Continuous Auditing and Continuous Monitoring Solutions through IDEA

An organisation is swamped with a vast amount of Data with the booming of the IT industry and implementation of ERP, SCM, CRM solutions, Data Warehouses, BI Tools and the entire range of such solutions. The decision maker at times needs to decide on what is the relevant information that he should consider before committing the organisation’s resources.

The rapid pace of business requires prompt identification of, and response to, control issues. Regulations such as Section 404 of Sarbanes-Oxley and Clause 49 of the listing agreement in India require the timely management assertion of control adequacy. These statutory compliance imperatives, as well as ongoing changes in auditing standards and the evolution of audit software are encouraging and enabling decision makers and auditors to adopt new approaches to assessing risk and controls.

Contemporary Audit and Assurance requires the auditor to provide the Board with ongoing assessments rather than simply periodic reviews of the health of internal controls and levels of risk within an organization. If they do not have a top-down understanding of the business processes and associated risks, auditors can only perform traditional audit check-list tasks. Continuous auditing provides auditors with an opportunity to go beyond the confines of traditional audit approaches and the limitations of sampling, review of standard reports, and point-in-time assessments. The crucial component of continuous auditing is the development of a model for the ongoing (continuous) review of transactions at, or close to, the point at which they occur.

One of the greatest advantages of continuous auditing is its independence from both the underlying operational and financial systems and the monitoring performed by management. This improves the organization’s management and control frameworks and provides mechanisms that auditors can use to support their own independent review and assessment activities.

IDEA Continuous Auditing Solutions help:

·    Automate concurrent testing so Process Owners can focus on high risk areas.

·    Test the efficiency and effectiveness of key controls by reviewing financial transactions continuously and independently.

·    Identify and investigate indicators of fraud, errors, and inefficiencies quickly.

·    Curtail audit time and effort spent on controls verification.

The outcomes of continuous auditing involve notifications or alerts indicating control deficiencies or higher risk levels. The notifications or alerts can be prioritized and, depending on the seriousness of the risk of control deficiency, distributed to the assurors of the business process or application system, operational management, senior financial management and even the regulators.

Today’s Process Owners need to internally attest functioning of controls; and keep an eye on a company’s risk profile and play a key role in identifying areas to improve risk management processes. Continuous Monitoring with IDEA paves the way for operational excellence and increased profitability by removing control deficiencies, preventing revenue leakages and facilitating cost rationalization.

Case Study

Continuous Audit testing of financial transactions provides notification when a transaction is over a given limit and involves entries among an unusual combination of accounts. Using continuous auditing, additional tests to determine the nature of the anomaly could answer questions such as:

·    Is the transaction creating an entry in a suspense account and not being cleared within an acceptable time frame?

·    Is the transaction creating entries among unusual combination of accounts?

·    Are the accounts affected likely to be ones that could for example, artificially inflate earnings?

·    Are the volume and type of transactions unusual compared to previous years?

·    Are the individuals creating the entries in a position of compromised segregation of duties?

·    Are the financial ratios in-line with the company’s benchmarked peers?

Continuum of Continuous Auditing

Contact us at info@samaaudit.com to learn more on how IDEA Continuous Audit Solutions can meet your Continuous Assurance requirement.