21 May DISCUSS THE BENEFITS AND CONSTRAINTS OF CONTINUOUS AUDITING
In many scholarly articles continuous auditing refers to a technique or structure that helps auditors to present documented results on a given subject via one or a series of simultaneous reports. This opportunity to present results of reports in a synchronized is important to users of audit documentations. Therefore, continuous auditing was created to assist auditors to report on events in a short period compared to conventional model. In theory, in some scenarios it has the ability of decreasing the reporting period to present almost instant auditing.
Identify and discuss three examples of continuous auditing
Continuous auditing entails adequate architecture that is based on intricate as well as formal framework. Nevertheless, continuous auditing should be developed to improve its benefits and reduce outstanding internal challenges. Some of the main examples of continuous auditing include: Audit risk evaluation: measurements of risks in auditing and approximation of conventional nature tend to be subjective. The introduction of continuous auditing and its comprehensive data gathering and monitoring characteristics increases the meaning of risk estimation. Quantitative methodologies that considerably enhance measurement of risks with actual empirical data must be created. This ushers in innovative avenues of this long-established audit research. Additionally, computerization of internal monitoring and inherent audit representation can promote risk evaluation. However, the application of this audit research requires the creation of new of modification of current risk representation that presumes continuous auditing.
Data capture: this type of audit research requires highly structured data capture structure that provide organizations with auditing information. Currently, data capture structures should be customized for individual audit users. Organizational system may facilitate real generation of specific reports developed to help assessment analytics for audit research. Moreover, data capture is apparently advanced to the measurement technique while presenting standardization degree that increases economics of continuous auditing.
Real-time analytics: this type of audit research has widely been applied in engagement planning as well as final phases of auditing. At the moment, real-time analytics focus on financial ratios that are normally evaluated cross-sectionally within a given time frame.
Nevertheless, real-time analytics research is constrained by type and the amount of information gathered by conventional methodologies. Considering that, this audit research has the ability to increase the quantity and scope of information accessible to auditors, its application presents a platform to broaden the scope while increasing the magnitude of real-time procedures significantly.
Discuss the benefits and constraints of continuous auditing
Advantages
Quantify profits
Regular auditing helps the company to determine if they are making profits and hence concentrate on their core disciplines.
Control loopholes
Regular appraise helps the company to curb loopholes that employees take advantage of to loot from large organizations
Disadvantages
Modification of Figures
The records as well as numbers in the documents of accounting can easily be modified after the appraisal is over. A deceitful clerk can do it do defraud the figures.
Expensive
Nonstop audit is rather costly in comparison to other forms of audit, since the auditor requires more time to conduct the audit.
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