Continuous monitoring and

continuous auditing
From idea to implementation
Continuous Monitoring and
Continuous Auditing:
From Idea to Implementation
Most financial and auditing executives are aware of The current environment of rising risks, regulatory activity,
continuous controls monitoring and continuous auditing and compliance costs makes this the ideal time to consider
and of the general benefits of such programs. Yet (or to reconsider) the potential role of CM or CA, or both,
relatively few enterprises have realized their full potential, in your enterprise. You might also consider what it would
particularly at the enterprise-wide level. Deloitte sees take to implement them, what they would look like, how
the reason for this as twofold: first, executives have not they would operate, and whether to further investigate
seen a clear, strong business case for establishing either these modes of monitoring and auditing.
continuous monitoring (CM) or continuous auditing (CA) in
their enterprises; second, they lack a clear picture of how This paper, prepared for internal audit, accounting,
CM or CA would be implemented in their organizations. financial, and risk management executives, can guide you
in these considerations. CEOs, COOs, and board members
A quick definition, to be expanded upon below, may be who share those executives’ concerns about rising risk,
in order because we have found that some confusion regulation, and costs — and the potential impact on their
surrounds CM and CA. Although they are often lumped enterprises — may also find this paper informative.
together, perhaps because they are both automated,
ongoing processes, they are actually two distinct types of
programs. As the name implies, continuous monitoring
Continuous auditing enables internal audit
enables management to continually review business to continually gather from processes data
processes for adherence to and deviations from their that supports auditing activities.
intended levels of performance and effectiveness. Similarly,
continuous auditing enables internal audit to continually
gather from processes data that supports auditing
activities.

Continuous monitoring enables

management to continually review business
processes for adherence to and deviations
from their intended levels of performance
and effectiveness.

As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about
for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

2
What Do CM and CA Do?

CM enables management to determine more quickly and While CM and CA need not coexist to be effective,
accurately where it should be focusing attention and an enterprise may maximize the value of each by
resources in order to improve processes, implement course implementing both because:
corrections, address risks, or launch initiatives to better • Implementing CM and CA can integrate management’s
enable the enterprise to achieve its goals. CA enables responsibility for the performance of controls with
internal auditors to determine more quickly and accurately internal audit’s responsibility for assurance regarding
where to focus attention and resources in order to better management’s controls — while preserving audit’s
allocate audit resources and improve the quality of its independence
audits and support of management. • Increasing coordination between management
and internal audit in these areas should minimize
CM is an automated, ongoing process that enables duplication of controls and efforts
management to: • Implementing CM and CA can enable the enterprise to
• Assess the effectiveness of controls and detect adapt more quickly and effectively to changes in the risk
associated risk issues and regulatory climate
• Improve business processes and activities while
adhering to ethical and compliance standards The value of CM is that it gives management greater
• Execute more timely quantitative and qualitative risk- visibility into, and more timely information on, business
related decisions processes designed to achieve strategic and operational
• Increase the cost-effectiveness of controls and goals. The value of CA is that it enables internal audit
monitoring through IT solutions to move from sampling accounts and transactions to
coverage of 100 percent of accounts and transactions
CA is an automated, ongoing process that enables (when and where desired). Although CM and CA can be
internal audit to: adopted separately or together, enterprises may achieve
• Collect from processes, transactions, and accounts data the most cost-effective development by implementing
that supports internal and external auditing activities both; either simultaneously or in planned sequence.
• Achieve more timely, less costly compliance with
policies, procedures, and regulations
• Shift from cyclical or episodic reviews with limited focus
to continuous, broader, more proactive reviews
• Evolve from a traditional, static annual audit plan to a
more dynamic plan based on CA results
• Reduce audit costs while increasing effectiveness
through IT solutions

