Continuous Auditing Is Here To Stay

Now that the need for transactional efficiencies, fraud prevention and real-time financial reporting is acute, mainstream finance is finally jumping on the bandwagon.

Continuous auditing's surprisingly long gestational period is nearing a conclusion. For software vendors, academics, consultants and a handful of practitioners at early-adopter companies, the primary question is: Why has it taken so long for corporations to embrace it? The delay can't be justified by claims of high cost. A $200,000 to $300,000 investment in a continuous auditing (CA) software application that sniffs out errors in masses of A/P, travel and entertainment (T&E), or general-ledger transactions is routinely recouped in less than a year. And that saving is based solely on the dollar amount of the errors that the application identifies. Further, more focused, downloadable CA applications are available for well below six figures.

Whatever the reasons companies have advanced for inaction, regulatory demands, the push for real-time financial reporting and resource-sapping manual audits are propelling them toward adoption of continuous auditing. Ultimately, though, larger forces will provide the biggest boost for change. "How do you maximize value and how do you manage and mitigate risk? ... My personal view is that continuous monitoring and continuous auditing can help to make progress towards both," said David M. Walker, comptroller general of the United States and chair of the Center for Continuous Auditing (CCA) at Rutgers University in New Jersey, in his keynote presentation at Penton Media's BPM Summit in November of last year. "I think this concept of both continuous monitoring within the organization by management, as well as continuous auditing by either internal and/or external auditors who are going to be dealing with test and assurance issues, is going to become much more important."