Implementing CA/CM for Not-for-Profit Organizations

• In Event: Saturday Breakfast
  In Paper Session: Roundtable 1

Abstract

There has been much public attention recently regarding fraud and abuse in the not-for-profit (NFP) sector (Washington Post, 2013). The NFP sector has been subject to increasing pressure to conduct internal audits in a more effective and efficient manner. Many large, and generally publicly-held organizations have implemented Continuous Auditing and Monitoring (CA/CM) tools into their internal and managerial activities to some degree (Alles et al, 2008), to support their internal audit function. Small-to-Medium sized (SME) organizations, and especially NFPs, have not had an opportunity to participate in the benefits of CA/CM technology due to cost/benefit concerns, a general lack of products designed and priced for smaller organizations, and a lack of technical expertise in the organization. The overall purpose of this Rutgers Accounting Research Center (RARC) project is to undertake CA/CM implementations working with Small-to-Medium sized (SME) NFP organizations of varying sizes, business purposes, and levels of technical sophistication. The project methodology proceeds as follows, once the client has agreed to participate: first, the project team gains an understanding of the client’s processing scenario for the selected application area by means of interviews and questionnaires; second, the team and client agree on appropriate data sources for the testing and the format in which the data will be presented to the team; third, the team presents typical testing scenarios and agrees with the client as to which scenarios to initially pursue; fourth, the team and client agree on appropriate analytics software to employ for the testing; fifth, the team implements the solution and generates appropriate reports and visualizations for presentation of testing results. The intent of this project is to demonstrate that existing CA/CM tools and techniques can be implemented and generate appropriate analyses in an SME NFP setting. This paper discusses in detail one particular case study of the project, where the project team and SME NFP client successfully implemented CA/CM protocols in the payroll/HR process. The project team envisions this implementation will serve as a benchmark for CA/CM adoption

Authors

• Deniz A Appelbaum, Rutgers University - Newark

• Stephen Kozlowski, Rutgers Business School

• Miklos A Vasarhelyi, Rutgers University - Newark