Minimizing Cost of Continuous Audit : Counting and Time Dependent Strategies

Why do we need to continuously audit databases? The answer to this question depends on several factors, including the users and the applications that have accessed the data, the timing and the type of data modifications such as permissions or schema and so on. There had been many studies pertaining to the technical feasibility of continuous auditing of databases. But, we never came across any study in accounting literature where economic feasibility of continuous auditing of databases was seriously studied. Our paper is an effort in this direction where we examine certain strategies that have been suggested in the database auditing literature (see, e.g. Orman, 2001) with major and minor modifications. Orman studied the counting, periodic and hybrid auditing strategies with the objective of minimizing the number of errors introduced during database access. Unlike Orman whose focus is on assessing the number of errors entering into the system (technical feasibility), we focus on the long run operating cost of running database audit. We use results from regenerative stochastic processes to derive expressions for the long run average cost under the counting and periodic auditing strategies. Future directions for research are also proposed