Accounting technologists Randy Johnston and Brian Tankersley, CPA, discuss Audit Sight, a technology platform that eliminates manual work for auditors, diligence and private equity professionals by automating financial transaction verification. The Accounting Tech Lab is an ongoing series that explores the intersection of public accounting and technology.
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Transcript (Note: There may be typos due to automated transcription errors.)
SPEAKERS: Randy Johnston, Brian F. Tankersley, CPA.CITP, CGMA.
Brian F. Tankersley, CPA.CITP, CGMA 00:00
Randy Johnston 00:08
Welcome to the accounting Technology Lab. I’m with my co host, Brian Tankersley, today, I’m Randy Johnson. We’re going to talk about a product platform audit site. Now we just had the pleasure of doing an audit automation overview with co founder Jonathan Womack and his associate, Michael Zimmerman, and we were we’re looking at how the audit profession is changing. There’s so many platform changes, there’s so much guidance changes, and there’s so many tool changes. This was one of the tools that we thought just deserve some time. Now, the tool makes auditors much more efficient, as it turns out, and they have a couple of specific offerings that they’re doing well in, and one of the ones that they’re able to help with is transaction advisory services. And when you think about audit practices, assurance practices today, there is so much focus around revenue and margin growth, really focusing around utilization realization issues, and part of that is because where firms want to actually be acquired by private equity or merge, they need to have their practices more tuned up further staff, accountants and seniors, managers are in short such short supply, it’s really motivated a lot of outsourcing, and there’s concern that staff are actually working on the right things and are being effective and efficient and with the quality standards kicking in, the way the audit methodologies have worked has also changed over this past couple of years. So, you know, we look at the transition in the assurance areas, it’s pretty substantive. You know, Brian, I probably said some things wrong, because you’re the auditor among us. What would you comment on terms of the changes in the profession and what audit site platform does?
Brian F. Tankersley, CPA.CITP, CGMA 02:10
Well, you know, in addition to the technical changes we talked about, where we’re moving again, away from sampling and toward 100% testing, we also have the business model changes where, you know, we’re moving toward some of these different kinds of practices. You know, you look at CLA, and there, I believe it’s CLA that incorporated a law firm in Arizona, and some of these non traditional practices, practice areas that are getting added, and it’s quite an interesting time in the profession. We also look at the private equity roll ups and how those are driving the desire for better information on quality of earnings, both out of the audits, the validation of the quality of earnings out of the audits, as well as the quality of earnings for the firms, so that the PE firms can get their desired returns.
Randy Johnston 03:01
So you know, to that point, Brian, it is interesting to me, because not only does this platform help with that, but I’m aware of at least another half dozen platforms that are doing that type of work as well. And it was also fascinating as I’ve dealt with larger firms in the past two years, top 100 and g4 100 class firms that have audit practices, how they’ve restructured the practices to isolate the assurance team, to also isolate the revenue overheads and so forth along the way, yet enabled to cast but here’s probably the key takeaway for our listeners, the larger firms have concluded that they need to have a service, advisory service, offering in every category. So just like your signing of the law firm piece, you know, another statement might be, everyone has to have HR, and when I look at my auditors, you know, with the independence requirements, the separation of the business units, to try to maintain that is kind of a an interesting deal,
Brian F. Tankersley, CPA.CITP, CGMA 04:10
well, and part of the challenge is that, historically, the margins on audit have been lower than some of the margins for Other services. And so it’s really compounding. We’ve got a general problem with staffing in the profession anyway and hanging on to those seniors, managers, partners anyway, in audit, but it’s particularly more acute in audit than it is the rest of the firm, just because, again, the future is so up in the air with so many different things?
Randy Johnston 04:43
Yeah. So we’d like to turn your attention to the audit automation overview podcasts in this area, and turn our attention then to audit site, because one of the things that they do is they improve the data intake, the data verification and the results. In automation, and you know the they can connect to accounting data, but many auditors know that clients are not connecting data directly, so this ability to process data, either with a direct connection or through CSV or Excel sheets, is a big deal, and that includes the accounting data, the banking data. And this tool, audit site, is designed to work over the top of all common platforms, on top of case where an engagement manager and cch engagement or access engagement and inflow and Field Guide, and I can keep naming platforms, but regardless of what you’re using for PrEP, comp, review or audit, this tool can sit on top of that. Do the data intake, do the data verification accurately, and then produce documented work papers for reconciliations and cash proof and debt both and the like. So that’s the goal of the tool. They do have a fairly accurate PDF bank statement conversion tool. And as we’ve said in prior podcasts with you, if an accountant is keen data, we have a broken process, and they audit site has built a tool that can do a bank statement conversion quite effectively. It basically allows the upload of the PDF and then it does footing and role statements and will identify any Photoshop data and any file tampering. So the time saved on this tends to be pretty substantial along the way. So Brian, I think another thing that they have is the ability to get non connected customers data acquired.
