Integrating Analytical Procedures into the Continuous Audit Environment

The objective of this article is to show how to embed analytical procedures (AP) into the continuous audit environment. The audit environment is discussed in terms of audit phases, where the role of APs is to obtain evidence for auditors. The article addresses different characteristics of AP techniques. Furthermore, the article compares four different AP techniques to form expectations for the monthly sales values. Two of these techniques are simple quantitative ones, such as the previous year’s value and the mean of the previous years’ values. The advanced quantitative techniques are regression analysis and an artificial neural network (ANN)-based model. In a comparison of the prediction results, the regression analysis and ANN model turn out to be equally good. The development of these kinds of tools is crucial to the continuous audit environment, especially when most data transmission between companies and their stakeholders are moved into the electronic form.