Artificial intelligence (AI) has shifted from a theoretical concept to a transformative force across various industries, including finance and auditing. Rapid advancements in machine learning, natural language processing, and data analytics characterise the current AI landscape. These technologies are embedded into enterprise systems, reshaping business operations and decision-making processes.

AI applications in finance and auditing are not just theoretical concepts, but practical tools that can automate mundane tasks and provide deep insights through data analysis. The integration of AI is not just a trend, but a necessity to enhance efficiency, accuracy, and compliance, setting new standards for financial integrity and operational excellence. However, the full potential of AI in these sectors is not just a possibility, but a reality that depends on data quality, robust algorithms, and organisations’ willingness to embrace change.

AI advancements in accounting

AI has already made significant strides in financial reporting and auditing. According to a recent article in the Journal of Accountancy, AI is used to analyse vast amounts of economic data, identify anomalies, and predict trends. These capabilities are precious for auditors who must sift through complex datasets to detect fraud or errors efficiently.

Moreover, AI has enabled real-time data processing, allowing for continuous monitoring of financial transactions. This shift from periodic to constant auditing represents a significant leap forward, enhancing the ability to detect and address issues promptly. KPMG’s insights on AI in financial reporting highlight that AI tools can now perform tasks such as journal entry testing and transaction validation, which traditionally require extensive manual effort.

How are auditing and financial reporting impacted by Generative AI (Gen AI)?

Generative AI, a subset of AI that involves creating new content from existing data, is poised to revolutionise auditing and financial reporting. This technology has the potential to generate financial reports, draft audit summaries, and even simulate financial scenarios to predict future outcomes. The applications of generative AI in finance are extensive, as noted by Forbes, which outlines various use cases ranging from automated insights generation to discrepancy detection in financial records.

Generative AI’s ability to process and analyse unstructured data, such as emails and contracts, also offers a new dimension to auditing. It can identify potential risks and compliance issues hidden in textual data, providing auditors with a more comprehensive view of the financial landscape. This technology increases the accuracy of financial reporting and enhances the auditor’s ability to provide strategic advisory services.

How can auditors leverage AI?

AI is not just a tool, but a partner that can enhance auditors’ efficiency, accuracy, and value proposition. AI tools are not just for automating repetitive tasks, but for empowering auditors to focus on more complex and strategic activities. According to KPMG, integrating AI into auditing processes is not just a suggestion, but a game-changer that can significantly reduce the time and cost associated with manual auditing tasks.

Furthermore, AI can enhance the accuracy of audits by reducing human errors and biases. Advanced machine learning algorithms can analyse vast datasets to identify patterns and anomalies that might be overlooked by human auditors. This capability is advantageous in detecting fraud and ensuring compliance with regulatory standards.

Auditors can also use AI to provide more insightful and forward-looking analyses. AI-powered predictive analytics can help auditors forecast potential risks and financial trends, enabling proactive risk management and strategic planning. Gartner predicts that the future of generative AI will involve its deep integration into business processes, which will act as a crucial tool for decision-making and risk assessment.

Mastering the use of AI

As auditors master AI, the profession is expected to transform profoundly. The traditional audit, characterised by periodic reviews and manual processes, will evolve into a dynamic, continuous, and data-driven function. AI will enable auditors to provide real-time assurance, where financial health is monitored continuously and issues are addressed as they arise.

The future of auditing will also see a greater emphasis on strategic advisory services. With AI handling routine tasks, auditors will have more bandwidth to focus on providing value-added services, such as risk management, financial planning, and compliance consulting. This shift will elevate the role of auditors from compliance enforcers to strategic partners.

Moreover, integrating AI into auditing will necessitate new skills and competencies. Auditors will need to develop expertise in AI technologies, data analytics, and cybersecurity to harness the power of AI effectively. Continuous education and professional development will prepare auditors for this new landscape.