Continuous monitoring and continuous auditing From idea to implementation 3

CM and CA and Risk Management

CM and CA can improve the risk management and control CM and CA are best considered in the context of the
activities of virtually any large enterprise. These activities enterprise’s overall risk management effort at the
have risen in importance on the agendas of many senior operational level. Often executives and boards consider risk
executives and boards, given the events of the past few management in broad terms, but have trouble bringing it
years and continuing challenges in the financial and down to the operational level. Yet that is where effective
business environment. Those challenges range from risk management occurs. To bring their thinking about CM
heightened global competitive pressures, to more stringent and CA to operational levels, leaders can start by asking
regulatory regimes, to endless pressure to increase revenue themselves:
and margin, to exposure to ever more aggressive forms of • How do we currently monitor controls?
theft, fraud, and cybercrime. • How well do the enterprise’s controls currently
function?
Executives allocate resources to the initiatives they perceive • How do we currently allocate internal audit resources?
as yielding the greatest return, in keeping with their • How do we determine that this allocation is optimal?
organization’s mission and priorities. To commit — or not • What costs and unintended risks do our current
to commit — resources to CM or CA executives need methods of controls monitoring and auditing create?
a clear picture of the ways in which CM and CA would
enhance current risk management, control, and audit Such questions bring current methods of controls
activities and of the ways in which implementation might monitoring and auditing to light, and allow for a clearer
proceed. This, in turn, requires that CM and CA be viewed comparison between current methods and CM and CA.
in their proper context.
Deloitte’s approach to CM and CA supports, and
is supported by, the principles of the Risk Intelligent
Enterprise™, which embodies Deloitte’s philosophy of and
approach to risk management. A risk intelligent approach
departs from traditional approaches to risk management in
specific ways (see sidebar, The Risk Intelligent Enterprise™).
Risk intelligence provides an integrated risk management
framework in which leaders and employees at all levels can
recognize and manage risks in their decision-making and
operating activities.

4
Risk intelligent practices should guide development of
CM and CA systems and techniques. For instance, when The Risk Intelligent Enterprise™
contemplating CM or CA it’s best to consider the full Risk intelligence is Deloitte’s philosophy of and
spectrum of risks across “silos,” interactions among risks, approach to risk management, and it consists of
and ways to build CM/CA into activities and processes. practices that:
In addition, several factors in the prevailing business • Address the full spectrum of risks, including
environment should prompt enterprises to consider strategic, operational, compliance, reporting,
implementing CM and CA. These include: security, environmental, and other risks across the
• Heightened demand for faster, better decisions and for enterprise
improved, but cost-effective risk management • Acknowledge the need for specialization by
• Rising pressures on internal audit to provide timely business and function, but also across organiza-
assurance to stakeholders tional “silos”
• Increasing complexity and change in regulatory • Consider the interaction of multiple risks rather
requirements than focusing on a single risk or event, and
• Greater efforts to align internal audit activities with consider the potential impacts of multiple threats
management’s strategic business goals • Create common terms and metrics for risk, and a
culture in which people account for risk in every
Internal audit generally does employ a risk-based approach activity
to audit planning, and that approach can be enhanced by • Support risk taking for reward and value creation,
taking a broader view of risk and expanding audit tools rather than pure risk avoidance
and techniques. Expanding those tools and techniques
to include CA, or at least some CA mechanisms, can very
likely enhance internal audit’s performance regardless
of how risk-based its approach currently is in practice.
Similarly, CM can help management to improve the
allocation of risk management resources as well as risk
management itself.

For example, to support the work of internal audit, CA

provides information that relates to compliance with
policies, procedures, and regulations, which supports
financial reporting activities and goals. CM provides
relevant data on processes, transactions, and accounts to
management in a timely manner and at low cost, with the
aim of monitoring performance and supporting decision
making. Both CA and CM usually use IT-enabled tools to
monitor processes, transactions, and accounts to enhance
the efficiency and effectiveness of internal audit’s and
management’s efforts.

Continuous monitoring and continuous auditing From idea to implementation 5

How would they operate?

