AUDIT ANALYTICS AUDIT

More documents

Recommendations

Info

ESSAY 6 Managing Risk and the Audit Process in a World of Instantaneous Change Paul Byrnes, CMA Gerard Brennan, CFE, PhD Miklos Vasarhelyi, PhD Daehyun Moon, CPA Satyajeet Ghosh, MS, MSE, MBA, CIA, CISA, CFE ABSTRACT We live in a world in which business circumstances change and risks evolve in a very rapid manner. Within this context, traditionally-developed annual audit plans may not be able to account for the constantly changing landscape and associated modifications to business risk. Consequently, an approach for regularly monitoring, assessing, and reporting on all pertinent risk factors should be implemented. In this setting, auditors would benefit by keeping audit plans current, thus facilitating adjustment of audit procedures and tests so as to help ensure that a high level of assurance can be provided in a timely manner. In this essay, the concept of continuous risk monitoring and assessment (CRMA) is described as a method for simultaneously conducting effective audits and managing business operations in the evolving real-time 129
AUDIT ANALYTICS AND CONTINUOUS AUDIT:LOOKING TOWARD THE FUTURE global economy. Discussion includes a general overview of CRMA as well as more specific considerations such as identification of risk, development and maintenance of key risk indicators, and responses to changing risk levels by both auditors and management. In summary, CRMA offers promise in accommodating auditing and business needs of the future. INTRODUCTION In the traditional auditing and managerial environments, risk assessment is viewed as a discrete activity that occurs periodically at a point in time. For example, in the external auditing context, risk assessment would historically occur during the planning stage of the annual audit. The accumulated evidence would then contribute to deciding pertinent characteristics of the corresponding audit plan, such as scope, procedures, and tests, as well as accounts and balances to be emphasized. However, problems can arise when a client’s risk profile experiences significant change between the risk assessment phase and completion of the associated audit engagement. In this setting, dynamic adjustment of the audit plan is warranted, but if risk assessment is not a fluid activity, this will not transpire. Problems associated with the untimely identification of changes in the risk landscape will also affect the management and internal audit areas. Increasingly, we live in a society where business circumstances and risk factors can and do change very abruptly, thus substantially reducing the lead time for effectively responding to changing conditions. Simultaneously, stakeholders’ needs and expectations are expanding (NACD 2009). Within this environment, the traditional method of risk assessment becomes untenable. Alternatively, a more agile, real-time approach for monitoring and assessing risks is necessary such that the audit plan and enterprise risk management protocols are both able to be updated in real time based upon changing risk levels. Audit and risk management procedures may then be refined accordingly, thus improving both audit quality and business productivity. CRMA demonstrates the potential to facilitate this process. CRMA ARCHITECTURE—OVERVIEW Vasarhelyi, Alles, and Williams (2010) initially envisioned CRMA as a vehicle for monitoring the risk landscape, measuring pertinent indicators, and providing meaningful input to the audit plan, so that it may be reformulated dynamically in response to modifications in an entity’s risk 130
Page 1 and 2:
AUDIT ANALYTICS and CONTINUOUS AUDI
Page 3 and 4:
Notice to Readers Audit Analytics a
Page 6 and 7:
TABLE OF CONTENTS Preface Acknowled
Page 8 and 9:
CONTENTS 3 Evolution of Auditing: F
Page 10:
CONTENTS B Page Implementing Contin
Page 13 and 14:
AUDIT ANALYTICS AND CONTINUOUS AUDI
Page 16 and 17:
AUTHOR BIOGRAPHIES Abdullah Alawadh
Page 18 and 19:
AUTHOR BIOGRAPHIES He is a passiona
Page 20 and 21:
AUTHOR BIOGRAPHIES AICPA Assurance
Page 22 and 23:
AUTHOR BIOGRAPHIES management. Prio
Page 24 and 25:
AUTHOR BIOGRAPHIES Trevor R. Stewar
Page 26:
PART I Essays 1
Page 29 and 30:
Page 31 and 32:
Page 33 and 34:
Page 35 and 36:
Page 37 and 38:
Page 39 and 40:
Page 41 and 42:
Page 43 and 44:
Page 45 and 46:
Page 47 and 48:
Page 49 and 50:
Page 51 and 52:
Page 53 and 54:
Page 55 and 56:
Page 57 and 58:
Page 59 and 60:
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104: AUDIT ANALYTICS AND CONTINUOUS AUDI
Page 112 and 113: ESSAY 4 Reimagining Auditing in a W
Page 114 and 115: ESSAY 4: REIMAGINING AUDITING IN A
Page 128: ESSAY 4: REIMAGINING AUDITING IN A
Page 153: AUDIT ANALYTICS AND CONTINUOUS AUDI
Page 170: PART II Case Studies 145
Page 182 and 183: CASE STUDY B Implementing Continuou
Page 184 and 185: CASE STUDY B: IMPLEMENTING CONTINUO
Page 192: CASE STUDY B: IMPLEMENTING CONTINUO
Page 200 and 201: CASE STUDY D Implementing Continuou
Page 202 and 203: CASE STUDY D: IMPLEMENTING CONTINUO
Page 204 and 205:
CASE STUDY D: IMPLEMENTING CONTINUO
Page 206 and 207:
Page 208 and 209:
Page 210:
AICPA Assurance Services Executive
show all

AUDIT ANALYTICS AUDIT

Create successful ePaper yourself

Delete template?

Save as template?