Embracing AI for the future

Integrating AI into auditing and financial reporting holds immense potential to transform the profession. By automating routine tasks, enhancing accuracy, and providing deeper insights, AI empowers auditors to deliver more value to their clients. The future of auditing, driven by AI, promises to be more dynamic, continuous, and strategic.

For auditors, the key to benefiting from AI lies in embracing the technology, investing in high-quality data, and developing the necessary skills to leverage AI tools effectively. As the profession evolves, auditors who master AI will be well-positioned to thrive in the new financial reporting and auditing era.

To learn more about using generative AI as an auditor, click here.

Accountants are witnessing an era of unprecedented change in their industry, from the rise of new technologies to the ongoing challenges around talent acquisition and retention.

The latest installment of Caseware’s An Executive View video interview series helps practitioners make sense of these top trends of 2024. Join Caseware CEO David Osborne and special guest Jim Bourke, Partner and Managing Director, Advisory Services at Withum, as they offer their insights and advice around such topics as:

• The talent test – How is the industry dealing with the still-pressing challenge of attracting and retaining the talent they need to prosper in the modern age? The speakers offer their analysis of the situation and discuss solutions that can ease the pressure, both in the short and long terms.
• Growth of client advisory services – Today’s clients are looking for more than simple tax and audit services. Find out how firms can respond to these diverse demands and become proficient at providing strategic guidance in an increasingly complex financial and regulatory environment.
• Tech developments – Get an inside perspective from these two thought leaders on how exciting new technologies such as generative AI, automation software and Dynamic Audit Solution (DAS) are revolutionising the field and enabling previously unthought-of possibilities.

Both David and Jim were named to Accounting Today’s recent list of the Top 100 Most Influential People in Accounting. You won’t want to miss their conversation!

Cloud accounting software is quickly becoming the new normal in the accounting profession. Our world has changed in the past decade, making most businesses at least partly remote, and the accounting industry has been no exception. Because of that, accounting firms need a solution that allows them to work smoothly with teams and clients in various locations. Local accounting software, bound to a computer in your office, is no longer sufficient.

The answer has come in the form of cloud computing. Cloud accounting software can be accessed from any device in any location, through a secure user portal. It can be utilized by your entire team and with clients so everyone stays connected and up-to-date on any pressing accounting needs. There are obvious benefits to this method, though some decision-makers still feel intimidated by the adjustment from on-premises software to the cloud. The good news is that it might be less complicated than you expect.

On this page, we’ll discuss everything you need to know about cloud accounting software: What benefits does it offer your accounting firm, what forms does it take and what does it look like to adopt it into your usual workflow?

What is cloud accounting? 

To start off, let’s go back to the basics and define a cloud-based accounting system. What is cloud accounting? It’s a method of accounting in which the firm is able to perform its work on a secure remote server. All data is stored in the cloud and can be accessed only through a secure user portal. Those who have permission to use that portal, however, can access the software from any device in any location.

What is cloud-based accounting software, then, and what are the different ways it can be used? The truth is that cloud-based accounting software can be used in many of the same ways that on-premises accounting software is, but the big bonus is that it can be utilized remotely. There are also added benefits, given that the software is in the cloud and can be accessed by those who aren’t in your office. Some cloud-based accounting software features include:

• Storing, reviewing and accessing financial statements and client data
• Protecting sensitive accounting information
• Creating invoices, reports and statements
• Organizing your workflow 
• Communicating and collaborating with clients, including deadline reminders

By February 2024, the staffing site Robert Half listed more than 5,000 remote accounting jobs, which speaks to the drastic change this industry has seen since the COVID-19 pandemic. New accountants getting their start in the field are often looking for hybrid or remote positions so they can have that flexibility. Because of this, more and more accounting firms have had to familiarize themselves with cloud platforms. 

Cloud accounting offers firms a comprehensive solution. With it, they can carry on with essentially all of the functions of their job through one secure remote server, accommodating remote or hybrid work for new accountants or more senior staff transitioning to spend more time at home. In the future, it might just be that we see even more of a need for cloud accounting. 

