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Continuous Auditing Myth or Reality? Robin Clough January 2011

Continuous Auditing Myth or Reality? Robin Clough January 2011. Robin Clough. Robin Clough. Agenda. Concept of Continuous Auditing (definition).

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Continuous Auditing Myth or Reality? Robin Clough January 2011

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  1. Continuous AuditingMyth or Reality?Robin CloughJanuary 2011

  2. Robin Clough Robin Clough

  3. Agenda

  4. Concept of Continuous Auditing (definition) Continuous Auditing is a method used to perform audit-related activities on a continuous basis that covers control and risk assessment. Is generally carried out by Internal Audit and uses CA/CCM software. Continuous (Controls) Monitoring are processes to ensure that policies/processes are operating effectively and to assess adequacy/effectiveness of controls. Is generally carried out by operational/financial management. Audit will independently evaluate. LOTS OF OVERLAP!

  5. Concept of Continuous Auditing (categories) Applications: • Monitor application settings and changes • Example is Segregation of Duties settings Transactions/Master Data: • Testing transactional/master data for evidence of failed, inefficient or missing internal controls • Example is duplicate payments made to Vendors

  6. Concept of Continuous Auditing (drivers) Drivers for Continuous Auditing are: • Provide assurance over increasingly complex business processes in high risk areas • Increase audit oversight and detect issues sooner rather than later • Eliminate labour intensive work and reduce audit costs • Under resourced audit teams • Support immature control areas – CA becomes the control

  7. Examples of Continuous Auditing Some : • Duplicate payments • Segregation of duties • Employee clocking in system • Compliance

  8. Duplicate payments ££££££!! Is a common area for businesses to focus on. • Notoriously difficult to have bullet proof control over • Can generate big savings • Experience has shown a split between audit and business in ownership • Can usually cover costs of any CA software purchase!

  9. Segregation of Duties Heavy focus since Sarbanes Oxley. • Can highlight inappropriate mix of duties • Difficult to set up as requires large investment of time • Experience has shown a split between audit and business in ownership • Additional data from OS can highlight sharing of IDs

  10. Employee clocking in Recent fraud related example. • Employees sharing clocking in cards, clocking each other in! • Audit developed analytics that read data and highlight potential abuse • Should transition to business from audit • Other area to use CA is expenses

  11. Compliance Compliance team at Hedge Fund responsible for checking trades: • Essential to detect trades that are in breach of rules • Adopted by dedicated compliance team • Implementing smarter CA system as currently use spreadsheets manually

  12. Pro’s and Con’s of Continuous Auditing What do you think?

  13. Pro’s and Con’s of Continuous Auditing (Pro’s) • Increase audit coverage/reach • Automated testing allows more time for analysis of findings • Can draw data from different sources • Reduce cost of audits • Assist external audit • Improve business performance • Detect missed flaws in controls – flaws that occur occasionally

  14. Pro’s and Con’s of Continuous Auditing (Con’s) • Cost • Mixed track record • Hot air? • Time taken to configure and set up • Could create additional work if set up poorly • Likely to be skeptics • Ownership unclear, can straddle departments – creates issues

  15. Managing Continuous Auditing • Clear strategy / Objectives / Goals • CBA • Clear ownership and direction • Focus on high risk areas, don’t spread too thinly • Start small and grow from there • Ensure that the findings are shared with the business in a constructive way • Nominate experts/champions

  16. Continuous Auditing Solutions • Taken from Gartner Magic Quadrant for Continuous Controls Monitoring • Embedded: SAP/Oracle • ACL Audit Exchange • Approva • Greenlight Technologies • Infogix • Security Weaver • SymSure (integrates with IDEA )

  17. Demo ACL Audit Exchange • Developed by ACL • New release of AX3 on February 7th • Focused on transaction data • Connects to multiple data sources • Has an Exception module which workflows the exceptions • Strong user base in N.America, growing steadily in the UK

  18. ERP ACL Enterprise Data Automation – built-in analytic scheduler Server analytic processing power Content Management – any file type SQL Automatically distribute exceptions found during data analysis testing to multiple business stakeholders Access virtually any data source and automate data feeds Create analytics, perform ad-hoc analysis and remote analysis

  19. Myth or Reality?

  20. THANK YOU!

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