Colorado State University Global Financial Continuous Auditing Discussion

Read Example 2 and explain your take away. Add additional information. Your document should include minimum 200 words plus credible references.

Example 2:

While Ibelieve that continuous auditing can be a very useful tool, I don’tthink it can ever replace normal annual audits. There are so many waysindividuals can commit fraud. Each of the main three ways, assetmisappropriation, corruption, and financial statement fraud, can bebroken down into even more detailed fraud types (Richardson, Teeter,& Terrell, 2018). I think there are just too many fraud indicatorsfor a system to be able to set up to catch. The human eye andinquisitive mind would be more capable of catching fraud and errors. Ithink humans would be able to find a way around the system to figure outhow to commit fraud without getting caught. For example, the employeeknows of a particular customer that always pays cash. Instead of sendingthem the invoice from the system, they doctor the invoice to cost anextra $50. When the cash comes in, they keep their $50 and record therest as a payment on the invoice. Because this is all completed outsideof the system, there wouldn’t be a way for the system to catch it.However, if in the annual audit the auditors do customer confirmationsfor those who paid cash, one of the customers would come back and saythe invoice the company has on file is $50 less than what she paid. Thiswould throw up red flags and start an investigation. While I thinkcontinuous auditing can be extremely helpful in some ways, I just don’tsee it ever being able to entirely replace the traditional audit.

Reference

Richardson, V., Teeter, R., & Terrell, K. (2018). Data Analytics for Accounting (1st ed.). New York, NY: McGraw-Hill.