How cloud accounting differs from traditional accounting software

All accounting requires some kind of software. In the past, most firms used on-premises software, which means their software was installed on office computers. To serve an entire accounting firm, the software would need to be installed on every single computer, updated on every computer and maintained on those computers. A firm might also purchase an expensive local server in order to share files, or it might have to share files through email. 

This, of course, has its drawbacks. On-premises accounting software is expensive, for one thing. You need office equipment for every person who would use the software, an IT staff to maintain the office equipment and expensive software installed on every computer. Servers add an additional charge. 

It also takes a considerable amount of time. In order to collaborate with clients, files have to be emailed back and forth and then added back into the software. And if anything happens to the office computers on which the software is installed, teams could stand to lose all of their work.

Cloud accounting offers many of the same functions that on-premises software features. You can store and review documents, create reports and statements and draft invoices or notices through both. 

The key difference is that cloud accounting software is not installed on any one computer, but rather, it’s stored in the cloud and accessible through a remote user portal. Because of this, accounting teams don’t have to work in the same physical space. In fact, they don’t need a physical office at all, which means they don’t need the office equipment. 

Why use cloud accounting software, aside from the remote work benefits? The best cloud accounting platforms often have built-in technical support, so there’s no need for an IT team to maintain the software all on its own. You won’t need an office-wide server. And if anything happens to your office equipment or your power goes out, you don’t have to worry about losing your work. As soon as you’re back online, you can find all of your accounting resources, stored right there in the cloud and ready to use.

Benefits of cloud accounting

We’ve already touched on some of the benefits of cloud accounting software, but now let’s go a little more in depth. Cloud accounting can change the game for your firm, making it more efficient and flexible, and even boosting your team’s morale. Some of the chief advantages of cloud accounting include:

• Easy integration: With cloud accounting software, you don’t have to worry about installing it on every computer or setting up a dedicated server. It’s just a matter of purchasing the software and then establishing your team’s user portal. You can upload old legacy files with ease, saving time and avoiding the headaches that come with installing traditional software.
• Removing manual grunt work: You can use templates to automatically draft invoices and move data from your financial statements directly into your bookkeeping program. This eliminates much of the manual data entry, so your team can focus on what it does best.
• Easy collaboration, from anywhere: With remote access, your team and your clients can collaborate from any device. Instead of emailing documents back and forth, you can review them and make edits directly within the software itself. This makes for instant, convenient and efficient collaboration.
• Secure data: Because you’re using online software, you don’t have to worry about manually backing up your work. Everything is stored in the cloud and kept safe behind encrypted user portals. 
• Cost savings: One of the biggest benefits of cloud accounting is the cost savings. You won’t need to pay for constant training and updates, IT maintenance or office equipment. Instead, everything you need is built into the software itself and stored in the cloud.
• Data and documents in one central location: Instead of searching through files and emails, you can find everything you need in one central repository. Most cloud accounting programs also have a dashboard that is updated in real time, showing all of your analytics. 
• Enhanced security: Using the cloud eliminates the need for your staff to worry about installing the latest software patches and other updates that help to keep hackers and bad actors out of your data. With the cloud, these are handled automatically by your cloud provider.
• Recruitment appeal: Because you’ll be able to offer remote work, you can appeal to a broader range of talent, including Gen Z and younger millennial accountants.

Challenges with migrating to cloud accounting software

Any change can come with some amount of resistance, even when it’s a good change. This is certainly true in the business world, and cloud accounting software for accountants is no exception. While many firms are embracing cloud accounting software, others have lingering questions and concerns that can make the final step a challenge.

Which of the following statements concerning cloud accounting are not true?

• Cloud software is more expensive than on-premises software.
• It’s hard to migrate from on-premises software to cloud software.
• Cloud software is easy to hack and less secure due to being online.

