The reason we conduct auditing on a cycle is because there has never been another way. It takes significant time and labor to compile the necessary accounting data and ample resources to ensure the audit is complete and correct. The overall amount of input necessary means that auditing always has to stop after starting.
This is a necessity, but it's also a liability. By the time that audits are complete and ready to be acted upon, the information is often outdated to the point of irrelevance. Decision makers depend on these audits to formulate strategy and calibrate ongoing operations. But due to the backward-looking nature of the traditional auditing cycle, planning is always waiting on the information it really needs.
The speed of the auditing cycle has traditionally been limited by its scope. However, thanks to data-driven technologies it's now possible to manage much larger volumes of data in much shorter times. That is speeding up the auditing process and will eliminate the idea of cycles entirely.
What is Continuous Auditing?
It's exactly what the name implies: A form of auditing that takes place continuously rather than on a rotating schedule. The most accurate and up-to-date insights are available on demand, and it's possible to run customized audits at will.
That may sound impossible or overwhelming, but thanks to automation it's within reach. Technologies like artificial intelligence and machine learning can automatically organize relevant data. Then smart tools make it instantaneous to create audits on a weekly, daily, or even hourly basis.
Why Is Continuous Auditing Important?
Speed is the primary asset that continuous auditing has to offer, but the benefits extend much further than that. By taking a new approach to auditing, organizations can optimize much of what they do:
- Better Insights – Decision making becomes a lot more confident and effective when the very best financial information is available on demand.
- Better Accountants – If a smart system is handling the heavy lifting of auditing it frees up accountants to focus their time and energy on more important projects.
- Better Audits – Continuous auditing leads to better financial documents because artificial intelligence is less prone to errors and omissions.
- Better Outlook – Organizations can operate confidently and strategically thanks to continuous auditing, which is essential for sustaining growth and leveraging new opportunities.
So how close are we to reaching this holy grail of accounting? Well, AcctTwo's technology partner, Sage Intacct, is dedicating research and development resources to making this a reality, and has already begun to put important automation technologies in place that are transforming how finance and accounting operates and elevating the department's strategic importance to the overall organization.
When you're ready to explore the real-world potential of continuous auditing, consider moving to a financial management platform that will take your business into the future and contact the accounting innovators at AcctTwo.