Brian F. Tankersley, CPA.CITP, CGMA 06:57
Yeah, you know, it was very interesting when we talked to the, you know, the two executives from auto audit site during our previous podcast. One of the learnings I had was that many account, many clients now are not wanting to give up the API access for direct import of data. Which I which blew my mind, okay, you know. But, I mean, I get wanting to control and not understanding it and things like that, but it’s, you know. Again, the thing here is that sometimes people use systems in a different way where they don’t use the entire system, so maybe an export wouldn’t do exactly what you need. So they have templates where you can copy and paste data to get it in there. There are also ERP guides that tell you exactly which reports, what format to put them in, what columns to add to get the right data. And they have some data conversion services as well to work with it. They’ve got a pretty healthy number of software packages that they have import guides for now, again, they only have direct import connections with, you know, five or six, okay, but again, when we, when we’re talking about, you know, let’s say SAP S for HANA Cloud, or, you know, we’re talking about, maybe PeopleSoft, those systems are so big that they’re really more of a Lego tool set than they are a database in A with a defined schema and a defined layout. And so the problem there is that you almost have to do something bespoke with those. So realistically, import is probably the only option there. But again, the idea of being able to of having solutions for importing from this, which is a pretty healthy number of accounting software packages, it’s not everything, but it’s an awful lot. And they also have workbooks that show the kind of data that they need to go in here.
Randy Johnston 08:50
Yeah, so the direct connections, then, as you mentioned, there’s actually, I believe, eight that they’ve got running, but we would really think in the US market, dominantly around six or so platforms allow a direct connect, so you can send an email to your client, and they will basically sync based on a date to pull that financial statement in. So the players here include QuickBooks, Microsoft Dynamics, zero NetSuite, Sage intact, and then the lower end products of sage accounting FreshBooks, and they have a bank Connect module as well. So this whole idea of a read only connection then gets us to the point that we can do a few supporting work papers, and one of those work papers is proof of cash. So Brian, what about proof of cash automation.
Brian F. Tankersley, CPA.CITP, CGMA 09:41
Oh, this is the ultimate work paper, because, you know, because it’s a it’s painful to do it, because you you’re really reconciling every single transaction that flows through and then tying it out, you know. But again, it, it will automate this whole concept, you know. Again, we used to just do, you. You know, back back when dinosaurs roamed the earth, and I was doing audits, we used to do just reconciliations for organizations that had had decent controls, so we’d look at the reconciliations and audit those. But when we had something where we were concerned, like a nonprofit where we’re concerned about completeness or something where we get inkling that something may be rotten in the state of Denmark, from a fraud perspective, we may decide to jump in and do a proof of cash. So, you know, I recall one, one audit partner I worked with, wanted to do a proof of cash on a very large municipality I worked on. And so what it really does is it reconciles the cash in the bank to the accounting system. So it will again, go through a unique bank statement. GL detail, it will say, what’s there, what’s not again, this is something that is typically done in a forensic audit to try to find things you know, because, again, people steal assets, not liabilities. And so the bank, you know, the money is the easiest thing to fence, because you just have to go to the bank. So again, it will give you, it will show you the differences in these things, and again, potentially identify situations where maybe somebody’s not being as forthright as they should be in audits. Randy, talk to us about the journal entry testing here.
Randy Johnston 11:22
Well, on this, the many of the tools in the market today are trying to take these extracted or downloaded transactions and plug the holes in the data and audit sites. Approach is to try to get a complete data set for the general ledger, and that really eliminates a lot of hours where auditors are looking at data that lacks key information, transaction ID, dates and other items. And so this part of it gives you a fairly straightforward general ledger. Now, one of the other things that audit site has done is their management meeting, prep. And this was pretty interesting, a relatively new feature on the product platform. Part of the reason actually, Brian and I wanted to do this podcast for you today, because this was introduced here in mid 2025, and there’s several different things that their meeting automation does to eliminate the preparation. So Brian, what might you call out for our listeners here?
Brian F. Tankersley, CPA.CITP, CGMA 12:29
Well, you know, the thing about this is that it’s not just that it has to be right, it’s that this is expensive time to look at it. Okay? So you know, if we’re looking at a penile balance sheet analysis. It’s not enough that it has to be accurate. It’s that the person has to understand. That person has to pull the key insights in there. And that just requires time, okay? And that’s manager, partner time, you know. Or it’s C it’s, you know, controller, CFO time on the other side, you know. So as we’re as we start thinking about this is a tool that really helps leverage the effectiveness of the time that you know, that of that expensive time that you have from those senior execs. So you know it again, it helps you have a standardized set of things in here, so that the managers you know, so that the subordinates, the managers, the seniors, the you know, the folks on the client side as well that attend the meeting, so they have some idea of what to expect, of what’s going to come through here. So there’s a heat map that analyzes income statement and balance sheet drill down, so you can get down to the changes and drivers and try to on the fly, answer queries and things like that. Some EBITDA modeling to try to, again, get back to cash flow and to look at the quality of those earnings ratio analysis for your planning and final review analytics, as well as some standard questions for dude from do for due diligence as well. So again, they’ve got a financial anomaly on Omni risk store that they’ve created that’s kind of an interesting ad that they put in there.
