Audit Analytics and Continuous Audit

210 Pages·2015·2.27 MB·English

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AICPA Assurance Services Executive Committee IT
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The mission of the AICPA Assurance Services Executive Committee (ASEC) A
L
Y
is to assure the quality, relevance, and usefulness of information or its T
IC
context for decision-makers and other users by (1) identifying and prioritizing S
a
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emerging trends and market needs for assurance, and (2) developing related d
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assurance methodology guidance and tools as needed. ASEC achieves its O
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mission by: T
IN AAUUDDIITT
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providing guidance and leadership in identifying and prioritizing O
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significant emerging assurance trends and market needs while engaging S A
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users, preparers, and influencers toward action; D
IT AANNAALLYYTTIICCSS
developing assurance guidance by creating suitable criteria when
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and
communicating new assurance methodologies, guidance, and
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Looking Toward
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aicpa.org | cpa.com AUDIT
ANALYTICS
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AUDIT
ANALYTICS
and
CONTINUOUS
AUDIT
Looking Toward
the Future
17970-344
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TABLE OF CONTENTS
Page
Preface xi
Acknowledgements xiii
AuthorBiographies xv
PartI Essays
1 ContinuousAuditing—ANewView 3
NancyBumgarner,MiklosA.Vasarhelyi
1.Introduction—ContinuousAssurancetheTheory 3
1.1ContinuousProcessAuditing 4
1.2ConceptualizingVariousElementsofCA 6
1.3GuidanceonContinuousAuditing 13
2.TheElementsofContinuousAssuranceRevisited 13
2.1ContinuousAuditingVersusContinuous
Monitoring 13
2.2TheElementsofContinuousAudit 17
3.InformationTechnologyandtheAuditor 19
3.1EvolvingDatabaseAuditConceptualization 22
3.2IncrementalTechnologicalChange 23
3.3TheAuditDataStandard 24
4.TheNewContinuousAudit 26
4.1AssuranceLevel 28
4.2TimeFocus 29
4.3TimeInterval 30
4.4DataSource 31
4.5ChosenProcedure 32
4.6ChoiceofAssertion 33
4.7AnalyticMethod 33
4.8AssuranceEntity 35
5.QuestionsRegardingSomeAuditingConcepts
intheModernEnvironment 35
5.1StochasticOpinionRenderinginaWorld
ofStatistics 36
5.2NewAuditProducts 37
5.3Management,Control,Assurance,and
OtherMeta-ProcessesConfusionofConcepts 38
5.4Independence 39
v
CONTENTS
Page
1 ContinuousAuditing—ANewView—continued
5.5MigrationofFunctionstoAutomation 39
5.6TheAuditEcosystem 42
6.Conclusions 46
6.1TheNewCA 47
References 49
2 TheCurrentStateofContinuousAuditingand
ContinuousMonitoring 53
PaulEricByrnes,BradAmes,MiklosVasarhelyi
Introduction 53
CurrentEnvironment 54
ProductsandServices 55
PromotionEfforts 56
SkillsRequired 57
SupplementalFindings 58
Conclusions 59
References 60
Appendix—ContinuousAuditingand
ContinuousMonitoringinAction 60
Introduction 60
SAPKeyPerformanceIndicator 61
DSAS/AuditCommandLanguage 61
DSASDatabase 61
DashboardFeature 63
3 EvolutionofAuditing:FromtheTraditionalApproach
totheFutureAudit 71
PaulEricByrnes,AbdullahAl-Awadhi,BenitaGullvist,Helen
Brown-Liburd,RyanTeeter,J.DonaldWarren,MiklosVasarhelyi
Introduction 71
ABriefHistoryofAuditingintheUnitedStates 72
TheTraditionalAudit 76
AutomatingtheAudit 77
TheFutureAudit 78
EmbeddedAuditModules 79
MonitoringandControlLayer 80