What would CM and CA look like and how would they

operate? In which situations does CM or CA have the most Controlling Freight Costs
value? To help answer those questions, we provide a few An operating manager needed to detect unneces-
case studies in this document, and the following brief sary freight payments, which were set by the trucking
examples of CM in action: company per the weight of the goods being shipped.
The contract between the enterprise and the trucking
Transaction Monitoring company included clauses that guaranteed a minimum
A lender wanted comfort that the pricing of each loan it payment if the weight of a delivery fell short of the
extended was in keeping with its underwriting policies, truck’s maximum load. Generally, the minimum cost
in order to ensure profitability. Its practice had been was set at 60 percent of the cost of a truck’s maximum
to calculate loan price on a defined set of business and load. Thus, the manager needed to ascertain when
credit rules, but to allow manual override of these rules. trucks were being loaded at less than 60 percent of the
However, when implemented by the lender’s agents, vehicle’s capacity, situations that would represent inef-
that manual override could occur without detection, ficiency and excess costs.
causing a potential control failure. The solution was to automatically identify and report
The solution was to continually monitor loan prices trucks that had been loaded at less than 60 percent of
and to report deviations from the price calculated only capacity on the same route or destination within a given
on the basis of the business and credit rules. (Any period of time.
significant deviation is now detected and reported, and
exceptions are investigated and resolved.)
Limiting Breaches of Authority
A comptroller wanted to be able to detect limit-of-
authority breaches in areas such as purchases, payables,
and sales discounts. The enterprise had established
systemic preventive controls to support approval
levels in some processes, but those controls could be
circumvented. For example, if a person authorized to
sign for individual purchases of up to €2,000 wanted
to approve a purchase of €10,000, he could input and
approve five purchase orders for €2,000 for the same
supplier and thus complete the transaction.
The solution was to continually monitor approvals of
expenditures or disbursements to the same entity by
each individual with spending authority and to compare
the individual and total amounts authorized for a
specific entity in a specific period, such as one day or
five business days.

6
 Personal Password Protection Case Study #1: European Conglomerate
A chief information officer wanted to protect passwords Using CM in a Risk Management Context
and detect situations in which users shared their The Situation:
passwords with co-workers or other parties. System An EU-based Fortune 50 conglomerate experienced several high-profile control
security policies stipulated that system access was failures that led to substantial fines and damage to reputation. Management realized
limited to individuals with authorized user login and that controls needed to be much more effective, particularly in purchases and
password information, yet breaches had been occurring. payments. Key issues included a lack of a structured approach to assessing risks in
The solution was to automatically identify users sharing these activities, loose controls in areas such as segregation of duties, and a need for
login information and passwords by detecting access by robust but cost-efficient monitoring.
parties who had not entered the premises (as recorded
by identification card swipes), concurrent use of the The Solution:
same login and password information at different Based on the level of associated risk, Deloitte helped management prioritize the
computers, and other anomalies in instances of access. activities, access privileges, and preventative application controls on which to focus.
On this basis, we developed a framework of rules to use to interrogate historic
As these brief examples show, CM or CA can be transactions, master-data changes, access-right modifications, system configurations,
applied selectively and in targeted ways. This enables and user activity. This enabled us to give management the tools to identify
management or internal audit to experiment, gain inappropriate changes in access rights and system configurations, as well as user
experience, and realize early, and then incremental, activity after such changes.
returns. That said, the Risk Intelligent Enterprise™ will
recognize the interconnectedness of processes and of Via automated data extraction, we collated disparate data sets into a structured
risks and consider other areas that could be affected by central repository. This enabled analysis of data that resided in existing systems,
each CM or CA change or initiative. The greatest benefits but had not been analyzed in light of control objectives. We worked with the
accrue to enterprises that coordinate CM or CA initiatives enterprise to identify any significant false positives and to fine tune the rule set to
to maximize the use of automated control and audit help ensure that only high-risk activity was flagged for further investigation. We also
mechanisms. The key however, is to view CM and CA in a recommended process of timely, appropriate, local remediation of exceptions be put
risk management context (see sidebar, Case Study #1). in place.

To provide a practical reporting mechanism, Deloitte custom designed a dashboard

to provide both a high-level and detailed view of exceptions and remediation
efforts. This dashboard provided a central view of the businesses with the most
and least exceptions and those that failed to investigate exceptions in a timely
manner. The dashboard indicated the business units’ performance, and the value or
potential impact of exceptions. The latter enabled a risk-based approach to focusing
identification and remediation efforts.

Continuous monitoring and continuous auditing From idea to implementation 7

Developing the Business Case

Exhibit 1 — Moving CM up the value chain

Drive process
Optimize
e processes
pro Apply technology to optimize processes (e.g., financial,
improvement
operational, compliance, etc.)

