（2006）ACTVE：A Proposal for an Automated Continuous Transaction Verification Environment.pdfVIP

JOURNAL OF EMERGING TECHNOLOGIES IN ACCOUNTING Vol. 3 2006 pp. 81–96 ACTVE: A Proposal for an Automated Continuous Transaction Verification Environment Richard B. Dull Clemson University David P. Tegarden Virginia Polytechnic Institute State University Lydia L. F. Schleifer Clemson University ABSTRACT: During recent years, there has been a significant increase in calls for corporate financial reporting transparency and for improved timeliness of financial in- formation disclosures. To adapt to these changes in the financial reporting environment, auditors must look for methods and procedures to increase the effectiveness and ef- ficiency of the audit process. Traditionally, a source of strong audit evidence has been the confirmation of an amount with a third party. Technology now exists to support the improvement and expansion of the confirmation process. To facilitate the timely con- firmation of transactions and balances that involve external entities, this paper pro- poses ACTVE, an Automated Continuous Transaction Verification Environment. ACTVE is an interorganizational system by which data from an accounting information system can be electronically confirmed with a third-party’s system. The system will provide timely audit evidence while significantly decreasing the transaction cost of obtaining confirmations. ACTVE will not only resolve confirmation response issues in today’s audit environment, but will also support the new continuous assurance paradigm. Keywords: continuous assurance; confirmations; financial reporting; clearinghouse.