A commitment to employees, clients and community: The Bonadio Group’s response to COVID-19. View Here

Big Changes to Your Financial Statement Audit are on the Way

We’ve probably all heard buzz words by now regarding artificial intelligence, blockchain, innovation, data analytics, etc., but if you’re a private company, non-profit organization, or governmental agency, what does this all mean to you? Well in the next one to three years, how your auditors will perform their audits, and what they will be requesting from you, will be getting a major overhaul.

Recently, The Bonadio Group became one of 36 firms across the nation (and the only firm in Upstate New York) to invest dollars and leading experts in the American Institute of Certified Public Accountants (AICPA)’s Dynamic Audit Solution (DAS). This undertaking was designed to develop a new technology with artificial intelligence to increase efficiencies in the audit process by reducing mundane tasks, providing a more robust assurance product by analyzing a company’s entire general ledger system, and providing more robust reporting to management and ownership/governance.

DAS is going to take in far more data than auditors can currently digest with available technologies, and analyze it, learn from it, and report back items that should be of unique focus and attention. Its ability to match certain requests with procedures will allow auditors to focus less on data entry and more on data analysis, trends, and exceptions. Furthermore, DAS will allow auditors to analyze the entire population of transactions of a company versus what auditors are currently doing, which is picking selected samples. Think of it this way: currently auditors are testing like fly fishing in a stream, hoping to catch something based on spots they think will provide the best results. With DAS, the stream itself will go through a process and filter and, in theory, catch way more fish.

It may not shock you that accountants are slow to change. But we must get moving if we’re going to answer some key questions and desires of audits by clients. In fact, did you know:

  • 80 percent of financial statement users wish auditors would test more data.
  • 47 percent of financial statement users wish auditors would do a deeper analysis.
  • 76 percent of financial statement users should use more advanced technologies.

To meet these needs and allow CPAs to become less of historians and more so advisors, technologies such as DAS are needed to reduce the data entry and manual tasks. In the near future, not only will the systems analyze your full general ledger, but also sub-ledger data, and invoicing. The technology is being developed to allow auditors to be more engagement specific, driving more questions based on what the data and the analytics is providing. For example, what is a risk for Company A, may not be the same for Company B, and nor should it be.

Lastly, some key improvements in dashboards, queries, and file sharing as a result of DAS will allow clients to have a more interactive experience with their audit, as they too will become part of what shapes the system to drive more probing questions. These improvements will allow better audit evidence to improve quality, and also improve the efficiency of additional questions and audit completion.

We’re thrilled to be leading an effort to bring this technology to Upstate New York. If you have further questions on what this will mean for your audit or how you can receive a DAS audit from Bonadio, contact me at kmcgivney@bonadio.com.

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute an accountant-client relationship.