Getting data from your clients is always harder than you expect, takes longer than it should, and creates an initial bottleneck and delays in your engagement. This issue has plagued our profession for years and has recently been amplified with the advent of technology. Each year there are more accounting systems creating more and more complexity for CPAs. All of a sudden, CPAs are forced to act as system experts and data wranglers. Often they run into problems like systems that generate incomplete reports, an inability to export the data you need due to system limitations, and reports are in a non-excel format. Combine this with your client being too busy for the audit or getting used to a new system and CPAs are burning through their budget and missing deadlines.
In FY 2023, we began an endeavor at Audit Sight to solve the data acquisition problem. Before we started building anything we laid out a few ground rules:
As a result, we developed a multi-layer approach to address this problem and make the auditing process more accurate, efficient, and less time-consuming. In this post, we will share this approach that offers a world class solution for CPAs everywhere.
Approach 1: Get data via our cloud-based connectors
Imagine instantly eliminating 30 PBC request items - this means never having to ask your client for a P&L, balance sheet, journal entries, invoice listing, cash application report, etc. That dream is already a reality. Here at Audit Sight we have 8 cloud-based connectors that link directly to your client's accounting system. These view-only, read-only connections can't modify any data. The only thing they can do is obtain the data from your clients systems.
This cutting-edge technology eliminates the need for your client to keep running the same reports over and over again. Additionally, this data can be updated daily without any additional burden for your client. These connectors allow for real time continuous auditing and is the future of our profession.
Approach 2: ERP guides that instruct clients step-by-step
We consider Approach 1 to be ‘auditing of the future’, we also understand that you need a plan for the present. This second approach can be used for your clients who don't want to connect their systems or use systems that don't offer connectors. Using the 30 most frequent accounting systems we see, we developed ERP materials that guide your clients, step-by-step, on how to extract the necessary data and prepare it for the audit. These PDF guides can be downloaded directly from Audit Sight and shared with your clients.
These guides are designed to make the data gathering process as straightforward and seamless as possible, all while ensuring that you get the right data in the right format with the right fields to do your job. If you have a cluster of customers on a certain system, our team at Audit Sight is looking for the next wave of systems to add.
Approach 3: Building data transformers that automatically convert the data and validate the data is complete and accurate.
Once the data is provided by your client in the best possible format, now comes the hard part: transforming the data into a usable format. Oftentimes these reports have merged cells, columns in an unusual order, data not in a tabular format, or a host of other formatting data nightmares. While this problem can take hours for even the best excel wizard, we have built data transformers that will automatically convert the data into a structured and standard format that can be instantly uploaded into our database. Upon completion, you will receive a workpaper containing a comparative trial balance and a complete list of journal entries. In addition to the raw data, Audit Sight performs the following audit tests, which are documented in the workpaper:
Approach 4: Data Healing and creation of synthetic data
Missing data is a reality in the world we live in. Software engineers do not think in terms of GAAP, so they do not understand basic controls that any CPA would use when designing a system. As a result, they build systems where you can record a journal entry without an ID, use the same transaction ID over and over again, leave the invoice # blank, and this list goes on and on. Companies like Intuit did this so non accountants can perform bookkeeping procedures. We all know where that takes us… to financial statements full of misstatements and errors. Here at Audit Sight, we solve this problem by healing the data. Data healing is a term for creating usable identifiers to link related data. When our team heals data sets, we are not creating new records, modifying amounts, or changing anything that would result in altered financial statement numbers. For an example of data healing, let's consider a general ledger report that does not contain journal entry IDs.In these scenarios, we have built a rules engine that combines the other data in the report (such as description, memo, date, etc.) to create unique identifiers. Once a unique ID is created, we check to see if the journal entry balances. If the data passes this check, we will proceed with this new field as the ID; if it does not, we will try another combination. The rules engine starts with the most granular procedure in order to operate as precisely as possible. Once the data healing operation is performed, the data is ready to be used in any audit test.
Approach 5: Outsource data conversion services with Audit Sight
This approach is reserved for clients whose clients are painful to work with or simply use awful accounting systems. These systems may be one-off, outdated programs, or they provide everything in PDF, text file, SQL, or other random formats. While we wish there was a magical data transformation tool, that does not exist. There are some OCR tools that can help, but they are not 100% accurate and often require you to hunt, peck and try to figure it out yourself. This is a massive waste of your most precious resource - your CPAs’ time. Audit Sight has solved this problem by providing a data conversion service that will do this work on your team’s behalf. By utilizing an hourly rate cheaper than any CPA in combination with best-in-class technology, our team can get the job done more efficiently and affordably than anyone at your firm. Plus, our team can build additional tools to automate this process in the future.
Conclusion:
Overcoming the data challenge in auditing is no longer a monumental task when you leverage Audit Sight and its multi-layer approach. Implementing our solution will improve the accuracy and efficiency of your auditing process, save you a significant amount of time, and increase your audit margins. If you want to improve your auditing procedures and make your clients happy, consider giving Audit Sight a try. With Audit Sight, you can trust that your data is secure (Soc 2 Compliant) and accurate.
