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Forensic Analytics: Methods and Techniques for Forensic Accounting Investigations by Mark J. Nigrini, PH.D

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Chapter 15

Fraud Risk Assessments of Forensic Units

Monitoring means “to watch, and keep track of, or to check for some special purpose.” Continuous monitoring happens in many aspects of our personal life. Our water supply is continuously monitored, and all sorts of phenomena are monitored in commercial airplane flights. In hospitals, the monitoring of a patient's vital signs is taken for granted. In prisons, monitoring the activities and whereabouts of inmates is vital, and any escape is usually attributed to a lapse in monitoring activities. An Internet search for “continuous monitoring” will return results from applications such as monitoring storms, emissions, volcanoes, glucose for diabetics, perimeter activities for important installations, and foreign broadcasts for intelligence purposes. Since monitoring is so pervasive in everyday life it is puzzling that corporate transactions are not also the subject of continued monitoring to assess the risk of frauds or errors.

The 2006 edition of PricewaterhouseCoopers' (PWC) State of the Internal Audit Profession series reports that 81 percent of audit managers either had a continuous auditing or monitoring process in place, or that they were planning to develop one (PWC, 2006). Only one-half of audit managers had some actual form of continuous monitoring in place (possibly only one application). This low percentage might be due to a lack of guidance on methods and techniques that might be used in continuous monitoring applications. ...

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