Continuous Auditing and Risk-Based Audit Planning

Abstract

Due to rapidly changing risks in companies, a continuous alignment of internal audit activities with the relevant risk is required. Continuous auditing (CA) is one possible way to meet these requirements. Specifically, the internal audit function (IAF) could use CA as a methodology in order to add a continuous perspective to their risk assessment. This study examines factors associated with the use of CA information in IAF’s risk-based audit planning (RBAP). We use survey data from 264 chief audit executives to address our research question. Consistent with our expectations, we find several factors having a significant positive influence on the use of information from CA in RBAP. From an IAF’s perspective, these factors include the importance of data analytics, the collaboration with audit committee and external auditor, as well as the use of IAF’s results for fraud prevention. Furthermore, our additional analysis presents various effects of CA on potential outputs of the IAF. Finally, we discuss the implications of these findings for research and practice.