Question

Continuous assurance auditing will send signals or messages deviated from an audit limit or parameter to internal auditors. What auditing standards and methods are necessary to ensure the effectiveness and efficiency of continuous auditing services?

Answer 1

Answer:

Continuous auditing is the use of audit methods, ranging from ongoing control evaluations to continuous risk assessments on a more frequent or ongoing basis. Continuous auditing consists of two main components — continuous risk assessment and continuous control assessment. To be effective some key aspects/methods need to be followed for better results which are explained below:

• Continuous auditing should be approached on an incremental basis (i.e., starting small and building on each success). When developing an approach to continuous auditing, auditors should make sure they have considered the short- and long-term objectives to address management-set goals adequately.
• Another important factor for effective use of continuous auditing is to have a good understanding of the main business processes and the associated information systems and infrastructure. However, the adoption of continuous auditing will not only require auditors to have knowledge of information systems, but also enable them to analyse the data. This means that IT auditors need to have the necessary data analysis skills. Furthermore, auditors must realize that continuous auditing will change the way audits are conducted, including the procedures and level of effort required by auditors. This will place demands on the audit department and possibly the work performed by IT auditors. In particular, auditors will have to obtain the support of the audit committee and senior management to move forward with the implementation of continuous auditing.
• For effective results it has to be ensured that the information being audited must be generated by reliable systems. The continuous audit process must be highly automated, and an effective link between the auditor's system and that of the audited entity must exist.
• Standard audit procedures could be established based on the business model. However, to be more effective these standard models need to be reviewed often to check the relevance of those methods as businesses are dynamic and keep changing.
• For continuous auditing to be effective it is very essential to identify the processes that need to be audited and determine the audit rules and frequency of the same to be decided. The results of the audit should be discussed with the management at frequent times for necessary discussions.

Continuos auditing is one of the effective tools for assessing the company internal controls and improve the efficiency of the operations. Hence management should ensure that continuous auditing is carried out taking into consideration the above aspects