In today’s fast-paced business environment, traditional audit approaches often lead to a last-minute scramble, with clients rushing to gather evidence and auditors working overtime to meet deadlines. This method can be stressful, error-prone and inefficient. Enter continuous audit – a proactive and strategic approach designed to simplify the audit process, spread out the workload and ultimately improve audit quality.
What is Continuous Audit?
A continuous audit allows clients to provide audit evidence incrementally throughout the year rather than waiting until the end of the audit period. It’s not a rigid requirement but a flexible schedule that helps streamline the audit process, reduce bottlenecks, and enhance collaboration between auditors and clients.
Why Should You Opt for Continuous Audit?
- Better workload management: With a continuous audit, evidence submission is spread across the audit period, reducing the end-of-year rush. This leads to a smoother audit process and allows both auditors and your team to manage their workloads more effectively.
- Early feedback: Early and regular submission of evidence allows auditors to identify potential issues and address them promptly, reducing the risk of errors and ensuring a more accurate assessment of your controls.
- Proactive Risk Management: By engaging in continuous audit, you can stay on top of your control environment and compliance requirements throughout the year, rather than waiting until the last moment. This proactive approach minimizes the risk of non-compliance and strengthens your overall control environment.
How Does Continuous Audit Work?
The continuous audit process is customized based on the type and volume of controls in your organization. Here’s a suggested schedule to help you understand how it works:
Sample-Heavy Controls:
For controls that require extensive evidence (referred to as “sample-heavy” controls), we suggest a phased approach:
- By the 6th Month: We gather evidence for the first half of the year. For example, if the control population is expected to be 200 by the end of the year, we will select a sample size of 20, with 10 to 15 samples reviewed in the 6th month.
- By the 10th Month: We gather additional samples based on the evidence provided for the 7th to 10th month period. This ensures that we have a comprehensive view of your control environment before the year-end.
- Final Confirmation: In the last two months, we conduct a final review to confirm that no significant changes have occurred, but no additional samples are required unless major changes to the controls have taken place.
Non-Sample Heavy Controls:
For controls which require less extensive evidence, we prioritize gathering information early in the audit period (within the first 1-6 months). This helps us to understand your control environment and address any high-risk areas identified during the risk assessment.
Frequently Asked Questions
- Is there flexibility in the schedule?
Absolutely! We understand that every business is unique. The suggested timeline can be adjusted based on your availability and preferences. If two sample submissions feel overwhelming, we can spread them across three periods to better suit your needs. - Who should consider continuous audit?
All clients can benefit from this approach, regardless of their billing method.