AUDIT ANALYTICS AUDIT

ESSAY 1: CONTINUOUS AUDITING—A NEW VIEW
data evaluation and review. In the engineering sciences the concept of
relative and acceptable errors are common. Unfortunately there are no
precise definitions of materiality in the auditing standards literature
(Elliott, 1986). Furthermore, information technology has changed the cost
structure of both the benefits of an audit as well as the costs of performing
audits by making information storage and retrieval very different.
The new environment changes the costs and benefits of assurance. Source
documents are indexed and electronic. Analysis activities can be mainly
automated. A wide net of automatic document reviews can be
communicated to staff and serve as a serious deterrent to malfeasance. If
auditor substantive processes can be formalized and support systems
evolve towards all electronic processes, full population evaluations may
be possible and desirable depending of a set of very different cost-benefit
tradeoffs.
A new conceptualization of materiality may be needed now with
different considerations of dimensions such as monetary value, volume
of transactions, type of usage, and probability of outcome. Furthermore,
for the audit to be more informative, it may be desirable to disclose more
details of relative expected error and the auditor may create a product
that provides a more detailed set of relative error assessments.
Furthermore, there are qualitative and quantitative aspects in audit
decision making, as many of the analytic-based monitoring processes
will be out of the eyesight of the auditors, there must serious thought
given to automatically bringing relevant qualitative evidence to auditors.
5.2 New Audit Products
The creation of new digital products has faced a Cambrian moment
(Siegele, 2014) of dramatic change where the cost characteristics of
e-products (mainly fixed cost and very low marginal variable costs) are
being reflected by the method of provisioning and charging for new
products. Auditors need to develop layered monitoring systems with
embedded elements such as sensors (for example, RFID, GPS, computer
vision), analytic intelligence, and exception detecting and rerouting
capabilities in order to provide additional assurance services.
Table 1-10 expands the conceptualization of the audit opinion and table
1-11 adds features that could be parts of the nature of the product.
Clearly, unintended consequences and the legal environment would
permeate the world of expanded assurances.
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