Developing a Forensic Continuous Audit Model

Abstract

Despite increased attention to internal controls and risk assessment, traditional audit approaches do not seem to be highly effective in uncovering the majority of frauds. Less than 20 percent of all occupational frauds are uncovered by auditors. Forensic accounting has recognized the need for automated approaches to fraud analysis yet research has not examined the benefits of forensic continuous auditing as a method to detect and deter corporate fraud. The purpose of this paper is to show how such an approach is possible. A model is presented that supports the acceptance of forensic continuous auditing by auditors and management as an effective tool to support the audit function, meet management's regulatory objectives, and to combat fraud. An approach to developing such a system is presented.

Driving and Inhibiting Factors for Implementing Audit Analytics in an Internal Audit Function

“…Moreover, we had to interpret the research methods of some papers which did not mention the method explicitly. For example, some papers were classified as design science research (DSR) as they followed the research steps that resemble relevance, design, and rigor cycle in DSR (e.g., Dai et al 2019;Kearns, Barker, and Danese 2011;Wang and Kogan 2020). Papers mentioning the use of quantitative and qualitative analysis were classified as mixed-methods research (e.g., Van der Nest, Smidt, and Lubbe 2018).…”

“…In this regard, there might be competing interests among different stakeholders. For instance, although the board expects accurate and timely audit results which can be delivered using the AA approach, the business process owner's primary concern might be to exercise their authority on data security (Haynes and Li 2016;Koskivaara 2006) or the system's performance to serve the business process (Kearns et al 2011;Debreceny, Gray, Tham, Goh, and Tang 2003). In addition, there might be different perspectives on the significance of the issues between different levels of actors.…”