If you answered “all of them,” you would be correct. These are all common myths about cloud accounting, but they can be easily disproved. 

Let’s start with the myth of cloud software being more expensive. Cloud software is typically purchased with a monthly or annual subscription. However, many of these programs have different plans, so you pay only for what you need instead of spending for features that you’ll never use. And since you won’t have to pay for new updates, maintenance, servers and added office equipment, you’re likely to save money. 

Change can be intimidating for many people, but migrating from traditional software to cloud software is actually easier than you might expect. Cloud migration processes leverage automation to help you migrate all of your files and information. You won’t need to install the software over and over, and many of these programs come with built-in tutorials, making training much easier for the whole team.

The most common fears about cloud accounting arise from cloud security myths. Because cloud software is online rather than on a local server, there’s often a fear that it will be easier to access and steal sensitive information. But is the cloud actually more secure than on-premises solutions? It depends on the program you use, but often, the answer is yes.

Cloud accounting software uses encryption to secure files – the same technology that banks use to protect digital information. This means that even if someone manages to hack into your cloud server, all of the data will be encrypted in an illegible code.

Features of world-class accounting software

Like anything else, cloud accounting technology can vary in quality. If you make the switch to cloud accounting, you want to be sure that you choose the right software. So what are the accounting software features that you want to keep an eye out for in world-class accounting software?

• A focus on collaboration: Collaboration is one of the most important benefits of cloud accounting software. The key is that you can collaborate from anywhere, at any time. So your platform should be built for connectivity and collaboration, including secure user portals that can be accessed from your device and dashboards that show your progress in real time.
• Comprehensive functionality for engagement and practice management: Your cloud accounting software should have a wide range of apps so you can manage your accounting practice and monitor your engagement directly from the software. A search engine is a must to help you wade through all of the different functions without wasting time.
• Flexibility and customization: No two accounting firms are the same, and what you need from your software may differ as well. Good cloud software will offer a number of application programming interfaces (APIs), so you can customize it to suit your own needs, including your workflow and analytics.
• Strong data protection and compliance: Again, most cloud accounting software uses encryption to protect data. Caseware, in particular, uses bank-level encryption to make sure that sensitive information is as safe as possible. A world-class cloud accounting platform will also have compliance measures built in so that you can always stay up-to-date with relevant regulations.

How to migrate your firm to the cloud

So perhaps cloud accounting seems like the right call for you, and you just need to get started with the software migration. With an accounting platform like Caseware, cloud computing implementation is a breeze. The cloud migration costs will be for the software itself, depending on how much functionality you need, and potentially to train your team. Caseware charges by user license, so the more users you need, the more you’ll pay up front. It’s a good idea to determine this beforehand so you can set your budget accordingly.

Here are the steps you’ll need to take:

• Choose your cloud accounting software, plan and features.
• Create user profiles and sign up your team and clients.
• Set up the platform in the way that suits your firm.
• Move old legacy files, statements and data into the new cloud software.
• Go through the tutorials or teach your team how to use the new software.
• Start working from your new cloud accounting platform!

You’ll also want to develop a change management strategy to help everyone on your team adjust to the migration from on-premises software to the cloud. Consider holding meetings where you can discuss the changes and answer any questions, and let your employees know whom in your firm they can speak with if they have further questions. This can also be a great time to dispel some of those myths mentioned above. 

The future of cloud accounting

We’ve said that cloud software is the future of accounting. But what is the future of cloud accounting? As we move further into 2024, let’s look at some of the accounting trends that speak to the future of the accounting profession with cloud technology:

