What is Continuous Audit and what can it do for my team?
Audit Analytics tools used during the auditing process is extremely valuable for internal auditors. When performed effectively, internal audit team can delivers a complete, accurate, and unbiased picture of a business' financials and operations.
The modern auditor's toolkit, however, consists of many other components as well. We can close some of these gaps through continuous auditing, a data-analytic approach that complements ad hoc audits.
The Challenges of conventional, periodic, ad hoc audits
Although conventional auditing is extremely helpful, it’s not perfect.
The results of an audit are only indicative of a snapshot of a business at a particular moment in time. As a result, new problems in the organization may go unrecognized for months depending on how often you audit.
An audit can be a lengthy process that takes many weeks or months to complete. The audit process may still be very manual and requires a significant amount of time and effort. Such resource requirements make audits resource-intensive, which explains the reduced frequency and the scope of the audits.
Continuous auditing can assist in addressing these issues. This approach overcomes the deficiencies of conventional ad-hoc auditing by utilizing an automated, rules-based, and data-driven approach.
This is accomplished by utilizing technologies and data science. Through continuous audits, new issues are often identified faster, transaction analyses are improved, more comprehensive coverage is achieved, fewer resources are required for audits, and trends can be identified more effectively.
Despite the benefits of continuous auditing, it is not a replacement for the traditional auditing. As an internal auditor, you possess deep knowledge of the business, which is essential to both traditional auditing and continuous auditing. Continual auditing cannot replace such human elements - the judgement and discretion of an auditor who understands the process context and can consider how metrics, processes, and assessments are tied together. It works more of a supplement to your auditing efforts.
The difference between continuous auditing and continuous monitoring
Continual monitoring allows management to identify and address risks that have a direct impact on risk assessment or business processes, such as data security. By identifying potential abuse and incidents before they occur, companies are able to ensure that data security is maintained.
Through continuous auditing, auditors can monitor every transaction and process related to a specific business system. Internal auditors can review all transactions rather than just a sample of them, giving them greater insight into compliance issues.
The benefits of continuous auditing
The objective of continuous auditing is to automate, track and identify certain transactions and information through the use of internal audit technology such as Arbutus. The technology is able to perform comprehensive data analysis that ensures everything is running according to plan, identifies trends, and reports outliers.
Internal audit technology is used as part of continuous auditing to gather data in a continuous manner. Throughout the year, you will receive continuous feedback regarding the state of the organization. Data analysis is comprehensive enough to uncover vital information quickly and only based on exceptions, so you will be aware of it.
You will now be able to perform greater number of audits. Technologies enable you to conduct assessments according to the frequency that is best suited to your business objectives and goals.
With the help of audit software, you will also be able to expand the process and methodology of ongoing audits to other functional areas. The process may be managed much more hands-off and may be run on an as-needed basis in regular intervals, therefore requiring less resources.
When all of the data is organized and laid out in front of you, analyzing the results and identifying risks, which can be a challenge, becomes straightforward. A better understanding of your current risk landscape will enable you to better focus the periodic risk audits on the priority areas which require a deeper assessment.
Continuous Audit supports a company culture of monitoring policies and procedures at all times and ensuring compliance with them. Automated real-time reporting on critical information allows organizations to detect potential issues at an early stage, rather than waiting until they become critical.
Continuous auditing also offers managers a proactive view of the company status such as finances, operations, and transactions, allowing them to make informed strategic decisions based on a comprehensive view.
Continual auditing is dependent on effective internal auditing technologies
Continuous auditing requires robust and best-in-class software platforms. With continuous auditing systems such as Arbutus Hub, large amounts of data can be gathered, processed and analyzed quickly. For this to work effectively, the data must be integrated with transactional systems as well as data warehouses, which can be achieved easily with Arbutus.
Additionally, a continuous auditing technology should provide powerful dashboards and reporting capabilities that assist auditors and other stakeholders in understanding the results. Training and modelling are necessary in conjunction with this type of internal auditing technology.
This is part 1 of a 3-part series for Internal Audit team to evaluate on their Continuous Audit vision. In the next article, we will discuss about how to leverage on Continuous Audit and the audit processes we can automate to make your continuous audit vision more effective than the traditional methods.
Do reach out to us if you like to know more about how to implement an audit analytics solution for your team.