Continuous auditing provides real-time financial information through simultaneous or rapid audits, but is generally more theoretical than practical due to cost. Audits help prevent errors, fraud, and liability, and provide a game plan for the future. Continuous monitoring is a similar system that uses lower cost methods. New technology makes continuous auditing and monitoring easier and more convenient, and may lead to real-time reports for financial systems. Most businesses use audits quarterly or annually, but can implement new systems to increase auditing capabilities, including continuous monitoring tools.
Continuous auditing is the idea that a business or enterprise can obtain “real-time” financial information from a series of financial audits conducted simultaneously or in rapid succession. This type of financial system is generally more theoretical than practical for most companies. This is largely because, in most cases, the cost of continuous control would outweigh the benefit.
Audits provide important financial data for a business. Audits help with error prevention, fraud prevention, and many other types of liability prevention. They also help provide a game plan for the future of a company or business.
A company could set up a continuous process for auditing using a variety of automated tools now available on today’s market. Continuous auditing should not be confused with continuous monitoring, a similar system where companies can examine their financial processes in real time. Many companies are working more on continuous monitoring, where lower cost methods can provide some advances in this type of internal observation.
An easy way to think about continuous control or monitoring is the stock exchange. Financial information about the company’s stock reaches investors in real time, updated every few seconds. This type of idea applied to an internal corporate structure could be termed continuous auditing.
Many configurations of continuous audit or continuous monitoring could theoretically provide a lot of value for a business. Seeing real-time results for internal financial processes can help business leaders make better decisions and recognize higher profits in the long run. If the primary costs of a continuous monitoring project are related to the initial installation and planning, the system could become cost-effective over time.
With new technology, continuous audit and continuous monitoring are becoming much easier and more convenient for businesses. This trend is likely to continue and future companies may be able to generate real-time reports for many of their financial systems. Consultants and others recognize much promise in the idea of continuous auditing and similar goals. Much of this has yet to be translated into practical application, but the ideas involved are generally recognized as valid.
Most businesses today use audits on a quarterly or annual basis. Conventional audits show what happened in the quarter or year. Companies looking to improve their financial reporting can look into various ways to implement new systems and increase their auditing capabilities. In the future, this could include “continuous monitoring tools” that will show immediate results and current values for business processes.
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