A Review and Analysis of the Existing Research Streams in Continuous Auditing

Abstract

A growing body of literature related to continuous auditing topics has developed. Advances in information technology and web-based applications are making monitoring and control of operations through continuous auditing increasingly important. The objective of this paper is to describe, summarize, and provide a framework for classifying the contributions of the diverse literature addressing the topic of continuous auditing. This paper was intended to provide researchers and practitioners with a background in continuous auditing topics. Our broad view of the literature is also designed to discover areas holding the potential for future research. Research streams are divided into five major categories: demand factors, theory and guidance, enabling technologies, applications, and impacts. Over 80 papers have been identified that relate to these areas. Many more articles exist, especially in the area of enabling technologies. However, the focus of our paper is the literature most closely related to continuous auditing.

Factors Influencing the Planned Adoption of Continuous Monitoring Technology

“…Continuous monitoring (CM) has been touted for about two decades as a technology that offers powerful advantages for business processes (Groomer and Murthy 1989;Vasarhelyi and Halper 1991;Alles et al 2006;Alles et al 2008;Brown et al 2007). Three key differences distinguish CM from traditional, human-powered monitoring: (1) CM is designed to immediately detect and deter problems, rather than to build cumbersome controls to prevent problems;…”

“…While the concept of continuous monitoring is not new (Groomer and Murthy 1989;Vasarhelyi and Halper 1991;Alles et al 2006;Alles et al 2008;Brown et al 2007), the actual adoption of continuous monitoring technology by organizations has fallen short in comparison (Chan and Vasarhelyi 2011;Grant Thornton 2011;KPMG 2010a;PwC 2006). A white paper by one of the Big Four firms makes the observation that, in spite of the potential benefits of continuous monitoring (CM), many enterprises have failed to adopt CM technology due to a variety of barriers (Deloitte 2010).…”

Financial Accounting Standards Should Not Matter: It's Just a Layer

“…This infrastructure changes the view and basic axioms that have guided the practicality of the accounting paradigm by changing some of its basic assumptions, allowing for new capabilities, and questioning the desirability of many current accounting principles. Among these capabilities we find continuous (more frequent) reporting (Gal 2008), continuous monitoring (Littley and Costello 2009), and continuous assurance (Brown et al 2007), which are being progressively incorporated in business but somewhat neglected in the traditional academic accounting literature.…”

Aiding the Audit: Using the IT Audit as a Springboard for Continuous Controls Monitoring

“…Consequently, evaluation of controls for these critical information systems has received considerable attention by academia, the press, and governmental regulators, particularly in the wake of the Sarbanes-Oxley Act (see Brown et al, 2007 andDamianides, 2005). Under this recent scrutiny, constant monitoring of internal controls, defined by the Committee of Sponsoring Organizations (COSO) as policies and procedures intended to safeguard an organization's assets from fraud or error, ensures that the information being captured by these complex technology-driven systems is accurate (2008).…”

“…These evaluations are reported to management to help meet the firm's objectives and provide compliance with regulation. As accounting information systems have become more complex and able to provide real-time or near real-time financial information, the demand by management to evaluate risks and resolve issues as they happen, rather than solely at specific intervals, has led to the development of robust CCM platforms and tools (Brown et al, 2007;COSO, 2008).…”