November 8 and 9, 2013
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
IMPLEMENTING CONTINUOUS AUDIT
FACILITIES FOR SMALL AND MEDIUM
BUSINESSES
Presented by Greg Frazier, CPA.CITP
1
November 8 and 9, 2013
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
 The Internet
 Database Event Triggers
2
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
November 8 and 9, 2013
ERP
Application
Before Event Triggers
Low Cash
Balance Report
(3rd Party App)
General Ledger
Journal Entry
Journal Entry Number
•
•
•
3
Date
User ID
Account Number
Account Description
GL-10123
06-27-2013
GREGF
10-6050-000
Office Supplies
GL-10123
06-27-2013
GREGF
00-1010-000
Checking
Debit
Credit
125.00
125.00
User runs the report daily, weekly, monthly
User runs the report on demand
Application automatically runs every 10 seconds (continuous polling)
November 8 and 9, 2013
Microsoft
SQL
Database events:
• Add record to table
• Modify record to table
• Delete record from table
MySQL
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
4
Oracle
Application submits a request to
be notified when certain even
triggers occur
Registered 3rd Party Apps:
• Database procedures
• ERP modules
• 3rd party dictionaries
• 3rd party applications
QuickBooks
Application
Registration
Request
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
November 8 and 9, 2013
ERP
Application
Using Event Triggers
Low Cash
Balance Report
(3rd Party App)
General Ledger
Journal Entry
Journal Entry Number
•
5
Date
User ID
Account Number
Account Description
GL-10123
06-27-2013
GREGF
10-6050-000
Office Supplies
GL-10123
06-27-2013
GREGF
00-1010-000
Checking
Application is notified when any add, update and delete
events occur
Debit
Credit
125.00
125.00
November 8 and 9, 2013
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
6
Widely accepted view of continuous audit processing – Time interval based
Time Interval
Continuous
Audit
Application
Stored
Transactions
ERP
Application
November 8 and 9, 2013
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
7
Time Interval
Continuous
Audit
Application
Stored
Transactions
ERP
Application
Transaction
Pre-posted
Alternative approach to continuous audit processing – Transaction based
November 8 and 9, 2013
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
8
Time Interval
Continuous
Audit
Cloud
Component
Stored
Transactions
ERP
Application
Continuous
Audit
Server
Component
Transaction
Pre-posted
Alternative approach to continuous audit processing – Transaction based
November 8 and 9, 2013
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
9
An example of an actual detective control report emailed from a continuous
audit application
November 8 and 9, 2013
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
After Market Sales of Luxury
Car Sunroofs and T-Tops
10
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
November 8 and 9, 2013
11
After Market Sales of Luxury
Car Sunroofs and T-Tops
CAF
Cloud
CAF
Continuous audit facility evaluates AP aging each time a credit transaction is posted to the AP control account.
November 8 and 9, 2013
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
Benefits
 Faster detective reports
 Smaller footprint in auditee’s environment
 Less costly than traditional audit approach
Drawbacks
 Limited ability to analyze transactions in aggregate
 High reliance on auditee’s IT environment
 High reliance on 3rd party IT resources
12
November 8 and 9, 2013
Greg Frazier, CPA.CITP – Implementing Continuous Audit
Facilities for Small and Medium Businesses
Questions
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