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Accounting Information Systems for Decision Making pp 121–137Cite as

The Role of Continuous Monitoring of Internal Controls over Financial Reporting: A Case Study of an Italian Medium-Sized Company

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Part of the book series: Lecture Notes in Information Systems and Organisation ((LNISO,volume 3))

Abstract

This chapter aims to analyze the academic and professional utilization of continuous monitoring (CM) with subsequent tentative implementation in a medium-sized Italian company. The study focuses on the possible role of CM techniques in the system of internal controls over financial reporting. The primary research questions are as follows: (1) Are recent regulatory changes related to corporate governance creating opportunities to implement the CM approach? (2) What are the obstacles to applying the CM techniques in the Italian corporate governance model and the market for audits of accounts? and (3) What is unique about applying CM to small and medium-sized organization in the current IT environment? Using a case study method can provide initial answers to those questions and indicate possible firm-level benefits of CM (i.e., efficiency, better decision making, and cost savings) as well as benefits for stakeholders (i.e., more reliable financial reporting).

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Notes

  1. 1.

    Configurable controls in large ERPs can involve tens of thousands of basic actions, many of which users can adjust.

  2. 2.

    Such monitoring is intended to ensure that the control systems are active and effective.

  3. 3.

    See http://ec.europa.eu/small-business/index_en.htm According to the European Commission Recommendation of May 6 2003, the category of micro, small and medium-sized enterprises is made up of enterprises that employ fewer than 250 persons and that have an annual turnover that does not exceed EUR 50 million and/or an annual balance sheet total that does not exceed EUR 43 million. Within this category, the Recommendation provides specific definitions of small and micro firms.

  4. 4.

    See Il Sole 24 Ore Norme e Tributi of June 16, 2008 n. 165, which used as its source InfoCamere data as of June 9, 2008.

  5. 5.

    Unless auditing is by law entrusted to the board of statutory auditors, it is conducted by an external body that, depending on the situation, can be an individual auditor or a registered auditing firm. The statutory board of auditors can also perform the audit in addition to providing administrative supervision according to art. 2409-2, paragraph 3 when the following conditions apply: there is an explicit statutory provision that assigns the responsibility for auditing to the board of statutory auditors, the company does not make use of the regulated equity market, the company is not required to publish a consolidated balance, and the statutory board of auditors is composed only of certified financial auditors.

  6. 6.

    In the other corporate governance systems, the actors that are institutionally required to conduct the financial audit are always represented by the appointed external auditor.

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Author information

Authors and Affiliations

  1. University of Tuscia, Viterbo, Italy

    Giuseppe Ianniello & Fabrizio Rossi

  2. University of Florence, Florence, Italy

    Marco Mainardi

  3. Rutgers Business School, Newark, NY, USA

    Miklos Vasarhelyi

Authors
  1. Giuseppe Ianniello
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  2. Marco Mainardi
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  3. Fabrizio Rossi
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  4. Miklos Vasarhelyi
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Corresponding author

Correspondence to Giuseppe Ianniello .

Editor information

Editors and Affiliations

  1. Parthenope University of Naples, Via Medina 40, Naples, 80133, Italy

    Daniela Mancini

  2. , School of Economics and Management, Tilburg University, Spoorlaan 293, Tilburg, 5038, Netherlands

    Eddy H. J. Vaassen

  3. Via Vivaldi 2, Genova, 16126, Italy

    Renata Paola Dameri

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Ianniello, G., Mainardi, M., Rossi, F., Vasarhelyi, M. (2013). The Role of Continuous Monitoring of Internal Controls over Financial Reporting: A Case Study of an Italian Medium-Sized Company. In: Mancini, D., Vaassen, E., Dameri, R. (eds) Accounting Information Systems for Decision Making. Lecture Notes in Information Systems and Organisation, vol 3. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-35761-9_7

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