Continuous Auditing and Monitoring Flashcards
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Read the first 6 Continuous Auditing and Monitoring flashcards as text
What is the primary distinction between continuous auditing and continuous monitoring in an organization?
Answer: Continuous auditing is performed by internal auditors; continuous monitoring is performed by management
Continuous auditing is an independent assurance activity conducted by auditors, while continuous monitoring is a management control activity.
Which technology infrastructure component is most essential for enabling continuous auditing of financial transactions?
Answer: Real-time or near-real-time access to ERP transaction data
Continuous auditing depends on timely data access, requiring direct connectivity to ERP or transactional systems for near-real-time analysis.
In a continuous auditing environment, exception reports are BEST used to:
Answer: Direct auditor attention to transactions that deviate from defined rules or thresholds
Exception reports surface anomalies that exceed tolerance thresholds, allowing auditors to focus limited resources on high-risk items.
A key performance indicator (KPI) used in continuous monitoring detects that purchase order approval cycle times have tripled. This MOST LIKELY signals:
Answer: A potential bottleneck, bypass, or control breakdown in the approval process
A sudden increase in cycle times often indicates a process disruption, control circumvention, or systemic issue requiring investigation.
Which of the following is an example of a rule-based alert in a continuous auditing system?
Answer: Flagging any invoice approved by the same employee who created it
Rule-based alerts trigger when specific predefined conditions are met, such as a segregation-of-duties violation where one person both creates and approves.
The AICPA/CICA framework for continuous auditing recommends that audit modules embedded in ERP systems should:
Answer: Operate transparently without affecting transaction processing performance
Embedded audit modules must be non-intrusive, running in the background without degrading system performance or altering transactions.