Drive operational
Improve
mpro Apply controls automation and monitoring techniques to
improvement
operations
erati achieve operational control objectives (e.g.,
merchandise management)

Drive sustainable
Improve
Apply controls monitoring techniques to achieve cost-effective
controls compliance
regulatory control objectives (e.g., SOX financial
and reduce
reporting control objectives and risks)
cost

Leverage initial technology investment for compliance to help improve

operations and optimize processes.

In many risk management initiatives, costs can appear The three stages of CM adoption depicted in Exhibit 1
more certain than benefits. That’s because the costs are accomplish the following:
specific near-term outlays and risks are more indistinct, 1. Initially, the enterprise uses controls monitoring
longer-term, potential events. Thus, the business case for techniques to achieve regulatory control objectives,
CM or CA can be difficult to make in traditional, ROI-based, such as those related to Sarbanes-Oxley (SOX) financial
monetary terms. But risks are real and that case can be reporting and risk management objectives. This
made, particularly for specific activities and processes. For reduces costs.
example, automating controls can reduce incidents of 2. Then, the enterprise applies controls automation and
duplicate payments, internal fraud, inappropriate warranty monitoring techniques to achieve operational control
claims, unauthorized discounts, and underperformance objectives, such as inventory, receivables, payables,
by service providers. The monetary losses due to future credit, or warranty claims management.
incidents, after adoption of controls, can be compared 3. Finally, the enterprise applies technology to optimize
with those of past incidents. processes, including operational, compliance, financial,
risk management, and other processes.
In addition, a significant CM or CA initiative can (and
arguably should) harmonize, rationalize, and optimize Generally, it makes sense first to improve controls and
controls. This process can eliminate redundant controls, reduce costs, then to improve operations, then to optimize
help institute needed controls, close control gaps, and processes. This movement up the value chain helps to
eliminate needless reports. The savings in reduced loss, make the business case at each level. It also casts a CM or
audit, administrative, and report generation and review CA effort as a process improvement, rather than "policing"
costs can all be calculated. initiative, and helps in defining short-, intermediate-, and
long-term goals.
Perhaps most importantly, CM can enable management to
achieve financial and operational control objectives while
exploiting new process-improvement opportunities. The
enterprise can in that way use CM to move up the value
chain (see Exhibit 1).

8
Exhibit 2 — Moving along the continuum

Manually Based Processes & Controls Technology-Enabled Processes & Controls

Start  Manual  Automated  Automated Controls Monitoring

Not risk-based Risk-based approach Application-based process Automation of control testing

controls
Redundant controls Rationalized controls User access & SOD controls Continuous controls monitoring
Manual business and IT Management platform Efficient testing of controls Operational improvement
processes & controls
Inefficient testing Manually intensive Some automated testing Sustainable compliance processes
testing procedures capabilities
Reactive approach to Testing requires large Testing requires smaller Proactive approach to control issues
control issues samples samples
Inefficient, ineffective Suboptimal controls Effective, efficient controls Measurable ROI & business value
controls

Case Study #2: Television Broadcaster

CM &Transaction Monitoring/Expense Control
From Manual to Automated
Development also occurs along a continuum defined
The Situation:
by migration from nonexistent or manual processes and
The Shared Services group of a fast-growing global provider of cable television news
controls to IT-enabled processes and controls (see Exhibit
and entertainment programming faced skyrocketing travel and entertainment (T&E)
2). In most situations, to the extent that controls can be
transaction volume. Given the company’s resource limitations, both that volume and
automated and to the extent justified by cost-benefit time-consuming manual audits of expense claims potentially increased the risk of
analyses, they generally should be. Though broad, this error, fraud, and misuse within the T&E reimbursement process. The enterprise needed
high-level view recognizes that many decisions arise assistance in scoping, planning, configuring, and implementing its Audit Command
regarding what should be controlled, how it should Language (ACL) continuous controls monitoring (CCM) tools.
be controlled, and which monitoring solutions should
be implemented. The latter can include IT-enabled The Solution:
dashboards, manual review of exception reports, and As in many business processes, moving from a manual to an automated review system
real-time approval of transactions. In general, however, involves data analytics. Data analytics assist in auditing and risk management and in
movement from reliance on manual monitoring processes testing controls and control overrides. For example, data analytics can be used to test
to automated processes is usually preferred (see sidebar, a population of transactions, as in this instance T&E claims, so that no overrides occur
without proper approval. In this case, Deloitte helped provide a suite of automated,
Case Study #2).
customizable analytics for T&E expense processing, control, and audit. This system
enables monitoring of T&E transactions and claims with the aim of identifying suspi-
cious activity, errors, and exceptions.

