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Article
Publication date: 19 July 2013

Il‐hang Shin, Myung‐gun Lee and Woojin Park

The purpose of this paper is to introduce the continuous auditing system based on continuous monitoring and its implementation methodology; also to present a systematic…

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Abstract

Purpose

The purpose of this paper is to introduce the continuous auditing system based on continuous monitoring and its implementation methodology; also to present a systematic case study of actual continuous auditing systems implemented in the financial industry and the manufacturing industry.

Design/methodology/approach

The paper examines the method of implementing the continuous auditing system in the enterprise resource planning (ERP) environment, and suggests how the continuous auditing system can take firm root by looking at the successful introduction of the continuous auditing system in the financial industry and the manufacturing industry.

Findings

The proposed method of implementing the continuous auditing system has the 2stage approaches which can be applied to various kinds of companies in the ERP‐based environment. In addition, the proposed cases have the important practical implications acquired in the process of implementing the continuous auditing system in the financial industry and the manufacturing industry.

Practical implications

This study will help many corporations facing various types of corruption or circumvention of internal control, with their internal auditing, by showing them how to use the continuous auditing system to reinforce internal control. Also, it will make the independent auditor understand audited company's continuous monitoring system and lead to use the infrastructure for efficient and effective external auditing.

Originality/value

The proposed method and cases of implementing the continuous auditing system offer an innovative approach to auditing in the ERP‐based environment because it facilitates both internal auditor and external auditor to achieve the audit objectives efficiently and effectively.

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Book part
Publication date: 8 March 2018

Miklos A. Vasarhelyi, Michael G. Alles and Alexander Kogan

The advent of new enabling technologies and the surge in corporate scandals has combined to increase the supply, the demand, and the development of enabling technologies…

Abstract

The advent of new enabling technologies and the surge in corporate scandals has combined to increase the supply, the demand, and the development of enabling technologies for a new system of continuous assurance and measurement. This paper positions continuous assurance (CA) as a methodology for the analytic monitoring of corporate business processes, taking advantage of the automation and integration of business processes brought about by information technologies. Continuous analytic monitoring-based assurance will change the objectives, timing, processes, tools, and outcomes of the assurance process.

The objectives of assurance will expand to encompass a wide set of qualitative and quantitative management reports. The nature of this assurance will be closer to supervisory activities and will involve intensive interchange with more of the firm s stakeholders than just its shareholders. The timing of the audit process will be very close to the event, automated, and will conform to the natural life cycle of the underlying business processes. The processes of assurance will change dramatically to being meta-supervisory in nature, intrusive with the potential of process interruption, and focusing on very different forms of evidential matter than the traditional audit. The tools of the audit will expand considerably with the emergence of major forms of new auditing methods relying heavily on an integrated set of automated information technology (IT) and analytical tools. These will include automatic confirmations (confirmatory extranets), control tags (transparent tagging) tools, continuity equations, and time-series cross-sectional analytics. Finally, the outcomes of the continuous assurance process will entail an expanded set of assurances, evergreen opinions, some future assurances, some improvement on control processes (through incorporating CA tests), and some improved data integrity.

A continuous audit is a methodology that enables independent auditors to provide written assurance on a subject matter, for which an entity’s management is responsible, using a series of auditors’ reports issued virtually simultaneously with, or a short period of time after, the occurrence of events underlying the subject matter.

  • CICA/AICPA Research Study on Continuous Auditing (1999)

CICA/AICPA Research Study on Continuous Auditing (1999)

Companies must disclose certain information on a current basis.

