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About half of the companies that practice it also incorporate some automated elements, according to a new survey, though only a few companies have shed their manual processes entirely.
Stephen Taub, CFO.com | US
June 26, 2006
Half of U.S. companies now use "continuous auditing" techniques, according to a new survey by PricewaterhouseCoopers, and 31 percent of the rest have already made plans to do likewise.
"This may be the beginning of a significant change in the way internal auditing has traditionally been done," said PwC partner Dick Anderson, in a press release. A total of 392 companies responded to the survey.
The Big Four firm asserted that continuous auditing and its subset, technology-enabled auditing, have the potential to shorten audit cycle times and provide more timely risk and control assurance. Through technology-enabled continuous auditing, explained PwC, an internal audit group can improve assurance quality by examining 100 percent of a transaction universe, not just transaction samples. "In addition, by expanding the scope and frequency of the audit process, technology-enabled auditing allows internal auditors to communicate more effectively with business units, senior management, and the audit committee," noted the firm.
Some 56 percent of respondents said that their continuous-auditing processes include both manual and automated elements, while 41 percent indicated their processes are entirely manual. Only 3 percent said that their continuous-auditing processes are fully automated.
The most common continuous auditing cycle is quarterly, maintained by 57 percent of respondents; 34 percent work on a monthly schedule; 9 percent, on a daily schedule.
PwC also reported that the percentage of survey respondents devoting 100 percent of internal audit resources to Sarbanes-Oxley compliance decreased from 23 percent in "year one" to a projected 1 percent for "year three." The finding is consistent with other studies, which have reported that Sarbanes compliance costs have already peaked or are on the decline.
Indeed, only 33 percent of survey respondents expect to devote half or more of their internal audit resources to year-three compliance with Section 404, compared with 71 percent and 45 percent for the two prior years.
More than half of respondents, however, reported that Sarbanes-Oxley had led to an increase in their internal audit resources; 35 percent reported an increase of 25 percent or more. Some 32 percent of respondents reported actively recruiting for auditor positions that had been vacant for more than six months, a percentage that is unchanged since last year's survey.