Cangemi: Perspectives from Rutgers 40th WCAR Symposium
Michael P. Cangemi is a senior fellow at Rutgers and a founding advisory Board Member of the Rutgers Continuous Auditing and Reporting Lab. The opinions expressed in this article are solely those of the author.
I have been a student of audit management since I transitioned from public auditing to the Chief Audit Executive (CAE) role at Phelps Dodge Corporation. As a CAE, I took a very broad view when I defined our internal audit mission. We wanted to be excellent and go beyond audit of controls to recommending efficiency as well as systemic integration of automated control features. We wanted to contribute to and help improve the business.
The concept of adding value to the business through the audit function is one of the objectives of the Rutgers World Continuous Auditing & Reporting (WCAR) Symposium. As a premier institution for the study of auditing, accounting information systems and related continuous auditing, the 40th edition of this event once again offered excellent examples of academic research, reports from progressive audit functions, and key analytics vendors on how they can add value to audit processes and improve business processes.
This conference was dominated with presentations about robotic process automation (RPA) (or “robot auditors” as one speaker called it); the Rutgers AICPA Data Analytics Research initiative (RADAR); and analytics software advances into the cloud, improved dashboard features for audit analysis and reporting and enhanced visualization functionality.
New blockchain (BC) ledgers, which are in the very early stages of discussion, were also part of the conversation. The major takeaway for me regarding blockchain ledgers is their use in operations, which —for now—will still feed traditional accounting systems. In the future we may see accounting feeds possibly via an accounting node, or even audit or regulator nodes on blockchain ledgers.
In the public auditing sector, we have been following the RADAR project. The AICPA and Rutgers University announced this significant initiative in 2016, which is a collaborative effort to research how accounting firms can work together to advance the use of technology and analytics to improve audit effectiveness and efficiency.
Participants in the RADAR project include the big 4 and other audit firms, CPA Canada, AICPA and the Rutgers University: Continuous Auditing and Reporting Lab (CAR) group. Goals include a pooling of resources rather than working in isolation, allowing for innovations, and development of a framework for analytical data selection and data mining.
The initial projects of RADAR include:
- Multidimensional audit data selection (MAD) – Addressing the shift from sampling to full population audits and how to select the higher risk portion of populations.
- Process mining – Auditing transactions or classes of transactions.
- Visualizations of data populations and getting evidence out of it.
In the U.S., the Public Company Accounting Oversight Board (PCAOB) is aware of the potential for changing audit approaches and auditing standards. The organization is having periodic meetings with audit firms, and continues to monitor developments, including RADAR. The AICPA’s Audit Data Analytics Guide on using analytics in public accounting audits is currently being updated and will be published before yearend. While public audits will change, it is coming slowly.
Presentations from the Rutgers 40th World Continuous Auditing & Reporting Symposium conference, including some videos of the sessions, are available here. Stay tuned for more management views on GRC, audit management and what progress internal audit functions are making in my future blogs.
About Michael P. Cangemi
Michael P. Cangemi is a senior fellow at Rutgers University and serves on the Rutgers Continuous Auditing and Reporting Lab Advisory Board. A former CFO and CEO, a prolific writer, active speaker and senior advisor to various companies, Mr. Cangemi now focuses on providing continuous auditing, continuous monitoring and analytics intelligence for GRC, Finance and Business Process Improvements. He also serves on FEI’s Committee on Finance & Technology (CFIT) and their GRC Sub Committee; the EDPACS Editorial Advisory Board; and the ISACA Governance Committee.
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