Introduction:
Continuous Auditing encompasses the ongoing risk and control assessments, enabled by technology and facilitated by a new audit paradigm that is shifting from periodic evaluations of risks and controls based on a sample of transactions to ongoing evaluations based on a larger proportion of transactions.
Continuous Auditing is the “application of computer technology” to the audit, such that, tasks that were previously performed manually and infrequently can be performed in an automated, real-time, or near real-time manner.
Features of Continuous Auditing:
- Continuous auditing involves ongoing risk and control assessments aided by technology-based audit activities.
- It allows internal audit to have a more real-time view of the risks and controls in the organization.
- This allows internal audit to be more agile and respond to changes in risk or lack of control more quickly.
- With more real-time monitoring and response, internal audit should be more apprised of risks and thus better able to provide value by focusing audit attention where needed.
- Continuous auditing should help the internal audit function revise the audit plan such that it is more responsive to risk.
Advantages of Continuous Auditing:
- Close relationship with management:
Having a close relationship with management should help to avoid duplication in continuous auditing and continuous monitoring done by various operational units. Also, a close relationship with management can increase the perceived value of internal audit’s effort, resulting in greater buy-in from management. Continuous auditing, if implemented effectively, should reduce the overlap and the associated “Audit Fatigue” felt by process owners who believe there is duplication of effort across the three lines of defense.
- Coordination with other governance functions:
Better co-ordination with other governance functions can be established because of continuous auditing and continuous monitoring.
Conclusion:
The concept of continuous auditing is not new. In fact, internal auditors have been striving for continuous auditing for decades. However, the emergence of sophisticated data analysis tools and the availability of full populations of data make the execution of continuous auditing possible for more organizations.