The Shared Services group can now monitor T&E transactions on a continuous basis.
The group also moved from employing a random sample approach to a more focused
approach of reviewing claims that display attributes of potentially fraudulent or
erroneous expenses. Using nearly real-time CM, analysts can investigate and resolve
issues that might otherwise go undetected. In addition to containing costs and mini-
mizing losses, the CCM tool provides additional assurance around compliance relating
to T&E business processes.

Continuous monitoring and continuous auditing From idea to implementation 9

 Barriers to CM and CA Adoption

Despite the potential benefits of CM and CA, barriers to their experience and success with IT-based ERP or GRC
adoption exist in many enterprises. Common ones include systems. These two factors — experience and success
misunderstanding CM and CA and implementation issues, — as well as the brands, configurations, and functions in
particularly the IT dimensions. The latter can include which they have been deployed will affect CM and CA
confusion regarding the efficacy of ERP and GRC systems, decisions and initiatives.
and the fit of CM or CA with such systems. Other obstacles • Realistic expectations: CM and CA deliver clear benefits
arise in the form of internal competition for resources and as detailed toward the end of this paper, but they are
funds. Often, until a risk event occurs or internal audit not achieved overnight. A large organization with
buckles under its workload, CM and CA can appear as complex systems and myriad activities and transactions
“nice but not necessary.” needs time and commitment to realize the benefits.
Again, however, it is possible to implement CM or
Barriers also arise in the following areas: CA in a limited area to gain experience and to realize
• Perceived impact on the enterprise: CM or CA impact substantial benefits.
internal audit and other areas of the enterprise. In
particular, the impact on internal audit — on its costs, In addition, it is useful to distinguish between the process
head count, audit plans, workload, quality of audits, side and the technology side of CM and CA, and to
and stakeholder satisfaction — should be considered. consider various perspectives from these angles.
So should the impact on the IT function and business
units, and on operating, decision-making, and risk-
management processes.
• Priority of implementation: Implementation is best
planned in the context of an overall risk management
framework. A method of prioritizing controls and
audit activities for automation should be developed
based on factors such as risk rankings, importance
of audit evidence, return on investment, and ease of
implementation.
• Internal audit’s readiness to develop and adopt CA:
Various audit functions vary in their readiness for CA,
depending on the enterprise’s lifecycle, audit focus
(rotational or risk based), and use of automation
(automated workpapers versus real-time monitoring).
Generally, the more progressive the internal audit
function, the more readily it may adopt CA.
• IT and software considerations: Enterprises vary in

