ADA Continuous Auditing and Monitoring

Question 1

What is the primary distinction between continuous auditing and continuous monitoring in an organization?

Accepted Answer

Continuous auditing is performed by internal auditors; continuous monitoring is performed by management

Answer

Continuous auditing is performed by management; continuous monitoring is performed by auditors

Answer

Continuous auditing uses manual tests; continuous monitoring uses automated alerts

Answer

There is no practical difference between the two

Question 2

Which technology infrastructure component is most essential for enabling continuous auditing of financial transactions?

Accepted Answer

Real-time or near-real-time access to ERP transaction data

Answer

Manual reconciliation spreadsheets

Answer

Annual batch export of general ledger data

Answer

Paper-based audit trails

Question 3

In a continuous auditing environment, exception reports are BEST used to:

Accepted Answer

Direct auditor attention to transactions that deviate from defined rules or thresholds

Answer

Replace the need for manual testing entirely

Answer

Confirm that all transactions comply with policy

Answer

Satisfy external financial statement audit requirements

Question 4

A key performance indicator (KPI) used in continuous monitoring detects that purchase order approval cycle times have tripled. This MOST LIKELY signals:

Accepted Answer

A potential bottleneck, bypass, or control breakdown in the approval process

Answer

Improved internal controls

Answer

That the vendor master is outdated

Answer

Normal seasonal fluctuation with no action needed

Question 5

Which of the following is an example of a rule-based alert in a continuous auditing system?

Accepted Answer

Flagging any invoice approved by the same employee who created it

Answer

A regression model predicting future revenue

Answer

Clustering vendors by geographic region

Answer

Generating a trend line for monthly expenses

Question 6

The AICPA/CICA framework for continuous auditing recommends that audit modules embedded in ERP systems should:

Accepted Answer

Operate transparently without affecting transaction processing performance

Answer

Modify source transactions to correct errors automatically

Answer

Replace periodic financial audits entirely

Answer

Be visible and accessible to end users for self-review