AUDIT ANALYTICS AUDIT

AUDIT ANALYTICS AND CONTINUOUS AUDIT:LOOKING TOWARD THE FUTURE
capabilities for business. The same technology that allowed data to be
processed rapidly and consistently also allows for consistent errors and
their distribution without human observation. The same technology that
allows for remote access of computers allows for foreign intrusion and
virus diffusion. The same technology that facilitates electronic
transactions with credit card magnetic information also allows massive
and intrusive capture and leakage of credit card information at reputable
organizations such as Target 16 and Home Depot 17 . As earlier discussed,
the roles of management, internal audit, and external audit are
overlapping and use the same tools. Figure 1-10 attempts to integrate
some high-level functions that will compose some of the elements of
future management and assurance. Prior to its discussion some basic
issues in modern assurance are discussed including: (1) progressive
implementation of assurance systems, (2) functional migration of roles
and tasks, (3) concepts to be evolved in the new audit conceptualization.
5.1 Stochastic Opinion Rendering in a World
of Statistics
The nearly "yes" or "no" nature of external audit reporting doesn’t
provide the types of insights or commentary that stakeholders may find
informative. The audit literature has proposed over the years several
forms of probabilistic reporting and more explanatory audit opinions.
These would give more information to stakeholders, but in general the
proposed methods are limited.
Associated with the concept of probabilistic reporting, the modern audit
could benefit from a real-time auditor dashboard. The issues related to
legal liability, stakeholder needs, and the natural reticence to change will
tend to make this evolution challenging. However several commercial
products and research efforts are developing these dashboards in internal
audit organizations responding to real needs of system monitoring.
Internal audits would provide additional value with the issuance of
probabilistic reporting.
In general, materiality estimates relate to dollar value in relation to a
value on a financial statement. For example, 5 percent of net income is
compared with the total value of the account on an account-by-account
basis. The audit literature has been linked to the concept of materiality
for a long time. Clearly there are decreasing returns in the economics of
16 www.businessweek.com/articles/2014-03-13/target-missed-alarms-in-epic-hack-of-creditcard-data
17 www.reuters.com/article/2014/09/09/us-usa-home-depot-databreachidUSKBN0H327E20140909
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