benedetto bongiorno cpa, cre lynford graham cpa, phd, cfe
TRANSCRIPT
Benedetto Bongiorno CPA, CRELynford Graham CPA, PhD, CFE
Continuous Audit As In Frequently Periodic To Continuous Monitoring
Development of Audit Expectations Detection & Testing of Risks Controls Extensive Use of Substantive Analytical
Procedure (SAP) Efficient Integration of SAP, Sampling &
Testing of Controls
• Review Documentation of Internal Control• Review of Automated and Manual Controls• Verification of Stationary Sequential Events• Verification of Non-Stationary Sequential
Events• Independent ODBC /JDBC Connection to DBS• Import Records For Current & Previous Periods• Based On Company Operations, Combine Into
Equally Spaced Events Days, Months, Quarters
Segregate Records Into Financial Statement Segments - Assets, Liabilities
Segregate Segments Into Financial Statement Categories - Cash, Revenue
Segregate Categories By Debits and Credits
Segregate Debits and Credits By Sources of Transactions
Cross Reference Sources To Processes (Cycles)
Segregate Sources of Transactions By Stationary & Non-Stationary Events
Reference Sources of Transactions By Automated & Manual Controls
Apply Appropriate Regression Model To Each Group
Establish Audit Expectations For Periods Under Audit
Update Documentation
Based on Company and Industry Information
Works Best With Discrete, Sequential, Successive & Equally Spaced Data Produced With Automated Processes
Algorithms That Are Multifaceted Variations of ARMA
Different Models For Different FS Categories
Does Not Replicate History But Anticipates Results
• Sequential Automated General & Administrative Expenses - Historical Debits
• {Period, Source, Monthly Total},• {{200601}, AP, 392,907.11},• {{200602}, AP, 416,209.05},• {{200603}, AP, 681,756.33},• {{200604}, AP, 541,760.38},• {{200605}, AP, 863,814.03},• {{200606}, AP, 518,772.63},• {{200607}, AP, 405,766.90},• {{200608}, AP, 483,285.86},• {{200609}, AP, 450,928.49},• {{200610}, AP, 437,524.51},• {{200611}, AP, 506,150.81},• {{200612}, AP, 792,556.24}
• Sequential Automated General & Administrative Expenses - Audit Expectation Debits
• {Period, Source, Monthly Total Expectation},• {{200701}, AP, 557,926.36},• {{200702}, AP, 546,124.97},• {{200703}, AP, 534,323.58},• {{200704}, AP, 522,522.20},• {{200705}, AP, 510,720.81},• {{200706}, AP, 498,919.42},• {{200707}, AP, 487,118.03},• {{200708}, AP, 475,316.65},• {{200709}, AP, 463,515.26},• {{200710}, AP, 451,713.87},• {{200711}, AP, 439,912.48},• {{200712}, AP, 428,111.09}
Non Sequential Manual General & Administrative Expenses - Historical Debits
{Period, Source, Monthly Total}, {{200609}, AD, 509,152.15}, {{200612}, AD, 20,944.81}
{Period, Source, Monthly Total}, {{200604}, AL, 953.58},
{{00605}, AL, 14,970.82}, {{200609}, AL, 323.24}
Non Sequential Manual General & Administrative Expenses - Audit Expectations Debits
{Period, Source, Monthly Total Expectation}, {{200709}, AD, 265,048.48}, {{200712}, AD, 265,048.48}
{Period, Source, Monthly Total Expectation}, {{200704}, AL, 5,415.88}, {{200705}, AL, 5,415.88}, {{200709}, AL, 5,415.88}
Is It Presently Used In Audits? [YES] Is The Process Truly Continuous? [YES] Is This a Silver Bullet For All Audits? [NO,
Must Be Tailored By Specifics of Industry and Company ]
Is It An Efficient Way To Audit? [YES, Time Efficient & Cost Effective]
Is It a Effective Way To Integrate New SAS & AS Pronoucments Into Audits? [YES]