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Continuous Auditing

Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

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Page 1: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Continuous Auditing

Page 2: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Items to be discussed include:

• Developing a Continuous Auditing Program

• Continuous Auditing Process

• Benefits of Continuous Auditing

• Continuous Audit Area Examples

Page 3: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Developing a Continuous Auditing Program

Page 4: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Level of Commitment and Effort

• Management/Board Support

• Should be a specific line item on your audit plan

• This is not a one time project, but rather ongoing each year

• Do you have the resources available to implement and sustain this program?

Page 5: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Selection of Automated Tool

• Which tools are available? (i.e. ACL, IDEA, Access, SQL, etc.)

• Are the funds available to purchase data analysis software, provide staff training, and annual maintenance support?

• Do your research!

Page 6: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Technical Constraints

• Disk space constraints

• Direct access to databases (possible security concerns)

• Dedicated platform for continuous audit testing (improves performance)

Page 7: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Staff Technical Proficiency and Knowledge

• Does your staff have working knowledge of the processes of your organization?

• Will you have to provide training to your staff on using the selected automated tool?

• How well does your staff adapt to change?

Page 8: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Building Efficiency into the Continuous Auditing Process

• Maintain balance in your continuous auditing program

• As much as possible integrate with your normal audit process

• Where possible completely automate testing (no manual intervention)

• Strive to increase your “actual issue to testing script results” ratio to move closer towards 1.00 (minimize false ‘hits’)

Page 9: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Continuous Auditing Process

Page 10: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Continuous Auditing Process

Page 11: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

• All testing should be developed using automated scripts

• Master list of continuous auditing ideas maintained and updated throughout the year

• Automated testing scripts are developed during the normal audit process that can be integrated into the continuous auditing process

Testing Development

Page 12: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

• Identified as part of the review process after results are validated

• Reduces wasted time that may occur with reviewing false results

• Helps to evolve and mature your continuous auditing program

Testing Enhancement

Page 13: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

• Automated testing scripts are run on varying cycles (i.e. semi-monthly, monthly, quarterly, annually, daily, etc)

• Results identified should be reviewed shortly after automated tests are performed

• The time devoted to the review process should reduce over time as familiarity with the data and process increases and additional enhancements are added, as necessary

Identification & Review of Results

Page 14: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

• The method of documentation and reporting vary depending on the criticality of the issue identified

• An engagement may be initiated based on issues identified during the continuous auditing process

• As any item is identified in the process, these items are discussed and addressed by management

Documentation & Reporting

Page 15: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Benefits of Continuous Auditing

Page 16: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

• 100% review of transactions for anomalies (no sampling)

• Real time results

• Greater audit coverage

• Audit efficiency

• Best way to develop knowledge about business processes

Continuous Auditing Benefits

Page 17: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Continuous Auditing Areas

Page 18: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

• Accounts Payable

• Payroll

• Purchasing

• Items that can be covered during every audit include: data anomalies and process inefficiencies

• Industry specific areas (i.e. healthcare, manufacturing, government, etc.)

Continuous Auditing Areas

Page 19: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Automated Tools Demonstration

Page 20: Continuous Auditing. Items to be discussed include: Developing a Continuous Auditing Program Continuous Auditing Process Benefits of Continuous Auditing

Any questions, comments, success stories?