The emergence of information technology has created the need for new business approaches involving the inclusion of electronic commerce, data interchanges and the internet (Elam, Rezaee & Sharbatoghlie 2001:150).
As technology expands and the global business community grows closer, demands are placed on the internal auditor for greater visibility into internal controls. This will enable the auditor to expand audit coverage in order to identify and mitigate risk, whilst keeping within the confines of limited resources (ACL Executive Brief 2006:1).
This essay discusses the emerging methodology in the field of auditing which can be used as a tool to benefit the internal auditor as he adapts to the changing environment.
2. A brief definition and history of Continuous Auditing
Information technology has created an intense need for new business approaches which require alterations in business practice and transactional processes (Elam, Rezaee &Sharbatoghlie 2001:150). One of these processes, which involves the internal auditor directly is the audit methodology referred to as Continuous Auditing. This can be defined as an enabling methodology for independent auditors to “provide written assurance on subject matter” after making use of audit reports collected whilst, or directly after transactions have taken place (Kuenkaikaew, Littley, Vasarhelyi & Williams 2012:1).
According to the Global Technology Audit guide, Continuous Auditing (CA) can provide the internal auditor with an opportunity to go beyond the traditional approaches to auditing which include the limitations of sampling, point-in-time-assessments and standard reports (Coderre 2005:4).
Although a broad category, Continuo...
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...r, these advances in auditing can assist the internal auditor specifically by assessing the adequacy of managerial monitoring systems and by targeting high risk areas (Coderre 2005:5).
Therefore it can be said that Continuous Auditing is an intensely useful tool for the internal auditor as its benefits outweigh its challenges. By allowing the internal auditor freedom from the banality of traditional auditing systems, the auditor can explore other outlets for critical thinking and can become better at his job (ACL Executive Brief 2006:6).
PricewaterhouseCoopers, “Internal Audit 2012—A Study
Examining the Future of Internal Auditing and the Potential
Decline of a Controls-centric Approach,” 2007
Canadian Institute of Chartered Accountants (CICA) and American Institute of Certified Public Accountants
(AICPA), “Continuous Auditing Research Report,”