AUDIT ANALYTICS AUDIT

ESSAY 1: CONTINUOUS AUDITING—A NEW VIEW
The early work on CA focused on using the benefits of automation to
perform a more frequent and deeper audit. This essay emphasized a
wider frame of thought by considering the effects of technological change
on business and the role of a more continuous form of assurance, with
different economics, conditions, and processes than are used today.
In this new environment there are no reasonable limits of sources of data,
but there are great limits on what data an organization can actually store
and make useful. Data will tend to exist to support particular decisions or
processes, but the great challenge is to anticipate needs and create
software and processes for its examination. The costs of system
development, improvement, and overlay obey much different rules than
the traditional fixed and variable cost managerial accounting model. The
fact that many IT provisioning economic models are charged on an
incremental basis proportional to usage will change the profession’s
usage of technology.
The new environment of audit is a mix of technology (TDA), analytics
(ABA), and human (HBA) efforts just as in the past, but the dramatic
evolution of TDA and ABA makes it necessary to change business
processes, legislation, regulations, and consequently HBA.
The introduction of IT-based analytic monitoring is the introduction of
meta-processes, meta-controls, and meta-management functions. These
meta functions, such as meta-data providing data about data (for
example, in XBRL), meta-control (information about controls being
extracted from ERP systems), or meta-control of controls (information
about the control of controls), provide increasing conceptual confusion
between what auditors and managers should do. The modern IT
environment is aggravating this problem. Migration between functions is
happening and requires new flexible conceptualizations.
The need for increased verification due to the many layers of technology
adding opacity and a more complex society has led to many levels of
ALO and the recommendations of the King Commission (Institute of
Directors in Southern Africa, 1994, 2009). The new continuous audit
model aims to liberate from these shackles, creating a new set of
assurance opinions and functions to be provided by the assurance
function in a partnership of management, internal control, internal audit,
and external audit.
6.1 The New CA
The major changes to CA that are emerging and should be permeating
the audit environment, and hopefully standards, are as follows:
Progressive adoption of a standard data interface to allow for the
usage of assertion and analytic based apps.
47