From the August 2011 Review of Engagement & Trial Balance Systems.
Audits are not the realm of only the Big 4 and other very large practices. Many small and mid-sized firms also offer A&A services to their clients. But audits can certainly be complex and labor intensive, not to mention the considerable regulatory obligations that accompany them. With the right tools and services, such as those in this section, even small firms and sole practitioners have found audit services to be a valuable and highly sought after offering.
AuditConfirmations provides a web-based utility for directly verifying an entity’s account balances by contacting the institutions, lenders and other organizations that hold the business’ assets and liabilities. Because the system uses electronic communication, verification and authentication tools instead of relying on paper-based processes and mailed forms, the program greatly streamlines these tasks, helps increase accuracy, and speeds them up dramatically.
AuditConfirmations is designed to give audit teams these productivity benefits, while also providing security features that ensure sign-offs come from appropriate authorities at the third-party banks and institutions. Instead of relying upon name and contact information provided by the organization/client being audited, the officials are identified, prequalified and verified by AuditConfirmations, and must register and authenticate their own account with the online system. This helps to reduce unofficial sign-offs, one of the most frequent methods of confirmation fraud. The system includes collaboration tools and functions for tracking the status of confirmations.
Capital Confirmation was the first to develop a secure electronic confirmation service, is used by most financial institutions in the United States and is endorsed by the American Bankers Association. The system provides an alternative to the formerly labor- and paper-intensive process of account balance confirmation that increases the accuracy and efficiency of audit teams.
Prior to electronic confirmations, the methods used during audits were more at risk for fraud, and resulted in notable cases of fraud such as those at Parmalat, CF Foods, HealthSouth and others, where unauthorized persons within financial institutions used by those companies were able to certify bogus accounts and balances. With services such as Confirmation.com from Capital Confirmation, however, only authenticated officials at banks are able to respond to confirmation requests, and Capital Confirmation guarantees that these officials are authorized to represent, report and make such confirmations.
In addition to the security and assurance offered by Confirmation.com, the electronic confirmation process also reduces the average time that auditors wait for a confirmation request from more than a week to about two days, which significantly improves the productivity of audit engagements and also provides the benefits of a paperless engagement. Confirmation.com was a recipient of a 2009 Tax & Accounting Technology Innovation Award from CPA Practice Advisor.
CaseWare is a well-known developer of technologies that enhance the management processes involved in auditing, financial compliance, risk assessment, and time and project management. Designed by auditors for auditors, the vendor’s IDEA system offers advanced financial data analysis features that help mitigate fraud and ensure data integrity.
IDEA includes features similar to an audit trail, with tools that automatically track and record the nature of changes made within a database, from transactional information to user IDs. The system allows data to be imported and exported into all common business formats, enabling it to be used with most ERP and accounting systems. It offers free-form search that can look across millions of records in seconds, and then allows comparison and consolidation of data from files from various sources to help find anomalies, and eliminate gaps and duplicates.