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CS Professional · Internal and Forensic Audit · Emerging Issues and Challenges

Under a continuous auditing set-up at Bharat Logistics Ltd, the internal audit team has configured automated rules that flag exceptions in the ERP daily. Which feature best distinguishes continuous auditing from a conventional periodic audit?

Continuous auditing tests controls and transactions near real time on an ongoing basis through automated rules, so exceptions are flagged soon after they occur. This differs from a periodic audit performed at intervals, and it does not relieve management of its responsibility for internal controls.

  1. AAudit work is performed only once at year end
  2. BControls and transactions are tested near real time on an ongoing basisCorrect
  3. CManagement no longer needs to maintain internal controls
  4. DThe external auditor's report replaces the internal audit report

Explanation

Continuous auditing uses automated, frequent testing of transactions and controls so exceptions are identified soon after occurrence. Year-end only work is the periodic model. It does not remove management's responsibility for controls, nor replace reporting to the audit committee.

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