Abstract
The objective of this article is to show how to embed analytical procedures (AP) into the continuous audit environment. The audit environment is discussed in terms of audit phases, where the role of APs is to obtain evidence for auditors. The article addresses different characteristics of AP techniques. Furthermore, the article compares four different AP techniques to form expectations for the monthly sales values. Two of these techniques are simple quantitative ones, such as the previous year’s value and the mean of the previous years’ values. The advanced quantitative techniques are regression analysis and an artificial neural network (ANN)-based model. In a comparison of the prediction results, the regression analysis and ANN model turn out to be equally good. The development of these kinds of tools is crucial to the continuous audit environment, especially when most data transmission between companies and their stakeholders are moved into the electronic form.
Highlights
The idea of continuous auditing (CA) is not new (Kunkel 1974; Groomer & Murthy 1989; Vasarhelyi & Halper 1991), and many models have been suggested
We use four different AR procedures, i.e. the methodology of the research, to produce monthly sales expectations. Two of these procedures belong to the simple quantitative (SQT) category, namely the mean of three previous years’ value and the previous year’s value, and two of the AR procedures belong to the advanced quantitative (AQT) category, namely regression analysis and artificial neural network (ANN)
All expectation values are produced with the spreadsheet application with neural networks component, i.e. NeuralystTM
Summary
The idea of continuous auditing (CA) is not new (Kunkel 1974; Groomer & Murthy 1989; Vasarhelyi & Halper 1991), and many models have been suggested. Sudit, and Vasarhelyi (1999) in particular have determined that the development of continuous auditing tools is important in order to create a real on-line auditing environment in today’s turbulent business world. The development of auditing tools is important with regard to the workload and demands of auditors in today’s business environment. The objective of this article is to show how to embed the analytical procedures (AP) into the continuous audit environment.
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