--- title: "Continuous Tech Auditing" canonical: "https://www.athenatechnologypartners.com/page/continuous/" format: markdown --- ![](/images/8835f20f-6081-4ec4-8e68-efe7df475e36) # **CONTINUOUS TECH AUDITING** Continuous Auditing is the method mainly used by (financial) auditors to perform audit related activities on a more continuous or continuous basis. A Continuous Auditing ("CA") program typically includes most, if not all, of the following: - Continuous risk monitoring, including the monitoring of key performance indicators (KPIs) - Continuous control monitoring - Continuous monitoring of transactions or activities - Investigation of potentially inappropriate activities that have been detected - Continuous reporting to stakeholders External Continuous Auditing is rarely used for tech purposes, especially software development. After all, this responsibility is a primary responsibility of the (development) organization itself and is generally not assigned to an external party. At the same time, we note that many software development projects do not proceed in accordance with an initially agreed time frame and budget. In addition, we see a multitude of internal reports from tech portfolio companies to their stakeholders (VCs/PE) that are not in line with the market, which calls into question monitoring of the process and progress. Continuous tech auditing also assumes a continuous income stream for the executing party, which translates into sustainable growth and client relationships. # **1\. VALUE BASED POSITIONING** Brand positioning is the process of deciding how customers feel about the proposition. Brand positioning is more than just producing a logo or a jingle. To build the right positioning strategy, the most important needs of the targeted customer segments must be mapped out. Key areas are defining customer segments and their needs, in this case VCs/PE versus entrepreneurs, translated into emotional and functional brand perception and reference(s) for reason to believe. Besides technical Due Diligences (DDs), financial and commercial DDs are the most pronounced and therefore applied. The perceived value of the latter DDs today exceeds that of technical DDs, due to the "temporary ownership model" of VCs/PE where financial and commercial principles prevail. A lower perceived value usually translates into lower rates, read investments in TECH DD's or that it does not belong to the initial DD execution scope. It is also a direct consequence of the capitalization of development costs, which is still a widely used market practice, as a result of which the said costs are not included or are included to a lesser extent in the deal rationale. This trend is waning due to an increase in the application landscape, a shift to AGILE based development and microservices and the increasing need for periodic insight into development costs, leading to more and more adoption of tech DDs. The above applies in particular to the VCs/PE segment. If we consider the entrepreneurial segment, other considerations also apply. # **2\. LEVERAGING THROUGH TEMPLATING** Templating, or templates, save money, especially when they're drafted with a balanced perspective in mind. In addition, the aim is also to guarantee consistency in reporting. Template-based contracts also play a role in overall risk mitigation efforts when they are designed with compliance in mind and include all relevant and required compliance provisions. However, the most important feature of TEMPLATING, in the perspective of conducting a due diligence, is the LEVERAGING of knowledge: In other words, the efficient reporting of and about data in a consistent manner. The focus of performing a DD will therefore have to lie in the consistent application of the template(s), which means that the individual knowledge of an auditor is less important. The alignment of the template with the (reporting) needs of the market is an important point of attention. # **3\. INTERNATIONAL SCOPE, COMPETITION AND STRATEGY** If the positioning around the target group of VCs/PE is taken into account, the number of annual transactions is an important (market) data. In the Netherlands there are between 200 and 400 takeovers of tech companies every year, the vast majority of which are "in the core" software companies. The underlying DDs are mainly performed by the BIG 5 audit and consulting companies or local accountancy firms. As stated earlier, the primary scope here is on auditing financial and commercial performance. The current number of local transactions in which an independent technical DD has to be carried out by a third party is estimated to be small. An international approach is therefore an important consideration for addressing a large(r) market size. Furthermore, numerous non-Dutch VCs/PE are active in and on the Dutch market, which the importance of an international network. Building and expanding an international network can take place through partnerships, organically or through acquisitions. # **4\. EXIT STRATEGY** Having a well-thought-out exit strategy is a pre requisite in this. It is not only a common (market) practice today, and also linked to "the ideas" of the aforementioned customer segments, it gets an extra dimension by taking into account the age of the initiators. The future going concern, in case of a successful start-up, must also be addressed. After all, it is obvious that "involved parties" will play a less active, read prominent entrepreneurial role in the near future. # **[CAN WE HELP YOU ? CLICK HERE TO CONTACT US](mailto:info@athenatechnologypartners.com)**