is a branch of Concurrent Auditing Services where accounts payables are audited and approved for before releasing the payment. The objective of a pre-payment audit is to ensure that the payments are made only against genuine and authorized transactions. It is a method of internal control to prevent fraudulent and unauthorized transactions. Most public sector companies and government department deploy independent external audit teams to conduct pre-payment audits.

What is our approach towards Concurrent Auditing Services?

Based on the needs of our clients we deploy a team of experienced concurrent auditors who are stationed at the client site and work with the client’s team while maintaining independence and objectivity. We maintain high standards of audit documentation hygiene and ensure periodic reporting of exceptions to the relevant decision makers.

FAQ’s About Concurrent Auditor

Who are eligible for concurrent auditing?

Eligibility for concurrent auditing may vary depending on the organization’s policies and requirements. Generally, individuals with a strong understanding of accounting principles and audit procedures, such as certified public accountants (CPAs), auditors, or accountants with relevant experience, may be eligible for concurrent auditing. However, specific requirements may include knowledge of the organization’s policies, procedures, and internal control systems. It is important to note that each organization’s eligibility criteria may differ, and interested individuals should check the specific requirements before applying for concurrent auditing.

What are the responsibilities of a concurrent auditor?

A concurrent auditor is responsible for performing a real-time audit of financial transactions in an organization. The key responsibilities of a concurrent auditor include:

Monitoring financial transactions.
Reviewing records and documents.
Verifying compliance with policies and regulations.
Identifying errors and discrepancies.
Reporting findings to management.

Additionally, concurrent auditor must maintain independence and objectivity in their work, adhere to professional standards, and communicate effectively with stakeholders. The goal of a concurrent audit is to prevent fraudulent or incorrect financial activities, ensure the accuracy and completeness of financial records, and improve organizational efficiency and effectiveness.

How does a concurrent audit differ from other types of audits?

A concurrent audit differs from other types of audits in that it is performed on an ongoing basis rather than at the end of a fiscal period. It is also conducted by an internal audit team rather than an external audit firm. Concurrent audits are designed to identify and address real-time issues, providing an early warning system for potential problems. This type of audit is beneficial for companies with complex operations or high levels of risk. Unlike traditional audits, concurrent audits focus on specific areas of risk rather than reviewing a company’s entire financial and operational systems. It allows more targeted and efficient auditing processes.

What is the purpose of concurrent auditing?

The purpose of concurrent auditing is to ensure that financial statements are accurate and reliable. Concurrent auditors review the company’s financial statements at the same time that regular auditors are conducting their audits. This allows for an additional layer of scrutiny and helps to detect any errors or fraudulent activities that may have been missed during the initial audit. Concurrent auditing also helps the company to comply with all applicable laws and regulations. By having multiple auditors review the financial statements, the risk of errors or fraud is reduced, and the overall quality of the audit is improved.

What are the different examples of concurrent audits?

Concurrent audits are performed simultaneously with regular audits to detect errors and fraud in real-time. Concurrent audits provide continuous monitoring of an organization’s financial transactions and internal controls and help detect and prevent financial irregularities. These audits can improve the overall efficiency and effectiveness of an organization’s internal controls, resulting in better financial reporting and accountability. Some examples of concurrent audits include:

Inventory audits
Cash audits
Vendor audits
Payroll audits
Revenue audits
Compliance audits