Randy Johnston 14:03
Yeah. So audit site claims that they save 80% of the medium prep time, which is good, but bigger picture for me is workflow automation and the audit site tool, like other competitors, let you preserve your existing work paper structures and workflows, and they’ve set their system up so it can support three years, or you can run it on any date range and but you know, for smaller audits, or if you’re short on time, doing Trial Balance only can be done, and then update the GL later, and The Chart of Accounts. Remapping and regeneration can be done in this workflow, really at any time. So you know, in terms of a tool to get you more robust, more automated testing, more complete documentation, appropriate reconciliation. Affiliations and so forth. Audit site might have the tools that your audit team needs for this, so there’s few additional tests available. Brian, what are those?
Brian F. Tankersley, CPA.CITP, CGMA 15:10
They have a data book that actually goes through and summarizes the key accounting reports and data so that you can get started, and it basically replaces 17 common schedules that the client usually has to prepare. It also will verify the bank balances from clients connected accounts, so that you don’t have to have confirmations. You can actually upload the recons, and you can work off of bank statements. You have revenue liquidation that will again do the testing for the transactions, and we’ll also reconcile and invoice match things out, and then it will do the subsequent receipt testing of accounts receivable. Now, I’m sure they have other tests that are coming in the near future, you know, again, I think about the, I think about the, you know, the end of year search for unreported liabilities. I think about, you know, some of the fixed asset vouching, some of those kinds of things you know. And I could imagine that those would be future tools in here. But again, this is not a replacement for the audit guidance that you get in your audit methodology that you’re getting from you know, again, a Walter Spoo, or a Thompson Reuters, or somebody else you know, or a das from AICPA. It really is a it’s really more of a tactical tool. It’s a strategic tool for analytics, but then it’s also a strategic tool for automation, but it’s really solves a lot of tactical problems. Of, how am I going to get this stupid proof of cash done? Because one of the reasons we didn’t do them on every engagement is they take a lot of time, because there’s a lot of transactions to summarize. And beautiful part now is that you don’t have to choose. You know, am I going to do this and not have to do that? If we let the automation do the work, we potentially can do more work with less human involvement in it. Now, the humans are still going to need to review it and check things out in very good detail, but it really gives you the potential to get that more effective audit, as opposed to focusing on just doing the same things we did last year more efficiently.
Randy Johnston 17:18
Yeah, so you know a few things that odd site does on automated testing, as you’ve heard, proof of cash, journal entry, testing, financial statement analysis, they have a universal confirmation module, and they have invoice to bank liquidation. So the tool is really designed to work on any client. All that’s really needed is their general ledger. Further, you can use Excel work papers to get audit ready outputs for your conclusions, and the product is gas compliant, so the tool has focus around audit firms, but they also support diligence providers. That’s where that management meeting module that we’ve already talked about in the data book could come into play, and they also have support for private equity providers and venture capitalists to analyze deals a little more rapidly. So there are multiple things that the platform can do well. So Brian, parting thoughts on the audit site platform.
Brian F. Tankersley, CPA.CITP, CGMA 18:21
You know, I think this is a worthy competitor some of the others, some of the other more well established tools in the area, you know, the data snippers, the teammate analytics, and some of those other things. You know, again, it’s, you know, the thing I think about with this is, you know, if I look at the Venn diagram of audit tools that I’m imagining, that we’re that I’m going to create someday, is that, you know, I think about this. This does some of the substantive testing. It does that, some of the data extraction, and that does some of the analytics. Okay? Now, what it’s not doing is doing the balance calculation and the tracking of the adjusting entries and the preparation of financial statements and those kinds of things. But it is, you know, and it’s not a work paper container, okay, but it does create work papers that can go into that work paper container. And it’s not an advice, it’s not a method, audit methodology, on a standalone basis, but it can plug into any audit methodology. So I guess what I would say here is that that’s kind of where this fits in the space, and kind of how we see it, you know, Randy and I think, you know, again, automation is where the future is. You know, as much as many things are getting sent offshore, I think realistically, automation is really where it has to go in the long run, because the economic, you know, nobody wants to pay more money for their audit. And so if we can get the technology to do it the way it’s done, the way it’s been done for years in the enterprises, I think we’re a whole lot better off understood.
Randy Johnston 19:55
And it turns out, the two co founders, TC Whitaker, I met, I think, at the. Accelerator program in 2023 the platform’s been around for about four years. I’ve known Jonathan Womack about the same time frame, actually. So you know, the team is entirely built of X Big Four auditors that have logged a lot of auditing hours themselves. So we see a lot of promise in New Generation AI tools, many of them which are being AI powered, and many of which are eliminating mundane, routine work. And this is another tool on platform that supports my premise that more automation and more AI will reduce the amount of outsourcing needed, or will automate the outsourced teams far more reliably and quickly. Well, it is always a pleasure, but Brian to cover a product with you in the accounting Technology Lab. We appreciate all of you as listeners, listening in and we’ll see again in another accounting Technology Lab.
Brian F. Tankersley, CPA.CITP, CGMA 21:06 Thank you for sharing your time with us. We’ll be back next Saturday with a new episode of the technology lab from CPA practice advisor. Have a great week.
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