Chapter 5

Continuous Auditing: Foundation Phase

Target Area

Understanding the concept and basics of how continuous auditing works is a good start when implementing a continuous auditing program but one of the more difficult questions to address is where to begin using this new and different approach. Selection of a target area to validate using a continuous auditing methodology becomes an important decision that impacts the level of success recognized in the testing approach and results. Let us start with where to begin.

Where to Begin

When considering all of the auditable entities in a risk-based audit universe, deciding which area would be more suited to be tested using the continuous approach can be confusing. Before selecting the pilot area, take a step back and examine all of the potential areas for review in the current year as well as any and all commitments you have made to your business partners, external partners, committees, and boards. List all of the required work for the audit year, and ensure that each item on the list is a true audit assignment. Keep in mind that a true audit assignment represents confirmed work, such as Sarbanes-Oxley testing, cyclical audit areas, external partner commitments, and any regulatory requirements. Do not include potential areas that you believe may come up or audits on your wish list. The selection process has to be made from a “pure” sample, including only that work that must be completed in the current audit year.

Once you have ...

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