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Thursday, May 24, 2007

PwC Publishes 2007 Internal Audit Survey - "Continuous Auditing continues to generate interest"

CFO Magazine published some of the results of PwC’s annual Internal Audit Survey, with the headline focusing on the fact that some internal audit functions do not comply with the IIA standard of performing an annual risk assessment. While interesting and potentially worrisome, I’m personally comfortable that some of those numbers could be overstated because Internal Audit may rely on other Company risk assessment activities (e.g. Enterprise Risk Management) as input for their annual audit plan.

As solution providers for continuous auditing and continuous monitoring solutions, my partner and I focused more on the survey's status of Continuous Auditing (CA), also presented in this year’s PwC survey. Some highlights:

Significantly fewer companies (11% in 2007, down from 41% in 2006) reported that their CA programs were entirely manual. The acknowledgment that automation of some type is needed as an enabler for continuous auditing is noteworthy, and we are encouraged by market recognition that automation is essential as part of an effective CA program. Also noteworthy is that slightly fewer companies (11% in 2007, vs. 13% in 2006) reported having a fully implemented continuous auditing (CA) program in place.

Perhaps we can attribute that decline to better awareness of what a real CA program may entail.

Updating one's audit plan twice a year instead of annually may satisfy a textbook definition of continuous risk assessment and thus continuous auditing. But personally, I would suggest that a "real CA" program examine TRANSACTIONS at regular intervals that approach weekly or even daily, and identifies areas of risk and needed follow-up. We see confusion and clutter in the vocabulary that describes continuous auditing and contininous monitoring today, despite numerous companies having successful CA programs in place.

This year's PwC survey shows that the audit profession is beginning to understand CA better, so I'll see that as a glass half-full.

posted by Joe Oringel @ 8:53 AM   0 comments


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