Concurrent audit techniques definition

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What are Concurrent Audit Techniques?

Concurrent audit techniques involve the ongoing automated examination of business processes. This is achieved by embedding audit sub-routines into the application systems used by employees to process transactions. The system then flags unusual transactions for review by the audit staff. This approach is becoming more common, as larger businesses use highly integrated systems to run their operations.

Examples of Concurrent Audit Techniques

Here are several examples of how concurrent audit techniques can be used:

  • Continuous transaction monitoring. Audit routines are built into the accounting or ERP system to monitor transactions as they occur in real time. The system checks for red flags such as duplicate payments, transactions exceeding approval limits, or entries outside normal business hours. Any anomalies are automatically flagged for the audit team’s review.

  • Exception reporting. The system generates real-time exception reports when transactions deviate from established rules or thresholds. For example, a report might highlight expenses submitted without supporting documentation or orders placed from unauthorized vendors. Auditors can then investigate these exceptions immediately rather than waiting for a periodic review.

  • Embedded audit modules. Specialized audit sub-programs are integrated directly into the financial system to track and analyze high-risk processes, such as payroll or inventory adjustments. These modules continuously evaluate transactions based on predefined parameters. If irregularities are detected, the module alerts the audit team instantly.

  • Data validation checks. Automated audit routines validate data entered by users in real time—ensuring, for example, that invoice dates aren’t in the future or that account codes are valid. These checks prevent incorrect data from entering the system and flag entries that bypass typical control rules. It supports data integrity and improves the quality of financial records.

  • Real-time approval monitoring. The system continuously monitors workflows to ensure that approvals are performed by the correct authority levels. If a high-value transaction is approved by someone without the required authorization, it’s flagged immediately for auditor review. This helps enforce segregation of duties and prevents unauthorized actions.

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Advantages of Concurrent Audit Techniques

There are several advantages to setting up concurrent audit techniques within your business. They are as follows:

  • Full population review. This approach has the advantage of providing a complete review of all transactions, rather than the small sample sizes that auditors normally examine.

  • Immediate flagging. Concurrent audit techniques are especially useful when there is a heightened need to spot errors and irregularities immediately, so that auditors can investigate these issues at once and determine the underlying cause.