CPA Practice Advisor - 36

THE 21ST CENTURY ACCOUNTANT

Automation and the

FUTURE OF AUDITING
AUDITING HAS CHANGED significantly over the last 50 years. During the days of paper
general ledgers (the 1980's and before), two auditors would work together to validate the
posting of entries from the general journal to the general ledger using a method called

BRIAN F. TANKERSLEY

CPA.CITP, CGMA (@BFTCPA, CPATechBlog.com
K2 Enterprises
brian.tankersley@cpapracticeadvisor.com

"holler and tick". The person with the general ledger book would call out the accounts
and amounts from each entry, and both auditors would make tick marks next to the
relevant line on the ledger paper in the physical books that held these books of original
entry. Both auditors would then scan the books for any unmatched transactions (or
transactions which were posted twice), and the person with the general ledger would
use a 10-key adding machine to foot each account and validate the balance.
Auditing in the mid-21st century
will use more automation and will
require future entry-level auditors
to perform higher level tasks than
those required just a generation
ago. Enterprise-grade test automation tools like ACL Robotics and
Caseware IDEA have each been
around for at least 30 years, but each
of these legacy tools has typically
required special training to use the
tools effectively - meaning that they
were only used by a few members of
the audit team. Just as the low code/
no code robotic process automation
tools I've written about in previous
columns are changing the way our
clients work by scripting simple
routine tasks, new audit tools will
simplify and automate many routine
audit tasks.

36

AUGUST 2019 ■

Some of the more popular tools available in the marketplace today
include the following applications:

USE/CASE/NEED

POSSIBLE SOLUTION(S)

Wizard-based full data set testing using Microsoft Excel for
non-technical users

TeamMate Analytics, ActiveData for Excel

Enterprise-class audit automation tools

Galvanize ACL Robotics, Caseware IDEA

Data extraction from documents, receipts and statements

Receipt Bank, AutoEntry

Trial balance extraction, data set import, and creation of
InFlo, CCH Audit Accelerator, Validis
basic lead schedule, analytical schedules, and other routine
schedules
Full data set analysis, unusual transaction identification,
and data visualization

Inflo HI, Mindbridge.ai

Bank statement and credit card retrieval from financial
institutions

Hubdoc, File This Fetch, Receipt Bank Fetch

(This table presents a small
number of the capabilities of
selected solutions in the marketplace, and is not designed to present
each capability of every application
in the marketplace today.)
Many new tools are expected
in the next few years, including a
product called "Dynamic Audit Solution" from CPA.com and Caseware, a
cloud-based version of CCH Engagement, Thomson Reuters' Onvio Audit
solution, as well as enhancements to
existing tools such as AuditFIle, CCH
ProSystem fx Engagement, Caseware
Working Papers, and Thomson

www.CPAPracticeAdvisor.com

Reuters AdvanceFlow.
While much remains to be
decided by the marketplace, the
future of auditing will likely involve
real-time transaction analysis,
risk evaluation, and data validation. Although this approach was
endorsed by many academics and
corporate governance experts over
20 years ago, we have seen few adoptions of this approach (outside of the
internal audit/compliance groups at
large enterprises and entities who
need SOC audits). When blockchainbased data repositories are more
broadly used by mid-market com-

panies, third party commercial tools
will be required to help auditors
evaluate the integrity of the data
sets. As firms and their clients adopt
more structured business process
automation solutions (e.g. process
workflow tools), process mining will
further shift the landscape in favor
of real time auditing.
In conclusion, my advice is for
everyone to get ready for change
in the audit space, as it looks like
we're in for some big changes to the
standards, tools, and approaches we
use for our profession's marquee
service over the next ten years. ■
http://www.CPATechBlog.com http://www.Mindbridge.ai http://www.CPA.com http://www.CPAPracticeAdvisor.com
CPA Practice Advisor

Table of Contents for the Digital Edition of CPA Practice Advisor