10
Varying Perspectives and
IT Considerations

Deloitte has found a wide range of perspectives on CM

and CA in enterprises. Some internal audit functions Case Study #3: Global Durable Goods Manufacturer
view the matter from the process perspective. They CM & ERP Assessment
focus on activities and transactions that might be
subject to CA and on how to replace current audit data The Situation:
gathering mechanisms with continuous ones or on how As part of its enterprise transformation initiative, a global manufacturer of durable
disbursement limits or SOD might be automated. Others goods planned a worldwide rollout of the next generation of its enterprise resource
view the matter from the technology perspective and planning (ERP) system. This initiative aimed to “commonize” core finance and
focus on how ERP, GRC, and third-party systems might purchasing processes across global operating regions. This multi-year project to
enable CA or CM — and the potential roles of the various enable worldwide business processes required that security controls be reviewed and
vendors and systems. documented during the implementation lifecycle to minimize the potential for (and
instances of) post-launch remediation.
Other considerations center on operationalizing CM or
CA — a perspective we have found that most enterprises The Solution:
fail to consider adequately. For instance, issues in The enterprise required a methodology for assessing pre-implementation ERP security
operationalizing include whether you take a bottom-up or and internal controls. Deloitte’s methodology focused on internal controls in four key
top-down approach. A bottom-up approach starts with areas: business process controls, application security, data and interface controls, and
the tools and technologies you have and works toward general computer controls. This approach has been built into a repeatable, proven
developing them into a platform. A top-down approach process for designing, building, testing, and deploying internal controls.
starts with the platform and more or less promulgates it
throughout internal audit or another area initially and then, A controls assessment identified, documented, and assessed ERP internal control
perhaps, other areas of the enterprise or even throughout and security recommendations. This enabled the enterprise to evaluate their ERP
the enterprise. control structure through successive phases and to drive management’s control
requirements into the program. The enterprise realized efficiencies as each regional
IT capabilities are a major consideration. Can the available launch progressed. Pre-implementation assessments established the controls baseline,
technology enable desired controls, warnings, and supported future test plans, and provided the controls that were designed into the
exception reports? Are the desired CM or CA mechanisms processes.
compatible with existing or contemplated ERP systems?
Can the mechanisms be implemented within ERP or GRC This pre-implementation review of security and business process controls consisted of
capabilities? Or must they be added on or programmed three phases: Phase 1: Plan, define and design; Phase 2: Construct, test, and deploy;
into these systems? Phase 3: Execute deliver, and help provide ERP support. This initiative also called for
audit-related assessments of the enterprise’s segregation of duties tools and warranty
Most enterprises with ERP systems view them as integral claims management program.
to their processes and, in turn, view their GRC systems as
integral to their ERP systems. This is a logical outgrowth
of ERP systems providers acquiring risk management
and compliance systems and offering them as part of a
“total solution.” The point is that these systems must be
considered in any CM or CA design or implementation
effort (see sidebar, Case Study #3)

Continuous monitoring and continuous auditing From idea to implementation 11

 The CM/CA Roadmap

Although there is no universal, sure-fire recipe for 4. Build and Implement the CM or CA System
implementing CM or CA, there is a general template that a Once the resources are approved and in place,
management team or internal audit function can use: implementation is next. For successful implementation:
• Begin with relatively straightforward, low-cost, high-
1. Develop the Business Case return projects
Whether you are a CFO considering enterprise-wide CM or • Involve IT, business units, and other key stakeholders
a chief audit executive proposing a CA initiative, you need early on
to develop a strong business case. This entails: • Create a sense of shared ownership of the project and
• Connecting the initiative to the drivers of value, and the the results
risks, in the business • Test the CM or CA system, particularly for its impact on
• Identifying benefits and costs, and quantifying them the IT system, before actual launch and adoption
when possible • Follow the plan, but make course corrections as needed
• Placing CM or CA in the context of the overall GRC • Establish workable, practical (rather than “ideal”) CM or
effort and clarifying their roles CA procedures

2. Develop a Strategy for Adoption 5. Monitor Performance and Progress, and Refine as
A strategy for adoption identifies potential CM and CA Needed
initiatives and prioritizes them according to risks, benefits, Migrate the CM or CA effort into the control or audit
costs, and ROI. This means: process as soon as possible after it demonstrates its
• Targeting efforts based upon risk exposure, appetite, viability and value. To ensure this happens:
and tolerances, enterprise-wide and locally • Report the results of the effort to management and all
• Identifying which areas are appropriate to pursue based other stakeholders
on projected benefits, costs, and ROI • Demonstrate the value added — in monetary terms
• Identifying how to set thresholds and monitor risks, as when possible (e.g., costs reduced, risks mitigated, or
well as useful intervals and notification mechanisms time saved)
(e.g., real-time notification versus daily check-in) • Verify by manual means that the early readings and
• Considering required resources and how current results are accurate
resources and priorities may help or hinder adoption • Adjust monitoring or notification mechanisms as
needed, given their performance and the quality of the
3. Plan the Design and Implementation human interface
Planning a CM or CA initiative should be an iterative
process, which involves: Pilot projects geared to testing the waters, gaining
• Determining the scope of the objectives experience, or achieving early wins can be quite useful.
• Establishing roles and responsibilities With an early success or two, management or internal
• Designing the CM or CA process and mechanisms audit can revisit its priorities and make adjustments or
• Allocating resources and creating a timeline and project move directly to the next priority. Also, given the potential
plan savings and lower risks, many CM and CA initiatives can
• Setting reasonable expectations for performance be structured as self-funding. Finally, be sure to obtain any
• Aligning people, processes, and IT resources necessary external expertise and guidance at each stage.

