CSU Continuous Auditing Processes Act helps Standard Company Audits Allowing Them to Continue Indefinitely Discussion

Read Example1 and explain your take away. Add additional information. Your document should include minimum 200 words plus credible references.

Example 1:

Continuous auditing

Introduction

Auditing is the lifeblood for every successful organization, and ithelps to give the opinion of the accurate and fair view of the financialhealth for organizations. Managers embrace the auditing process becauseit red flags activities that are likely to cause fraud. Through theauditing process, the potential threats of fraud are red-flagged, thusminimizing fraud. There are various methods of conducting auditprocesses, such as the traditional and modern methods of the audit. Thispost will evaluate the scope of continuous auditing, which is a modernauditing procedure and assesses the likelihood of the modern methodreplacing the traditional methods.

Continuous auditing covers a broad scope that encompasses theprovision of assurance on the subject matter through the provision ofaudit reports, helps in assessing risks, testing of controls based onthe risk factors, and automating the procedure of capturing auditingdata. According to Vasarhelyi & Halper (2018), continuous auditingcovers a broad scope of monitoring of key performance indicators, whichare popularly referred to as the (KPIs), activity monitoring oftransactions, investigation of potentially fraudulent activities,monitoring of controls, and continuous reporting to the stakeholders.The KPIs helps to monitor the business functions from the point ofproduction to the point of sales. Through the continuous auditing, themanagement can establish various shortcomings in their productiondepartments to their sales departments and establish a preventive stepto help reduce the impacts of the shortcomings. Through KPIs’ help, themanagement can establish the spoilage rate, total manufactured units,line of efficiency, and the production capacity, which would help thebusiness reduce the likelihood of fraudulent acts.

Activity monitoring helps gauge the workers’ efficiency in theirrespective areas of work and provides a benchmark regarding promotionand demotion opportunities. Moreover, a continuous audit helps to redflag the potential loopholes that could lead to fraud being committed.The continuous audit covers a broader scope more than just automatingthe audit procedures and setting controls, monitoring key performanceindicators, and transaction monitoring.

I believe that continuous auditing will most likely replacetraditional auditing processes. Due to the perceived benefits associatedwith the automation of activities attributable to continuous audit,this may contribute to replacing the traditional auditing processes.According to Vasarhelyi et al. (2012), Continuous audit uses automatedsystems to collect data regarding systems automatically, processesinformation automatically, and employs tools of controls and identifiesnon- compliance automatically. Moreover, continuous auditing is moreaccurate since most of the transactions are automated, and thus there isno need for keeping manual information.

Additionally, continuous auditing enables one to shift focus from onepoint in time review to other areas, thus saving on doing reviews. Onthe other hand, traditional auditing processes focus on a single pointin a time audit process where an auditor requests the audit informationduring a specific period. That way, the traditional audit processbecomes inefficient.

Conclusion

In essence, the continuous audit process has covered a wide range ofissues which has helped businesses red flag fraudulent activities,improve controls, and enhance key performance indicators. Continuousauditing will likely replace the traditional auditing processes becauseof its perceived and real benefits on automation of procedures, accuracyand cost-saving. Additionally, the continuous audit procedure enhancestimely reporting. It gives the management of the possible areas that arelikely to be used by various individuals to commit fraudulentactivities. It helps in the mitigation and prevention of fraudulentactivities. This should also benefit accountants by freeing them upfrom the most routine task, and give him/her more data to make betterdecisions on a higher level.

References:

Vasarhelyi, M. A., & Halper, F. B. (2018). The continuous audit of online systems. Continuous Auditing: Theory and Application, 87-104. https://doi.org/10.1108/978-1-78743-413-420181004

Vasarhelyi, M. A., Alles, M., Kuenkaikaew, S., & Littley, J.(2012). The acceptance and adoption of continuous auditing by internalauditors: A micro analysis. International Journal of Accounting Information Systems, 13(3), 267-281. https://doi.org/10.1016/j.accinf.2012.06.011