AUDIT ANALYTICS AUDIT

AUDIT ANALYTICS AND CONTINUOUS AUDIT:LOOKING TOWARD THE FUTURE
Figure 1-2: Pilot Continuous Monitoring of Business Processes at
Siemens, Rutgers CAR-Lab & Siemens Adding Intelligence (from
Alles et al, 2006)
Incorporating the concept of CCM into the original CA conceptualization
led to the renaming of the original CA to Continuous Data Audit (CDA)
where CA = CDA + CCM.
Continuous Risk Monitoring and Assessment (CRMA)
Vasarhelyi, Alles, and Williams (2010) suggested the addition of
Continuous Risk Monitoring and Assessment (CRMA) into the CA
schema where: CA = CDA + CCM + CRMA. CRMA is discussed in more
detail in essay 6, "Managing Risk and the Audit Process in a World of
Instantaneous Change" of this book. The essence of the CRMA concept is
displayed in figure 1-3 where risks are divided into three areas: (1)
operational, (2) environmental, and (3) black swans (Taleb, 2010). Black
swans are very remote risks with strong consequences that could arise, as
Taleb predicted the crisis of 2008. Risks are chosen judgmentally by the
audit team or management, and key risk indicators (KRIs) are associated
with the most important risks in each of the categories. The same basic
variance and acceptable variance model can be adapted to detecting
significant changes of risk. The model can be parameterized at the initial
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