The role and nature of interim external auditing in selected Maltese public companies : a study

Abstract

This dissertation sets out to study the role and nature of interim external auditing performed for Maltese public companies. The study seeks the reasons why an interim audit is carried out in public companies, what are the benefits and disadvantages of such an approach and, what type of audit work is conducted during the interim audit. Furthermore, the study focuses on the merits and faults of such an approach as perceived by Maltese public companies. Personal semi-structured interviews were carried out to investigate the issue. A total of eight audit partners and twelve public companies constituted the sample. It emerged that interim auditing is very beneficial when performed for Maltese public companies. The major benefits of such an exercise for both the profession and public companies include: meeting the strict reporting deadlines and correcting weaknesses before year-end. Moreover, an interim audit is considered to be an important tool which helps the profession to reduce peak season pressure. It was found that the interim audit is performed in the last quarter of the financial year. Moreover, auditors perform one interim audit for every public company. Interim audit work consists mainly of tests of controls. Some substantive testing is also carried out at an interim stage given that it is practicable to be performed on certain account balances or classes of transactions. Analytical procedures at an interim date are mainly done for planning purposes. It emerged that some tests of detail are executed at an interim date depending on their practicability. Auditors, effect documentation of controls and procedures during the interim audit since it serves as a very important tool for the final audit.