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Continuous Accounting

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Submitted By JessicaHunt679
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Continuous Auditing
Jessica Hunt
Accounting 510
Dr. Yining Chen
December 3, 2014

Intorduction
Generally auditing: is performed months after the business activities have actually occurred, based on a sampling approach, and includes reviewing of systems of approvals and reconciliations as well as policies and procedures. This method has been realized to provide auditors with only a narrow scope of evaluation and doesn’t really provide much value because of its lack of timeliness. Furthermore it has become evident that a need for timely and ongoing assurance over the effectiveness of risk management and control systems is crucial. This along with the environment of rising risks, and regulatory activity and compliance costs (complying with section 404 of the US Sarbanes-Oxley Act) makes this an optimal time to consider a new approach. Continuous auditing is a method used to perform control and risk assessment automatically on a more frequent basis (Coderre 2005). It enables auditors to continually gather from processes data that supports auditing activities (Deloitte 2010), and allows auditors to provide written results on the subject matter using one or a series of reports issued simultaneously (ISACA 2002). Continuous auditing leverages technology and opens database architecture to enable auditors to monitor a company’s systems over the internet using sensors and digital agents. Discrepancies between the records and the rules defined in the digital agents are transmitted to the client and the auditor. The auditor then determines the appropriate action to take. Continuous auditing completely changes the method of auditing enabling auditors to test 100 percent of transactions (versus sampling) on an on-going, continuous basis (versus periodic or once a year reviews).

History
According to the Global Technology Audit Guide the origins of continuous auditing

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