Along with preventive elements such as codes of conduct, hotlines, and whistleblower mechanisms, continuous auditing and continuous monitoring can be a key component of an effective fraud risk management process. In addition, CA/CM shifts management's and internal audit's focus and review from a traditional retrospective/detective approach to a proactive/preventive stance. Many indicators of fraud and misconduct — both actual and potential — reside within an organization's financial, operational and transactional data, and can be identified using forensic-based CA/CM tools and techniques. These include sophisticated analytical tests, computer-based cross-matching, and non-obvious-relationship identification to highlight potential fraud and misconduct that can go unnoticed by traditional review techniques. Some benefits of forensic-based CA/CM strategies include: 1. Identification of hidden relationships between people, organizations and events; 2. Identification and analysis of suspicious transactions; ^ Assessment of the effectiveness of internal controls for preventing or detecting fraud; 3. Continual monitoring of fraud threats and vulnerabilities.
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