Dynamic Audit Solution Project Seeks to Level Tech Race Playing Field

By:
Chris Gaetano
Published Date:
Apr 1, 2021
audit-tablet

CPA firms that would be competitors in any other context are, instead, cooperating, under the guidance of the AICPA and accounting fintech firm CaseWare International Inc., to develop sophisticated audit tools that can bring the profession’s technological revolution to a wider set of practitioners.

Dubbed Dynamic Audit Solution, the project was first conceived in 2018—a year after the AICPA conducted a major review of what the profession will need to navigate the rapidly changing nature of the financial audit. The software, which is slated for release this year, is meant to be a reflection of how the needs of auditors—and the expectations of audit clients—have changed over the years. Susan S. Coffey, AICPA executive vice president and one of the project leads, said, “It’s really about looking at the audit completely differently.”

“How do we really transform the audit, from a user experience perspective, from a methodology perspective and from a technological perspective, and what would be the right way to develop that?” she said, noting that the project is about “transforming the audit, doing it very, very differently and achieving the audit objective by assessing risk differently and performing audit procedures differently and collecting audit evidence differently.”

Erik Asgeirsson, the president and CEO of technology company CPA.com and the other Dynamic Audit Solution lead, said that once the software is developed, auditors will be able to look at the full data set and have anomalies identified by the software through both traditional and visual analytics, which, he said, will allow the CPA to better assess the information and “drill down and understand those anomalies.”

“[It’s] the simple things,” he said. “When you look at the full data set, we think you’ll be providing the traditional audit service and then you’ll be providing additional insights to the client.  … You could look for things like double billing, if you know what the payment should be, [or with] a vendor contract, you could do an analysis on that. So, at the end of the audit, you will provide the opinion as well as additional information that’s more comprehensive than an audit today, due to the capabilities of this robust platform that leverages more data.”

While there is software today that can do these things, Coffey said that the intention is for this software to be a fully integrated platform that can suit all the auditor’s needs, rather than having to switch among several different programs that don’t work with each other at all.

CPA firms were involved in the project since early in the process, mainly through the AICPA’s Major Firms Group—Asgeirsson said that about 30 firms are participating. One is Citrin Cooperman, where partner and audit and attest practice leader Joseph Turkewitz, and chief risk officer and industry managing partner Patricia A. Cummings oversee their firm’s part in this project. This has involved contributing to the project’s strategic vision, providing input on the process, and working with other firms on what Turkewitz said was the question of “how we’re going to facilitate change management for such a large project,” among other things. Specifically, this has involved quarterly strategic meetings, along with numerous committee, subcommittee and task force meetings in between.

Turkewitz said that one of the biggest benefits to his firm will be the integration of many different elements, echoing Coffey in saying that users won’t need to “have 17 different screens open and 17 different icons they’re dealing with.” Auditors using this software will have greatly enhanced data analytics capacity because the process will be directly embedded in the  audit methodology and tools.

But beyond that is the ability for the firm to greatly enhance its data analytics capacities by directly embedding these capacities in the audit methodology and tools, “rather than being something of an afterthought.”

“From a pure procedural standpoint, the traditional vouching and sampling that’s associated with the audit process is, I’ll say, a dinosaur. ... Our processes right now are 80 percent traditional and 20 percent innovative. This will allow us to sort of flip the script on that. We’ll be much more taking advantage of those technologies, so we’re doing a lot less sampling and more looking at whole data sets, and really driving down to where the risk is, so it’s much more meaningful,” Turkewitz said.

Cummings added that this technology has applications beyond the financial audit. She sees not only a tool for audits but also for industry practice, saying that practitioners will be able to fine-tune the software to be tailored for specific industries for client insights. Additionally, it can help integrate processes across various industries to be more consistent across the board and make the audit easier.

These sorts of tools, however, are not necessarily a new invention. Giant international firms have invested millions of dollars in developing software like this as well, and have been using it in their own audits for a number of years now. But these are proprietary systems that are available only in those firms—professionals at other firms can’t buy it as they can tax software.

Cummings said that the product being developed in this project is intended to be an equalizer that can give relatively smaller firms access to these same kinds of tools without having to pour millions of dollars into developing them in-house. She characterized what she called the “global six” as having “unlimited resources, both in terms of dollars and people.” The idea, she said, is for other firms, such as her own, to join with the AICPA, CPA.com and other partners in order to pool their resources so that they can “develop this new transformational process.”

“It’s one of the few times where we’re working hand in hand, arm in arm with firms we’re fiercely competitive with in the marketplace,” she said. “It’s definitely been a game changer.”

Asgeirsson said that the project has been user testing individual modules, like risk assessment, since last year, and by the end of this year, he expects to have a more complete version available for firms participating in the project. That “won’t be the end-to-end solution,” he said, but it “will allow firms to do some testing.” Overall, he said, the project is on track with its goals, and he expects the main commercial release to be sometime in the summer of 2021.

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