Continuous Auditing

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Continuous Auditing

• Global Technology Auditing Guide 3

Twelfth Continuous Auditing and Reporting
Symposium Rutgers Business School November 3, 2006
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Institute of Internal Auditors
The Institute of Internal Auditors is a global
professional association with more than 122,000
members, and is recognized as the internal audit
professions leader in certification, education,
research and technical guidance. Its mission
includes

• Advocating and promoting the value that internal
  audit professionals add to their organizations
• Providing comprehensive professional educational
  and development opportunities
• Researching, disseminating, and promoting to
  practitioners and stakeholders knowledge
• Educating practitioners and other relevant
  audiences on best practices in internal auditing
  and
• Bringing together internal auditors from all
  countries to share information and experiences.

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GTAG
Written primarily for the chief internal audit
executive (CAE) and audit supervisors, the guides
address concerns of the board of directors and
chief-level executives. Each Global Technology
Audit Guide (GTAG) is written in straightforward
business language to address timely issues
related to information technology management,
control, or security. GTAG is a ready resource
series for chief audit executives to use in the
education of members of the board and audit
committee, management, process owners, and others
regarding technology-associated risks and
recommended practices.
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What This Guide Covers

• Role of continuous auditing in todays internal
  audit environment
• Relationship of continuous auditing, continuous
  monitoring, and continuous assurance
• The application and implementation of continuous
  auditing
• Benefits of a continuous, integrated approach

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Role of Continuous Auditing

• Todays audit challenges
• Regulatory compliance controls
• Internal audit value and independence
• Availability of skilled resources
• Determining appropriate technology solutions
• Need for timely, ongoing assurance over risk
  management and control systems
• Role of continuous auditing
• Provides more frequent, more timely, analyses to
  better manage control deficiencies and risk

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Gaining Clarity Some Definitions

• Continuous Auditing
• Method used to perform audit-related activities
  on a continuous basis includes control and risk
  assessment
• Performed by Internal Audit
• Continuous Monitoring
• Processes to ensure policies/processes are
  operating effectively and to assess
  adequacy/effectiveness of controls
• Performed by operational/financial management
  audit independently evaluates adequacy of
  management activities
• Continuous Assurance
• Combination of continuous auditing and audit
  oversight of continuous monitoring

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Relationship of Continuous Auditing/Monitoring/Ass
urance

• Role of continuous auditing dependent on
  managements role in continuous monitoring of
  controls
• Inverse relationship the greater the role of
  management, the less of a direct role of
  internal audit

• True continuous assurance
• Depends on effective monitoring by management of
  internal controls and Audits independent
  assessment of that function

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Application Areas

• Continuous control assessment
• Identification of control deficiencies
• Identification of fraud, waste, abuse
• Continuous risk assessment
• Examination of consistency of processes
• Development of enterprise audit plan
• Support to individual audits
• Follow-up on audit recommendations

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Key Steps to Implementation

• Establish audit objectives and requirements
• Gain executive-level support
• Ascertain degree to which management is
  performing monitoring role
• Select appropriate technology solutions
• Identify information sources and gain access
• Understand business processes and identify key
  controls and risks
• Build audit skill set
• Manage and report results

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Benefits

• Increased scope of audit activities
• Increased ability to mitigate risk
• Reduced cost of internal control assessment
• Increased confidence in financial results
• Improvements to financial operations
• Reduced financial errors and potential for fraud
• Reduced revenue leakage for improved bottom-line
  results
• Sustainable and cost-effective means to support
  compliance