Continuous monitoring and continuous auditing_ From idea to implementation.pdf

Topics: Internal audit, Internal control, Auditing Pages: 28 (5584 words) Published: September 20, 2013
Continuous monitoring and
continuous auditing
From idea to implementation

Continuous Monitoring and
Continuous Auditing:
From Idea to Implementation
Most financial and auditing executives are aware of
continuous controls monitoring and continuous auditing
and of the general benefits of such programs. Yet
relatively few enterprises have realized their full potential, particularly at the enterprise-wide level. Deloitte sees
the reason for this as twofold: first, executives have not
seen a clear, strong business case for establishing either
continuous monitoring (CM) or continuous auditing (CA) in
their enterprises; second, they lack a clear picture of how
CM or CA would be implemented in their organizations.
A quick definition, to be expanded upon below, may be
in order because we have found that some confusion
surrounds CM and CA. Although they are often lumped
together, perhaps because they are both automated,
ongoing processes, they are actually two distinct types of
programs. As the name implies, continuous monitoring
enables management to continually review business
processes for adherence to and deviations from their
intended levels of performance and effectiveness. Similarly, continuous auditing enables internal audit to continually
gather from processes data that supports auditing
activities.

The current environment of rising risks, regulatory activity, and compliance costs makes this the ideal time to consider
(or to reconsider) the potential role of CM or CA, or both,
in your enterprise. You might also consider what it would
take to implement them, what they would look like, how
they would operate, and whether to further investigate
these modes of monitoring and auditing.
This paper, prepared for internal audit, accounting,
financial, and risk management executives, can guide you
in these considerations. CEOs, COOs, and board members
who share those executives’ concerns about rising risk,
regulation, and costs — and the potential impact on their
enterprises — may also find this paper informative.

Continuous auditing enables internal audit
to continually gather from processes data
that supports auditing activities.

Continuous monitoring enables
management to continually review business
processes for adherence to and deviations
from their intended levels of performance
and effectiveness.

As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. 2

What Do CM and CA Do?

CM enables management to determine more quickly and
accurately where it should be focusing attention and
resources in order to improve processes, implement course
corrections, address risks, or launch initiatives to better
enable the enterprise to achieve its goals. CA enables
internal auditors to determine more quickly and accurately
where to focus attention and resources in order to better
allocate audit resources and improve the quality of its
audits and support of management.
CM is an automated, ongoing process that enables
management to:
Assess the effectiveness of controls and detect
associated risk issues
Improve business processes and activities while
adhering to ethical and compliance standards
Execute more timely quantitative and qualitative riskrelated decisions • Increase the cost-effectiveness of controls and
monitoring through IT solutions
CA is an automated, ongoing process that enables
internal audit to:
Collect from processes, transactions, and accounts data that supports internal and external auditing activities
Achieve more timely, less costly compliance with
policies, procedures, and regulations
Shift from cyclical or episodic reviews with limited focus to continuous, broader, more proactive reviews
Evolve from a traditional, static annual audit plan to a more dynamic plan based on CA...
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