by Sarah Butler, CaseWare SMSF Audit Product Manager
As Product Manager of a cloud-based solution, I try to keep up with the latest trends in the world of technology. But in recent years, this has been a hard thing to do! Digital disruption, data feeds, blockchain, artificial intelligence, machine learning… the list goes on.
At CaseWare though, the current hot topic in our office is automation.
Thanks to some fairly significant price pressure in the audit market, auditors want to get jobs done as quickly and cheaply as possible, and automation facilitates this. But how much is too much? As we start to automate more audit tests in our products, as an ex-Auditor, I worry that the risk of auditors just accepting results and moving on, without being skeptical or judgemental, increases.
Take SMSF audits for example – I am often asked about what audit tests we automate in our CaseWareCloud SMSF Audit solution. And I get it! Arguably, SMSF auditors feel the price pressure most of all. We help where we can – we have automated data analysis included in our audit checklists, and have started developing tailored audit testing worksheets. But there are only so many tests that can be automated. And most of the automation tools relate to the financial audit side, not the compliance side. At the recent SMSF Association National Conference 2018, Shelley Banton (Technical Services Executive General Manager at ASF Auditors) said: “the stringent checks in line with the SIS legislation will ensure we’re never going to get all those checks and balances done through technology, at this point in time anyway.”
Data is Key
No matter the type of entity being audited, the key to automating audit tests is the accessibility and quality of the data. Transactional data can be used to perform tests and checks over 100% of the population that auditors have previously sampled and tested manually. But how does the auditor know they can rely on the data? Is the data set received from the client complete? Is it in an editable format? Does the accounting system allow a mischievous person to do a bit of ‘creative accounting’ to hide fraud?
Our audit and financial reporting solutions all include powerful automation features that aim to help with security, accuracy and quality. And this reflects our philosophy at CaseWare – we always strive to develop quality solutions for our subscribers, that in turn promote quality in the accounting and audit professions. But we will never build a feature or enhancement that results in us stepping over the ‘professional judgement’ line.
Regulator Focus on Quality
And we aren’t the only ones focused on quality. As you have probably read about in the media and heard discussed at recent industry conferences, ASIC is using their Financial Reporting Surveillance Program to try to force improvements in audit quality overall, particularly from audit industry leaders auditing the major listed companies.
Automation in audit and accounting software is a good thing – implemented in the right way, with meaningful doses of seasoned auditors and accountants’ professional judgement and scepticism applied, it will enhance the quality of audits and deliverables in the industry as a whole. Auditors and accountants must take care to continue to apply professional standards to all aspects of their work, and regularly check that the automation provided by their tools, does indeed produce consistent and correct results. The next challenge is for the regulators and the legislators to catch up on the impact of new technology and what this means for industry compliance.