Big4Guy

Traditional auditing methods are not enough to cope up with today's internal audit demands. Companies are looking for real time identification of significant errors as well as improving processes. The objective of real time auditing is to ensure cost effective regulatory compliance with increased reliability and availability of information. So how do internal audit departments implement real time auditing. Real time auditing can be implemented as a series of steps. I have highlighted the steps in brief below.

1. Planning and scoping the program is the first steps in implementing real time auditing. This includes identifying business processes, determining testing strategies and documentation.

2. Defining processes and business sub-processes to be monitored. This normally includes collating factual data and analyzing information received from various sources.

3. Building measurement systems which lay down criteria for process evaluation. E.g. all vendor payments above USD 10000.

4. Ensuring a proper system for evaluation of exceptions and dealing with exceptions proactively. Companies can make use of technology to generate reports / outputs which can be monitored.

5. The final step in implementing real time auditing is to evaluate program effectiveness. This will include management's report on internal controls as well as independent auditors report on management processes.

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