12
Value and Benefits of CM and CA

Broadly, CM and CA add value by means of improved

compliance, risk management, and ability to achieve Benefits of CM and CA
business goals. They can be instrumental in locating Continuous monitoring can enable an enterprise to:
revenue leakage, for instance, due to customers taking • Increase value through improved financial and
unauthorized discounts, and in locating unnecessary costs, operating controls
as in audits of service levels from third-party vendors. More • Accelerate reporting to support more rapid
broadly, CM and CA bring new levels of systematization decision making and business improvement
and automation to monitoring controls, marshalling • Detect exceptions in real time to enable real-time
evidentiary audit data, and overseeing the enterprise. In responses
that sense, CM and CA represent a natural progression • Reduce — and ultimately minimize — ongoing
in the evolution of the control environment and auditing compliance costs
efforts. • Replace manual preventative controls with
automated detective controls
CM and CA give managers and auditors greater visibility • Establish a more automated, risk-based control
into processes, activities, and transactions. The resulting environment with lower labor costs
visibility also generates greater transparency for directors, • Heighten competitive advantage and increase
investors, and other stakeholders. In addition, CM and CA value to stakeholders
can each generate other specific benefits for the enterprise
(see sidebar, Benefits of CM and CA). Continuous auditing can enable an enterprise to:
• Improve risk and control assurance, usually in the
Neither CM nor CA should be viewed as a short-term same or less time than previous approaches
project, but rather as a commitment to a new, more • Reduce costs, including internal audit costs
systematic approach. The value and benefits are real, and costs associated with unaddressed control
as are the barriers to implementation. The former can deficiencies
be realized and the latter managed, provided CM and • Increase the level of risk mitigation for business
CA are viewed in the context of risk management and risks
implemented with a practical roadmap as your guide. • Achieve a more robust, more effective auditing
process
• Expand internal audit coverage with minimal (or
no) incremental cost
• Shorten audit cycles
• Identify control issues in real time

Continuous monitoring and continuous auditing From idea to implementation 13

Consider Continuousness

This document has highlighted the key considerations As with every initiative, decisions about CM or CA hinge
for a management team or an internal audit function on the business case. Deloitte believes that, although the
considering continuous monitoring or continuous auditing. business case warrants careful development, it will often
It has flagged the key issues and barriers, set the matter in be strong for CM and CA initiatives. This is particularly so
the context of a risk management framework, and flagged in light of rising compliance, financial, operational, and
potential IT concerns. other risks, and increasing demands on internal audit and
risk management resources.

14
Contacts

To learn more about how Deloitte professionals can help you and your organization, please contact:

John Peirson Brett Sherman

US Managing Partner Partner
Internal Audit Transformation Internal Audit Transformation — Consumer & Industrial
Deloitte & Touche LLP Products
+1 612 397 4714 Deloitte & Touche LLP
[email protected] +1 973 602 6364
[email protected]
Wayne Rose
Deputy Managing Partner Patty Miller
Internal Audit Transformation — Energy & Resources Partner
Deloitte & Touche LLP Internal Audit Transformation
+1 214 840 7268 Deloitte & Touche LLP
[email protected] +1 415 783 4623
[email protected]
Steve Curry
Partner Sheri Fedokovitz
Internal Audit Transformation — Health Sciences & Partner
Government Finance Operations & Controls Transformation
Deloitte & Touche LLP Deloitte & Touche LLP
+1 215 405 7700 +1 313 396 3394
[email protected] [email protected]

Paul Lindow Steven Henchock

Partner Principal
Internal Audit Transformation — Financial Services Finance Operations & Controls Transformation
Deloitte & Touche LLP Deloitte & Touche LLP
+ 1 415 783 4751 +1 404 220 1689
[email protected] [email protected]

Sandy Pundmann
Partner
Internal Audit Transformation — Technology, Media &
Telecommunications
Deloitte & Touche LLP
+1 312 486 3790
[email protected]

Continuous monitoring and continuous auditing From idea to implementation 15

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