AUDIT ANALYTICS AUDIT

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CASE STUDY B Implementing Continuous Auditing and Continuous Monitoring in Metcash—Change, Capabilities, and Culture Glen Laslett, CA, CIA Catherine Hardy, PhD INTRODUCTION Developing continuous auditing (CA) and continuous monitoring (CM) capabilities are consistently recognized in industry surveys as a top priority for not only improving internal audit effectiveness and efficiency but also for adding value in increasingly complex and changing business environments (KPMG 2012a; Protiviti 2014; PwC 2014). While the benefits and business imperative for CA/CM are widely accepted, uncertainty remains as to how this can be effectively accomplished (Hardy 2014). Building a sustainable CA/CM system requires far more than a business-as-usual type approach and "adding some tactical and 157
AUDIT ANALYTICS AND CONTINUOUS AUDIT:LOOKING TOWARD THE FUTURE technical data analytic capabilities" (KPMG 2013, 1). A number of papers have referred to the challenges in being able to effectively leverage data analytics and CA/CM techniques (PwC 2014) and then successfully integrating them into the audit process (KPMG 2013). We argue that the principal challenge is more fundamental. A major issue facing internal audit functions is developing an architecture that facilitates the regular capture and management of data from various systems, as well as the development and reliable delivery of continuous monitoring routines (CMRs) that efficiently test controls and data as well as mechanisms that allow the tracking and analysis of exceptions. We draw on the Metcash case, an Australian-based company that has reached an advanced maturity stage over a decade of development in using CA/CM (Hardy and Laslett, forthcoming). Key issues and challenges faced by the internal audit group when implementing and using CA/CM are described, as well as the lessons learned. More importantly, the case also reveals how CA/CM is being used to transform internal auditing and future directions. Our discussion commences with the value proposition for adopting CA/CM in Metcash. A description of the architecture follows. The types of CA/CM applications used are outlined, giving detailed attention to one specific CMR due to its relative uniqueness as well as its coverage of the core elements of value-added CMR development: multiple data sources, complex algorithms, and accountable exception delivery. The implication for implementing CA/CM and internal audit more broadly concludes the case discussion. VALUE PROPOSITION:IDENTIFYING THE NEED AND ADDRESSING THE BUSINESS CHALLENGE The value of CA/CM for Metcash needs to be placed in the context of the company’s history and overall strategy. Metcash operates in four market areas: food and grocery, liquor, hardware, and automotive. The vision of the company is to grow its markets and deliver value to its stakeholders, provide excellence in distribution and merchandise, be retailer and consumer champions, and be a place of choice to work. The company has had a long history of growth through acquisitions over a 40-year period. This was a period of significant change, resulting in organizational restructures, a new senior management group and diverse systems. Investments in enterprise platforms relating to warehousing and financial systems have occurred over the past decade. There were clear benefits to be accrued by implementing a CA/CM system. Metcash processes high volumes of transactions. For example, the accounts payable department processes approximately 760,000 158
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AUDIT ANALYTICS and CONTINUOUS AUDI
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Notice to Readers Audit Analytics a
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TABLE OF CONTENTS Preface Acknowled
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CONTENTS 3 Evolution of Auditing: F
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CONTENTS B Page Implementing Contin
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AUDIT ANALYTICS AND CONTINUOUS AUDI
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AUTHOR BIOGRAPHIES Abdullah Alawadh
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AUTHOR BIOGRAPHIES He is a passiona
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AUTHOR BIOGRAPHIES AICPA Assurance
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AUTHOR BIOGRAPHIES management. Prio
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AUTHOR BIOGRAPHIES Trevor R. Stewar
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PART I Essays 1
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ESSAY 4 Reimagining Auditing in a W
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ESSAY 4: REIMAGINING AUDITING IN A
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AUDIT ANALYTICS AUDIT

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