The Use of Continuous Audit to Improve the Effectiveness and Efficiency of Internal Audit Activities: A Practical Study of Distribution Sharia Company in Indonesia
DOI:
https://doi.org/10.54471/iqtishoduna.v12i2.2007Keywords:
audit internal, continuous audit, internal control, sharia companyAbstract
The implementation of technology has encouraged internal auditors to develop continuous audits as a practical method for obtaining useful information from a set of company electronic data related to internal audit activities at all stages. Continuous audit methods allow internal auditors to process the entire population of transaction data to identify risk and internal control weaknesses that are more likely to be the subject of an audit finding. XYZ is a distribution company that continues to expand its business with more than 200 branches in Indonesia especially in sharia business. However, a large number of branches and transactions face limited internal auditors, high audit costs, low levels of audit coverage, and potential human error, which are an obstacle. This research is a design science that proposes the use of DMADV six sigma methodology as a problem-solving method to enhance the effectiveness and efficiency of internal audit activity by applying technology and audit concept in the continuous audit system. This research revealed that the internal audit cost can decrease by 45,5% to IDR 528.000.000 and audit coverage can increase by almost double to 86,3% in a year.
Downloads
References
Barr-Pulliam, D. 2018. The Joint Effects of the Internal Audit Function’s Use of Continuous Auditing and Its Use as a Management Training Ground on Managerial Discretion in Financial Reporting. Working Paper, University of Wisconsin-Madison.
Barr-Pulliam, D. 2019. The effect of continuous auditing and role duality on the incidence and likelihood of reporting management opportunism. Management Accounting Research (forthcoming).
Bumgarner, N., & Vasarhelyi, M. A. 2015. Continuous Auditing: A new view of audit analytics and continuous audit: Looking toward the future. American Institute of Certified Public Accountants, Inc
Byrnes, P. E., Al-Awadhi, A., Gullvist, B., Brown-Liburd, H., Teeter, R., Warren, J. D, McQuilken, D. 2012. Evolution of auditing: From the traditional approach to the future audit. AICPA, Assurance Services Executive Committee.
Byrnes, P. E., Ames, B., Vasarhelyi, M. A., Warren, J. D., Pawlicki, A., & McQuilken, D. 2012. The current state of continuous auditing and continuous monitoring. AICPA, Assurance Services Executive Committee.
Cascarino, R.E. 2017. Data Analytics for Internal Auditors. CRC Press.
Chan, D. Y., & Vasarhelyi, M. A. 2011. Innovation and practice of continuous auditing. International Journal of Accounting Information Systems, 12(2), 152-160.
Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2013. Internal Control-Integrated Framework. New York: COSO.
Creswell, J.W. 2013. Research Design: Qualitative, Quantitative, and Mixed Methods Approaches. Thousand Oaks, California: SAGE Publications.
Davidson, B. I., N. K. Desai, and G. J. Gerard. 2013. The effect of continuous auditing on the relationship between internal audit sourcing and the external auditor's reliance on the internal audit function. Journal of Information Systems 27 (1): 41-59.
Farkas, M. J., and R. M. Hirsch. 2016. The effect of frequency and automation of internal control testing on external auditor reliance on the internal audit function. Journal of Information Systems 30 (1): 21-40.
Fauzi, M.R., Anwar, C., & Ulupui, I.G.K.A. 2019. Influence of independence, experience, and application continuous audit on the effectiveness of investigative audit implementation in detecting fraud. Jurnal Akuntansi, Perpajakan, dan Auditing.
Gaspersz, Vincent. 2019. Lean Six Sigma for Manufacturing and Service Industries. Jakarta: PT Gramedia Pustaka Utama.
Hevner, A.R. & Chatterjee, S. 2013. Design Research in Theory and Practice. New York: Springer
International Accounting, Auditing & Ethics (IAAE). 2016. Data Analytics for Auditors. London: ICAEW.
Kogan, A., Mayhew, B.W. & Vasarhelyi, M.A. 2019. Audit Data Analytics Research²An Application of Design Science Methodology. Accounting Horizons, Vol. 33, pp. 69-73.
Malaescu, I., and S. G. Sutton. 2015. The reliance of external auditors on internal audit's use of continuous audit. Journal of Information Systems 29 (1): 95-114.
Open Compliance and Ethics Group (OCEG), 2013. Governance, risk management and compliance. Arizona: OCEG.
Stippich, W. W., and B. J. Preber. 2016. Data Analytics: Elevating Internal Audit’s Value. Florida: The Institute of Internal Auditors Research Foundation (IIARF).
The Institute of Internal Auditor (IIA), 2018. Global Technology Audit Guide (GTAG) Continuous Audit System. Florida: IIA.
The Institute of Internal Auditor (IIA), 2017. International Professional Practices Framework (IPPF). Florida: IIA.
The Institute of Internal Auditors (IIA). 2018. Internal Auditing: Assurance, Insight, and Objectivity. Florida: IIA.
Vasarhelyi, M. A., Alles, M. G., & Kogan, A. 2004. Principles of analytic monitoring for continuous assurance. Journal of Emerging Technologies in Accounting, 1(1), 1-21.
Vasarhelyi, M. A., S. Romero, S. Kuenkaikaew, and J. Littley. 2012. Adopting Continuous Audit/ Continuous Monitoring in Internal Audit. ISACA Journal vol. 3.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Mochamad Alwi
This work is licensed under a Creative Commons Attribution 4.0 International License.
The journal can be accessed publicly, which means that all content is provided freely accessible without charge to either the user or the institution. Users are allowed to read, download, copy, distribute, print, search, or cite to the full text of the article did not have to ask permission from the publisher or author.