Cloud technology had truly arrived in the accounting profession. Now that it's here to stay, we can delve deeper into its capabilities. So, how can the cloud create better auditing engagements?
We are now seeing the far-reaching effects of the cloud in all areas of a practice: Advisory services, tax and audit. As accounting platforms continue to automate more time-consuming data entry, more time is being freed up which can be focused on creating new ways to work with clients to provide value.
Now, audit practices also have the ability to use cloud applications to create engagements that can not only save time but produce more profitable engagements. Additionally, by using cloud and video applications, you can deliver a better work environment for your staff so they can do the majority of the work remotely.
The cloud also facilitates the opportunity for audit firms to partner with advisory firms and act as a liaison during the audit. By working together, the audit process is streamlined, with a qualified accountant working with the client year-round. By collaborating with an advisory practice, the workpapers and information are ready at the time of the audit, reducing the time spent collecting the information and getting it into good working order.
For a long time, auditors have had to restrict the type of clients they bring on board based on potential revenue, which results in many firms turning away potential clients that they would want to work with. Likewise, audit fees are generally capped based on competition and the budgets of prospects.
At the same time, the amount of regulation and requirements pertaining to auditing has only increased. Often, clients don’t understand the skill and nuance involved to complete the audit because it is not value-added in their minds. Rather, an audit seems like a drudgery to get through.
Cloud technology gives audit firms the opportunity to look at the internal processes and technologies they can use to compete more efficiently, as well as examine how they’re viewed externally by clients and potential clients so they can differentiate how they offer services. If you can demonstrate how an audit will be less stressful and taxing on a potential client and the differentiated way you deliver your services, you can stand out from the pack when pitching new clients and creating happiness with existing ones.
Cloud advisory services
Cloud advisory services provide clients a way to keep their books up to date in real time and better understand the effect of the financials on their business. By partnering with this type of practice, you are less likely to have to clean up data when it comes from a more reputable accountant. If the client gets better advice and their business is stronger, they’re more likely to stay in business and require more robust services from you in the future. Creating those relationships with advisory service firms, which are often up to date with cloud technology and have a strong accounting background, can create huge value for your client. By doing so, you can ensure your engagements are more profitable and you get the answers more rapidly.
Elimination of data entry
Change is coming. In the future, we’ll see the elimination of data entry. We’ll be more concerned about the controls of the systems and the accuracy of the data flowing through applications automatically, rather than the data itself.
Clients who are using a myriad of apps to record transactions, whether it be a POS system, time tracking or inventory solution, are capturing the transaction at the point it happens and it automatically flows into the accounting system, without any manual data entry. No one in the accounting flow needs to actually enter or manipulate the transactions, and where applicable, they flow through the bank account, creating an auditable trail. Everything is aggregated in the general ledger, at which point it can be examined under the lens of your audit process and data analytics tools.
Verification will move toward checking that data is flowing correctly, not that humans omitted entries or miskeyed data. Even though there’s less data entry work, you actually end up with more data generated by all of the connected systems. This will transform the idea of sample selections. When you can analyze everything in aggregate electronically, you can literally audit everything. These new full data sets eliminate the noise from a possibly poorly done sample while opening the door to a range of more nuanced analyses. Plus, auto-captured data processed by machine learning systems is far less prone to error than human-entered data since it is being coded following known rules rather than a clerk’s whim.
With data flowing to the auditor automatically in nearly real time, it creates the opportunity for continuous audit. Continuous audit rethinks the whole audit workflow, enabling auditors to spot trends or missing data before they turn into larger problems; and spreads work more evenly throughout the year rather than in a rush at the end. This enables auditors to offer an opinion at any time and broaden the searchable data to other sources like contracts and emails to create a fuller picture of business activity.
Technology is enabling a better future for auditing services. By understanding the future of the vertical and partnering with advisors, you can create more value for your clients and a better working environment for your staff, and help your firm grow by creating a more efficient audit workflow.