How to Choose an Audit Analytics Tool Donny C. Shimamoto With clients continuing to put downward fee pressures on auditors, firms need to look for additional ways to gain efficiency on their audits. One of the easier ways to do this is to look at data analytic tools that are designed to help automate the auditor’s work or audit analytics tools.
What are audit analytics tools? Audit analytics tools are designed to help automate some of the procedures originally performed manually by an auditor. These tools can be used when an auditor can get the underlying data for a report and also potentially access to the transactions that the report needs to be tied to. For example, getting beginning and ending trial balances and all of the underlying journal entries in between, or an AR aging reporting and the underlying outstanding invoices. The basic functionality that you’ll see in audit analytics tools is the ability to import the data, and then perform tests on the data. Additionally, audit analytics tools can help with sampling (e.g., random or monetary unit sampling) and other data-related tasks. Some tools also provide you with the ability to clean up or segment data as part of the import. An example of segmenting data is taking an account number and splitting it between natural classification and department—taking 6100-10 and splitting that into 6100 (Advertising expenses) and 10 (Department A) in two separate fields so that you can do further analysis.
Examples of audit analytics tools Some of the common audit analytics tools used by firms today, as well as some of their common features or differentiators are shown to the right (in alphabetical order). There are two additional audit analytics tools that are also available, ACL (acl.com) and IDEA (audimation.com/products/caseware-idea-data-analysis-software/). These are not included to the right, as they are more complex to use and require extensive training and some programming knowledge to use effectively. They also are generally more costly than the tools listed, so they are usually provided to “specialists” within an audit department, rather than to every auditor. (The rest of the tools mentioned to the right would usually be provided to every auditor.)
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The Washington CPA Spring 2020
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