  • Corporate and Auditing Accountability, Responsibility, and Transparency (Sarbanes-Oxley) Act (2002)

Corporate and Auditing Accountability, Responsibility, and Transparency (Sarbanes-Oxley) Act (2002)

Details

Continuous Auditing
Type: Book
ISBN: 978-1-78743-413-4

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Abstract

Details

Continuous Auditing
Type: Book
ISBN: 978-1-78743-413-4

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Book part
Publication date: 8 March 2018

Victoria Chiu, Qi Liu and Miklos A. Vasarhelyi

The advances and continuous development of technology have been identified as significant influences on the accounting profession (AICPA, 1998). In the last twenty years…

Abstract

The advances and continuous development of technology have been identified as significant influences on the accounting profession (AICPA, 1998). In the last twenty years, both academia and the accounting profession have been giving much attention to the demand and opportunity for audits to be performed automatically, continuously and in nearly real time. This paper presents a comprehensive review of continuous auditing research by providing an overview of the emergence and growth of the continuous auditing literature and classifying the extant continuous auditing research on the basis of four research characteristics indicated by a newly developed research taxonomy.

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Article
Publication date: 3 July 2020

Siim Koppel and Shing Chang

Modern production facilities produce large amounts of data. The computational framework often referred to as big data analytics has greatly improved the capabilities of…

Abstract

Purpose

Modern production facilities produce large amounts of data. The computational framework often referred to as big data analytics has greatly improved the capabilities of analyses of large data sets. Many manufacturing companies can now seize this opportunity to leverage their data to gain competitive advantages for continuous improvement. Six Sigma has been among the most popular approaches for continuous improvement. The data-driven nature of Six Sigma applied in a big data environment can provide competitive advantages. In the traditional Six Sigma implementation – define, measure, analyze, improve and control (DMAIC) problem-solving strategy where a human team defines a project ahead of data collection. This paper aims to propose a new Six Sigma approach that uses massive data generated to identify opportunities for continuous improvement projects in a manufacturing environment in addition to human input in a measure, define, analyze, improve and control (MDAIC) format.

Design/methodology/approach

The proposed Six Sigma strategy called MDAIC starts with data collection and process monitoring in a manufacturing environment using system-wide monitoring that standardizes continuous, attribute and profile data into comparable metrics in terms of “traffic lights.” The classifications into green, yellow and red lights are based on pre-control charts depending on how far a measurement is from its target. The proposed method monitors both process parameters and product quality data throughout a hierarchical production system over time. An attribute control chart is used to monitor system performances. As the proposed method is capable of identifying changed variables with both spatial and temporal spaces, Six Sigma teams can easily pinpoint the areas in need to initiate Six Sigma projects.

Findings

Based on a simulation study, the proposed method is capable of identifying variables that exhibit the biggest deviations from the target in the Measure step of a Six Sigma project. This provides suggestions of the candidates for the improvement section of the proposed MDAIC methodology.

Originality/value

This paper proposes a new approach for the identifications of projects for continuous improvement in a manufacturing environment. The proposed framework aims to monitor the entire production system that integrates all types of production variables and the product quality characteristics.

Details

International Journal of Lean Six Sigma, vol. 12 no. 2
Type: Research Article
ISSN: 2040-4166

Keywords

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Book part
Publication date: 8 March 2018

Abstract

Details

Continuous Auditing
Type: Book
ISBN: 978-1-78743-413-4

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Book part
Publication date: 8 March 2018

Michael Alles, Gerard Brennan, Alexander Kogan and Miklos A. Vasarhelyi

In this paper we report on the approach we have developed and the lessons we have learned in an implementation of the monitoring and control layer for continuous monitoring

Abstract

In this paper we report on the approach we have developed and the lessons we have learned in an implementation of the monitoring and control layer for continuous monitoring of business process controls (CMBPC) in the US internal IT audit department of Siemens Corporation. The architecture developed by us implements a completely independent CMBPC system running on top of Siemens’ own enterprise information system which has read-only interaction with the application tier of the enterprise system. Among our key conclusions is that “formalizability” of audit procedures and audit judgment is grossly underestimated. Additionally, while cost savings and expedience force the implementation to closely follow the existing and approved internal audit program, a certain level of reengineering of audit processes is inevitable due to the necessity to separate formalizable and non-formalizable parts of the program. Our study identifies the management of audit alarms and the prevention of the alarm floods as critical tasks in the CMBPC implementation process. We develop an approach to solving these problems utilizing the hierarchical structure of alarms and the role-based approach to assigning alarm destinations. We also discuss the content of the audit trail of CMBPC.

