S P OT LI G H T
CASE STUDY: HEWLETT-PACKARD CO.
In 2015, Hewlett-Packard Co. (HP) adopted a continuous
auditing and continuous monitoring strategy, resulting
in improved performance in several key areas.
PROBLEM: Initially HP cited the frequency and volume
of manual journal entries as the key reason to initiate CA
and CM. Over time the company expanded its application
and discovered additional risks.
GOALS: HP executives sought to discover the nature
of the journal entries in order to reduce the associated
risks and to create standardized procedures for entries
in the future.
RATIONALE: Management validated its decision to
implement CA and CM by highlighting shortened response
time in discovering risk and in implementing corrective
action, and subsequent conservation of valuable resources.
AREAS OF FOCUS:
CA and CM were successful in identifying risks in Account-
ing, Regulatory Reporting, Compensation, Warranties, and
Expense Reports.
RESULTS:
Isolated journal entry outliers based on
predetermined criteria, revealing high-risk
accounts, unauthorized users, and entries with
missing explanations.
Simplified regulatory reporting by comparing
changes to a predefined threshold and
automating the decision to further examine.
Identified commissions and bonuses that did not
parallel with performance, and revealed high-risk
compensation practices, such as paying bonuses
in advance.
Monitored individual engineers’ product warranty
activity to detect potential fraud, including prod-
ucts returned with quantity or value inconsistencies
or parts returned that were different than shipped.
Uncovered discrepancies and fraud in employee
expense reporting by flagging key words
(like, “premium” or “upgrade”) and identifying
unreported personal expenses resulting in higher
credit card balance fees.
WHAT’S STOPPING YOU?
Find out how
continuous auditing
and continuous
monitoring will
supercharge
adaptability and
decision-making
in your business.
While CA and CM provide multiple advantages to your company, there are
perceived deterrents that may prevent or delay adoption. Be proactive and
tackle these common concerns before they become barriers to your success.
GET BUY-IN. For CA and CM to function properly, senior management must
support the idea and provide the necessary data. Managers will not invest in a task
of this size if there is no perceived value. Clearly define a return on investment for
each company division and involve the key players in determining the performance
indicators and processes.
ASSESS EMPLOYEE COMPETENCIES. CA and CM require a sophisticated
understanding of analytics and appreciation for how data can be used. Consider
the technological skills of your current team to fulfill this role and provide proper
training. Also, consult with professional auditors and monitoring providers to
determine the best staffing strategy.
MANAGE COSTS. The cost to implement and train for CA and CM can be sizable,
but cloud computing has enabled subscription-based services that don’t require
huge outlays of cash for equipment and software.
CONSIDER REGULATIONS. Depending on the nature of your business, your
data or reporting may be limited by regulatory requirements. Assign a point
person within each of your departments to monitor and ensure compliance and
revisit regularly to identify changes in laws that require procedural adjustments.
80% of CEOs cite data analysis as the second-most important
strategic technology after mobile capabilities.
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