How tech is revolutionizing accounting: The financial statement auditor
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How tech is revolutionizing accounting: The financial statement auditor

4 months ago · 2 min read

Being able to scrutinize all transactions instead of a sample is a game changer for auditing software and the audit itself.

Editor’s note: This article is part of a series highlighting how accounting professionals in different positions throughout the world are using new technology to provide valuable service to their organizations, clients and the public. See also reports on how technology is revolutionizing services for CFOs, tax practitioners and internal auditors.

Audit practitioner: Scrutiny for 100% of transactions

Identifying the riskiest transactions is one of the most important elements of financial statement auditing.

In many audits performed by GRF CPAs & Advisors, artificial intelligence (AI) software is used to make this identification. In just a few seconds, the software analyzes all of the audit client’s transactions, comparing against more than two dozen indicators of risk.

Such an analysis would take a human so long to do that it would be impractical as part of the audit process. But the software enables 100% of the transactions to be scrutinized so that transactions with the most risk indicators can be investigated further.

The board members for the firm’s clients, many of which are not-for-profits, are excited to see all of their organization’s transactions being reviewed.

“They absolutely love it,” said Tricia Katebini, CPA, an audit partner with GRF. “We’re able to tell them, because of the system, we’re able to really home in on a deeper level to be able to truly analyze the risks of the organization.” That’s a relief for donors to her not-for-profit clients as well as those who depend on the not-for-profits’ services.

“You can rest assured that 100% of the transactions, whether that’s cash out or cash in, are being looked at in some way,” she said.

With processes such as this, audit firms across the world are revolutionizing the financial statement audit through the use of technology.Katebini tells clients that this leads to a more effective audit, although it won’t necessarily be more efficient at this stage.

The technology also helps GRF discover and suggest opportunities for their clients to make operational changes. For example, analysis of the balance sheet may identify that at certain times in a cycle a client’s cash is extremely high, while at other points it drops far enough that the client needs to use a line of credit to cover its expenses. In this case the firm may be able to recommend new collections and accounts payable practices that can distribute the organization’s cash flow more evenly.

Katebini said her clients love it when the auditors can make those kinds of value-added suggestions. She expects that the opportunity to use technology in this way will make the audit profession more attractive to young people, and that all auditors will enjoy helping their clients in different ways.

“We’re blazing a trail for new, innovative ways to do audits,” she said.

Ultimately, the goal is to enable a process called continuous auditing by permanently connecting the AI platform to audit clients’ enterprise resource planning systems. In the AI platform, alerts will be set up to immediately notify the auditors of risky transactions that need prompt attention.

Clients will no longer need to wait until the end of a reporting period to be warned of a problem that might exist.

“That’s the hope,” Katebini said. “That’s what we should be moving toward.”

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