While industry is eager to move on from traditional auditing to Continuous Audit- Is it prepared? Does 2016 holds the possibility?

Its 1230 AM already and while the whole world progressed into a New Year 2016 the audit really hasn't. 

Tom, the seasoned auditor, asserted, "Well that's how it's done, Steve". And Tom served a quick insight into the sampling methodology. "If you testing 25 samples out of 1000000 transactions then how on this earth you think you gonna find the 'one' you are supposed to find?!", cried Steve knowing the 'one' is right in there but hasn't been found yet.

Steve demanded, "Tom, why can't you just test the entire population of transactions and help find the 'one' which shoot off the cliff".

 So whats wrong with the traditional one. Check this out from a study of 2000 fraud cases:
- 42% of all fraud are collusive-100% of financial frauds are collusive (doesn't this makes the much hyped 4-eye control obsolete and futile?!)

 Let's top it up with some more findings:
- External auditors can detect 3% of frauds ( aint this just 3%!!!)
- Internal auditors can detect 14% of frauds ( still, aint this just 14%!!!)

This indicates that auditors, in today's complex business setup,  are not able to do 'just enough' with traditional methods and tools. (*complex as one single transaction moves across few dozen systems and these systems are on different technology platforms and guess what there are many interfaces which aggravate the concerns around data completeness and integrity).

 Oh common auditors we all know no assurance/audit stands true in spirit or in letter. Fine tuning the words only rescues one side from the liability but the risk persists right there- Upright and Tall. Revamping and renaming traditional auditing methods wont earn a dime in today's complex scenario.

Today we have Focused audits, Risk driven audits, Analytics, CAATS but aren't these (mostly!) just another marketing cup cakes- sounds new but doesn't serve anything better. There are many a fraud happening despite the best ERP and Analytics being put together (not to forget the cost and efforts involved!).

Could we make a better 2016? Can we move on from Traditional sample based auditing to Population based testing? And wait, isn't this 'sampling' non-statistical, actually speaking?!! Can we help make integrated audit work the way it does on paper (and during training and meetings, huh)?

Well it can, if we can possibly understand what's traditional and what are its implicit limitations/challenges. And if auditors (business and technology) get out of silos and gear-up to leverage technology to step-build a strategy for Continuous Audit.

One interesting study suggests that the 'perception of continuous monitoring at all time' can negate the possibility of such undesired incidents to a large extent. Imagine if we can actually enact the perception- swiftly gearing from detective mode to preventive mode or simply put adapt to Continuous Audit.

So whats could be a good way forward - Lets collaborate!
Share your thoughts, throw your queries and lets get talking.

And oh yeah, Happy New Year 2016 to Tom and Steve!