Continuous Monitoring

Continuous Auditing
Organizational Readiness
What Needs To Be Done
Making It Happen

Clyde Rogers
clyde.rogers@sympatico.ca 1
 Research & Information Sources
 Professional Experience – Senior Director,
Continuous Auditing at Major Bank
 Industry – Barclay’s, RBS, Wells Fargo,
Citigroup, RBC, Fleet
 Organizations – IIA & ADR
 External Firms – Deloitte, KPMG, E&Y
 Academic – Centre for Continuous
Auditing – Rutgers, U of Waterloo
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 Guiding Principles - Mindset
 Improve Efficiency and/or Effectiveness –
Needs to Business Case, Be Important,
$’s, Benefits
 COSO/COCO Frameworks, Enterprise Wide
Risk Management, Control Self-
Assessment
 Changing Regulatory Requirements – SOX,
Basel
 Partner with Client & Governance Groups
 Validate - Cross Organization Roles &
Responsibilities & Acceptance
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 Guiding Principles – Mindset
 Client Monitors & Manages Risk and
Compliance
 Audit Gets Assurance From Client &
Partner Processes as well as Independent
Testing
 Information Technology is an Enabler –
Larger Than That
 Staged and Incremental Implementation –
Business Line & Phases

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 Success Drivers
 Promoted/Championed by Senior
Executive – Chief Auditor & Business Line
Executive
 Focus On a “Quick Win” – Business Line
Readiness – Operating Models
 Business Line Buy-In also Influences
Governance and Support Groups
 Leverage/Benchmark to Industry & Non-
Industry Leaders and Best Practices
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 CM – CA Model/Processes
Advisory
Whistle Operational
Support
Staffing Blower Losses
Lines
Issues Key
Performance
Early
Warning
Systems Risk
Teams
Continuous
ContinuousAuditing Warehouse
Auditing Warehouse
External/
Regulatory
NIAP

Traditional Auditing
Traditional Auditing Strong
Risk and Frequency Model No Action
Risk and Frequency Model or Satisfactory
Suggested
Quarterly
Action Proceed with audit Requires Audit
Planning
As scheduled Improvement and
Prior Audit
Reporting
Results

Accelerate audit Unsatisfactory

Inherent activity
Operational Risk
Risk

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 Business Line Profile
 Standard Operating Environment – 1,000
locations – National – 4 Segmented Client
Offers
 Confusion/Duplication Between Functions
in Roles & Responsibilities – 4 Major Risk
Teams
 Quick Win – Risk Teams – Duplication &
Costs
 Conflicting Reporting to Clients &
Stakeholders

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Benefits – Phase I – Risk Teams
 Align Risk Teams Coverage to Meet the Needs of
all Groups – 1 Group – Audit Leverages (QA)
 Roles & Responsibilities Defined and Aligned to
Changing and Emerging Regulatory
Requirements – SOX, Basel
 Improve Effectiveness & Efficiency – Less Branch
Disruption – Also $2 million Savings
 Move to Continuous Monitoring/Auditing Model –
Foundational to Phase II – Further Benefits

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 Phase I
Q2 2005 Q1 2006
SOX
Q1Basel
2005
SOX
W/M
Reduced On-site Testing Through: Basel

• Inventorying current on-site testing activities W/M

On-site testing

Compliance
• Changing/adding/deleting tested activities
• Identifying duplication Compliance
• Migrating duplicated testing to FRS
Internal
InternalAudit
Audit
• Eliminating migrated testing from groups
Internal Audit
• Developing process to audit FRS
• Focusing on routine activities
Business Risk • Processes review with product groups Business Risk

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 Benefits – Phase II - EWS
 Leverage Information Technology - Consists of Data
Mining and Analytics
 Whole Portfolios – Holistic View – Real Time
 Additional Efficiencies - $5 million
 Major Step Towards Continuous Monitoring/Auditing
Model
 Monitoring Capability Enhanced:
- Reduces Onsite Testing
- Risk Indicators/Trends To Support On-site Testing
- Improves Earlier Identification – More Predictive

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 Phase II
Q1 ‘07

SOX
Basel
W/M
On-site testing

SOX
Compliance Reduced On-site Testing Through: Basel
• Develop central monitoring capability W/M
Compliance
Internal Audit • Enhanced technology platform
Internal Audit
• Leverage existing knowledge (NRM/EWS/CRS)
Internal Audit/Basel
• Central monitoring for select activities
Business Risk
• Further on-site testing eliminated
Business Risk
• Majority of on-site testing migrated to FRS

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