Continuous auditing: Implications of the current technological, regulatory and corporate environment

This study is intended to address the potential impact of the current environment on continuous auditing and its stakeholders. Its objectives include: (1) to identify attributes of a corporation that suggest that a continuous audit process is appropriate; (2) to ascertain whether external auditors may choose to rely on audit evidence generated by internal auditors using continuous audit methodologies; (3) to address whether the Sarbanes-Oxley Act and SEC rule-making may be viewed as events that create more demand for continuous auditing; (4) to determine which, if any, interested party (ies)---regulators, managements, external auditors or internal auditors---could act as an owner or catalyst for the continuous auditing process; and (5) to determine the current state of continuous auditing and its acceptance by stakeholders groups.; Researchers have stated that the business environment and technology are becoming increasingly complex. The model developed for this study is an initial effort to test the notions presented by these researchers, namely with increased complexity in the business environment and its supporting information systems, auditors should adopt a continuous auditing approach.; Given the requirements of the Sarbanes-Oxley Act and the related SEC rules and regulations issued to date, one may argue that the Act is a catalyst in the current environment that may move continuous auditing from theoretical discussion to practical application. The periodic and annual reporting requirements of the Act require senior management to have in place the processes to comply with these requirements. Senior management and the board of directors traditionally rely on internal audit departments to provide assurance on the adequacy of the system of internal controls. The current environment provides internal auditors the opportunity to obtain funding to develop technologies that assist senior management and the board of directors to comply with the reporting requirements of the Sarbanes-Oxley Act. Accordingly, there is an opportunity for internal auditors to serve as a catalyst in the implementation of a continuous auditing process.