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Book part
Publication date: 8 March 2018

David Y. Chan and Miklos A. Vasarhelyi

The traditional audit paradigm is outdated in the real time economy. Innovation of the traditional audit process is necessary to support real time assurance. Practitioners…

Abstract

The traditional audit paradigm is outdated in the real time economy. Innovation of the traditional audit process is necessary to support real time assurance. Practitioners and academics are exploring continuous auditing as a potential successor to the traditional audit paradigm. Using technology and automation, continuous auditing methodology enhances the efficiency and effectiveness of the audit process to support real time assurance. This paper defines how continuous auditing methodology introduces innovation to practice in seven dimensions and proposes a four-stage paradigm to advance future research. In addition, we formulate a set of methodological propositions concerning the future of assurance for practitioners and academic researchers.

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Article
Publication date: 13 April 2012

Munir Majdalawieh, Sofiane Sahraoui and Reza Barkhi

The pressure is on organizations to go beyond automating their internal audit activities and develop and integrate internal auditing into business processes of the…

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1851

Abstract

Purpose

The pressure is on organizations to go beyond automating their internal audit activities and develop and integrate internal auditing into business processes of the enterprise. This paper aims to propose a “full power” continuous auditing (CA) model with three key components: electronic audit evidence functions; intra‐process auditing; and inter‐process auditing.

Design/methodology/approach

This paper follows a design science approach by identifying relevant problems from the current literature, defining the objectives of the study, designing and developing the “full power” CA model, and evaluating the model. The model supports business process‐centric auditing and enhances the business monitoring capacities of organizations enabling the fulfillment of increasingly stringent compliance requirements with internal policies as well as external regulations.

Findings

This work has attempted to fill the gap between the enterprise solutions offered by enterprise system providers and a structured approach to auditing within enterprise environments by proposing the IIPCA model which combines the automated controls inherent in the systems with continuous audits based on electronic audit evidence. The approach provides for auditing both within and between processes ensuring comprehensiveness of the audit process.

Originality/value

The paper makes a contribution by proposing a “full power” continuous auditing model on the principle of continuous monitoring and with predefined building block components; facilitating the integration of continuous auditing within business information processing in an enterprise using different building blocks; and giving practitioners insight on the adoption of the CA in the enterprise and how it will enhance their audit effectiveness, and audit efficiency.

Details

Business Process Management Journal, vol. 18 no. 2
Type: Research Article
ISSN: 1463-7154

Keywords

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Book part
Publication date: 8 March 2018

Michael G. Alles, Alexander Kogan and Miklos A. Vasarhelyi

In the almost twenty years since Vasarhelyi and Halper (1991) reported on their pioneering implementation of what has come to be known as Continuous Auditing (CA), the…

Abstract

In the almost twenty years since Vasarhelyi and Halper (1991) reported on their pioneering implementation of what has come to be known as Continuous Auditing (CA), the concept has increasingly moved from theory into practice. A 2006 survey by PricewaterhouseCoopers shows that half of all responding firms use some sort of CA techniques, and the majority of the rest plan to do so in the near future. CA not only has an increasing impact on auditing practice, but is also one of the rare instances in which such a significant change was led by the researchers. In this paper we survey the state of CA after two decades of research into continuous auditing theory and practice, and draw out the lessons learned by us in recent pilot CA projects at two major firms, to examine where this unique partnership between academics and auditors will take CA in the future.

Details

Continuous Auditing
Type: Book
ISBN: 978-1-78743-413-4

Keywords

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