The acceptance and adoption of continuous auditing by internal auditors: A micro analysis

Abstract

The umbrella of “advanced technology” covers a range of techniques widely used in the U.S. to provide strategic advantage in a very competitive business environment. There is an enormous amount of information contained within current-generation information systems, some of which is processed on a real-time basis. More importantly, the same holds true for actual business transactions. Having accurate and reliable information is vital and advantageous to businesses, especially in the wake of the recent recession. Therefore, the need for ongoing, timely assurance of information utilizing continuous auditing (CA) and continuous control monitoring (CM) methodologies is becoming more apparent. To that end, we have conducted interviews with 22 internal audit managers and 16 internal audit staff members at 9 leading internal audit organizations to examine the status of technology adoption, to evaluate the development of continuous auditing, and to assess the use of continuous control monitoring. We found that several companies in our study were already involved in some form of continuous auditing or control monitoring while others are attempting to adopt more advanced audit technologies. We also made a large number of surprising observations on managerial, technology training and absorption, and other issues. According to our audit maturity model, all of the companies were classified between the “traditional audit” stage and the “emerging stage,” not having yet reached the “continuous audit” stage. This paper,11This paper is one output of a research program undertaken between the Continuous Auditing and Research Laboratory (CARLAB) at Rutgers Business School and KPMG, whose aim was to obtain a 360-degree view of the state of the art of CA, encompassing its use by both external and internal auditors. The authors are appreciative for the comments received in many presentations and in particular to Prof. Alexander Kogan's suggestions. to our knowledge, is the first to study CA technology adoption in a micro level by an interview approach.