AuditDataWarehouse 81
AuditApplicationsApproach 81
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CONTENTS
Page
3 EvolutionofAuditing:FromtheTraditionalApproach
totheFutureAudit—continued
OtherFutureAuditConsiderations 82
Conclusion 83
References 84
4 ReimaginingAuditinginaWiredWorld 87
PaulEricByrnes,TomCriste,TrevorStewart,MiklosVasarhelyi
Overview 87
Introduction:BlueSkyScenario 88
UsingTechnologytoTransformAuditing 91
TechnologyEnablers 91
AuditOpportunities 92
MoreEffectiveAuditDataAnalytics 92
MoreAssurance 95
AuditingWithBigData 96
ContinuousAuditing,ContinuousAssurance 97
MoreEffectiveFraudDetection 98
ReducingFalsePositives 98
AuditProcessRe-Engineering:AnExample 99
MakingItHappen 100
EncouragingAuditResearchandDevelopment 100
ProvidingGuidanceandUpdatingAuditing
Standards 101
EncouragingandRecognizingNewResourceModels 101
BlueSkyScenarioRevisited 102
References 102
5 DataAnalyticsforFinancialStatementAudits 105
TrevorR.Stewart
Abstract 105
TheAuditContext 105
DAandGenerallyAcceptedAuditingStandards 106
AuditApplicationsofDA 108
UnderstandingtheEntity,andRiskAssessment 108
PerformingSubstantiveAnalyticalProcedures 109
AnalyzingandTestingPopulationsof
DetailedTransactionsandBalances 110
ConsideringandTestingforFraud 111
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CONTENTS
Page
5 DataAnalyticsforFinancialStatementAudits—continued
TestingtheOperatingEffectivenessof
InternalControl 112
Inquiry 112
ALookAhead:CognitiveComputingintheAge
ofBigData 112
UtilizingBigData 112
CognitiveComputing 113
UppingOurGame 114
IllustrativeExamples 115
Example1:SimpleDAVisualization 115
Example2:FinancialRatioPeerAnalysis 120
MultivariateRatioAnalysis 125
References 128
6 ManagingRiskandtheAuditProcessinaWorldof
InstantaneousChange 129
PaulByrnes,GerardBrennan,MiklosVasarhelyi,DaehyunMoon,
SatyajeetGhosh
Abstract 129
Introduction 130
CRMAArchitecture—Overview 130
CRMA—GeneralProcess 132
CRMA—MoreDetailedConsiderations 133
RiskIdentificationandAnalysis 133
KRIDevelopmentandImplementation 134
AuditorResponsetoChangingRiskLevels 136
ManagementResponsetoChangingRiskLevels 137
HypotheticalIllustrationofCRMAinUse 138
SystematicImplementationofRisk
ManagementandAssessmentinaProcess 139
Conclusion 142
References 142
PartII Case Studies
A DevelopingContinuousAssuranceatSiemens 147
AnnF.Medinets,JasonA.Gross,Gerard(Rod)Brennan
TraditionalInternalAudit 148
ContinuousControlsMonitoring 148
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CONTENTS
Page
B ImplementingContinuousAuditingandContinuous
MonitoringinMetcash—Change,Capabilities,andCulture 157
GlenLaslett,CatherineHardy
Introduction 157
ValueProposition:IdentifyingtheNeedand
AddressingtheBusinessChallenge 158
TheImportanceofArchitecture 159
DefinitionsandApplicationsofCA/CMinMetcash 161
AnExampleApplication:TheLeave
ContinuousMonitoringRoutine(CMR) 162
MovingForward—KeyRiskIndicators 163
ChallengesandLessonsLearned 164
Conclusion 166
References 166
C IncreasingAuditEfficiencyThroughContinuous
BranchKPIMonitoring 169
CarlosElderdeAquino,EduardoMiyaki,NiltonSigolo,MiklosA.
Vasarhelyi,PaulE.Byrnes
Abstract 169
Introduction 170
TheProcessatSAB 170
PotentialEnhancements 171
Conclusions 172
References 172
D ImplementingContinuousMonitoringatVodafoneIceland 175
Mar´ıaArthu´rsdo´ttir,Ho¨rðurMa´rJo´nsson,SindriSigurjo´nsson
Introduction 175
ContinuousMonitoringinVodafoneIceland 176
RevenueLeakage 177
ProcessofMonthlyFinancialClosing 178
TheBillingProcess 179
FraudMonitoring 181
CustomerRelationshipManagement 181
CultureChangeandEnhancedQualityof
WorkFlow 182
ChallengesandLearning 183
TheFuture 183
Conclusion 184
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