By Tammy Whitehouse @ Compliance Week.
The idea of continuous monitoring and auditing is seductive, certainly: If you monitor and test your key controls over financial reporting nonstop, mistakes can be caught early and corrected before they lead to material errors in financial statements; accomplish that, and compliance with Section 404 should be a breeze.
Proponents also contended that continuous monitoring and auditing could thwart fraud, since the techniques monitor all a company’s transactions and management overrides (theoretically), rather than a random sampling that might not catch whatever is amiss. “I would argue this is your best chance of finding fraud,” says Patrick Taylor, CEO of software vendor Oversight Systems.
Still, here we are at the brink of 2011, and continuous auditing and monitoring have not gained widespread use. America’s largest public companies and their external auditors have settled into their comfort zones around internal controls and Section 404 compliance—with the word “continuous” barely part of the conversation.
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