Advantages Of Continuous Auditing

Advancements in technology in the recent decades have caused many changes in the accounting and auditing profession. Traditional audit methods are being put aside for the newer more up-to-date methods of continuous auditing. Continuous auditing gives organizations the ability to receive real-time financial information, allowing them the ability to reduce risk and errors almost immediately. Continuous auditing allows for more efficient and effective delivery of auditing services, as well as alleviating cost and labor intensiveness (Chan & Vasarhelyi, 2011). “The concept of continuous auditing was first introduced by (Vasarhelyi and Halper 1991) and (Groomer and Murthy 1989)” (Chan & Vasarhelyi, 2011, p. 3). The rest of the paper is organized

One benefit being that continuous auditing allows auditors the ability to test up to 100 percent of a client’s transactions faster and more efficiently than the traditional method. As mentioned previously, continuous auditing can also reduce costs and the amount of time spent on manual examination of transactions. “Continuous auditing may also increase the quality of financial audits by allowing auditors to focus more on understand a client’s business and industry and its internal control structure” (Rezaee et al., 2001, p. 151). Continuous auditing can quickly alert auditors of significant risks and control deficiencies, whereas under the traditional system, risks would only be identified when the audit was performed (Hoffer, 2007). The integrity of data is improved through the use of continuous auditing. With improved efficiency and effectiveness, more accurate data and decision making will occur. This will allow for decreased risk levels, which in turn could allow for a more profitable company. The more timely detection of abnormalities is a distinct benefit of continuous auditing (Brown, Wong, & Baldwin,

Information technology has advanced to the point where continuous auditing is vital to the continuation of the auditing profession. Auditing had moved away from the more manual operations to becoming increasingly more computer based. Continuous auditing is necessary in providing stakeholders real time assurance. Without these assurances, management or stakeholders may make inappropriate decisions concerning resource allocation (Chan & Vasarhelyi, 2011).

Financial turmoil in the past has led to a great loss of confidence in the auditing profession prompting the need for better, more reliable financial reporting. “Companies are under intense pressure to earn and retain customers through using better auditing methods” (Sun, Alles, & Vasarhelyi, 2015, p. 183). These lessons from the past has led to the demand for implementation of a continuous auditing