• More AI and machine learning: AI is already used in many cloud accounting software programs to automate and optimize tasks and workflows. You can use AI for financial reporting, data entry and invoicing. But as AI continues to develop, we can expect to see even more advanced uses for it in cloud accounting technology.
• More data analytics: Data is essential for accounting firms today. In fact, more and more, practices that serve commercial businesses are asked to give insights into consumer behaviors and spending. This means accountants will need more complex, real-time data analytics to provide the best insights. With analytics dashboards and AI-generated reports, cloud technology is already rising to the demand.
• Big data: This concept refers to large and varied sets of data that are collected by organizations en masse. It gives you a breadth of information — but there’s also quite a bit to mine through. Accounting firms are likely going to look for cloud accounting software that can help them find relevant insights in both structured and unstructured data. 
• Remotely connected teams: Remote work has been on the rise since the onset of the COVID-19 pandemic. But four years later, remote work remains popular because many professionals have found that the traditional office space just isn’t for them anymore. With cloud accounting software being so easily accessible, you can expect more accounting firms to take advantage of that remote connection and even go fully remote.

Want to be a part of the future of cloud accounting? Get there with Caseware Cloud. Contact us today to request a demo. 

Organizations are rapidly shifting their technology investments away from on-premise hardware and software towards cloud computing solutions. Gartner, a global technology research firm, recently forecasted that worldwide end-user spending on public cloud services would grow by more than 20 percent year-over-year to reach a staggering $679 billion in 2024.

Accounting firms are no exception to this trend. A combination of business benefits and evolving client expectations are leading practices to adopt more cloud accounting technology. Caseware’s 2024 State of Accounting Firms Trends Report found that 76 percent of global survey respondents used cloud-only tools or a mix of cloud and desktop solutions to help manage their practices. 

Moving your accounting to the cloud can lead to significant cost savings, higher-quality engagements and deeper client relationships.

Cloud accounting defined

Cloud accounting represents a shift from how firms have traditionally deployed their software solutions. In a traditional on-premise implementation, software is installed on local computers or servers at a firm’s offices. All the data processing and storage takes place on-site, meaning accountants must be physically present or have a secure connection to the office to access the software. It also means the firm is responsible for buying, maintaining, upgrading and securing its own servers and software.

In a cloud accounting scenario, a firm doesn’t buy or license its own servers or software. Instead, it partners with an online accounting software solution provider, which – for a recurring subscription fee – securely stores the firm’s data on its own advanced cloud technology infrastructure. Employees can then access the programs they need through a browser or portal. While accountants still do all their work on the devices they’re accustomed to using, their data is stored securely in the cloud. This means they can access it anywhere – at the office, at home or on the road.

Benefits of cloud accounting software

Organizations have realized the benefits of cloud accounting in recent years and increased their adoption of the technology. Some of the advantages cloud accounting offers include:

• Cost savings – Firms that invest in cloud accounting solutions don’t need to buy their own servers, install their own software or maintain their equipment. Instead, they pay a monthly fee to their cloud solution provider. If the firm grows, it doesn’t need to buy more hardware to support additional staff. It can just purchase more cloud licenses. This makes it simpler for accounting firms to increase or decrease their technology spending, depending on how their business evolves. 

• Reduced IT maintenance costs – Investing in cloud accounting software means IT staff no longer need to spend time maintaining, updating and troubleshooting a firm’s servers. Organizations that rely on external IT consultants for their technology maintenance will be able to reduce their spending. Firms with internal IT staff will be able to dedicate them to higher-value technology projects.  
  
• Automatic updates – With cloud accounting solutions, firms no longer need to worry about updating and patching their servers. Their cloud accounting software provider automatically updates their applications, saving time and money.
  
• Better accessibility – Cloud accounting allows employees to access their files from any location, whether at the office, on-site with a client or at home. This enables them to be more productive.
  
• Better data security – Cloud accounting solutions are protected by robust security features, such as data encryption, permission controls and multi-factor authentication. This ensures essential data doesn’t get into the wrong hands. Since all data is stored centrally in the cloud, accountants don’t need to copy files onto external hard drives or flash drives, which can be a serious security risk if those drives are lost or misplaced. Finally, data stored in cloud accounting solutions is backed up regularly, meaning it won’t be lost if a computer goes down.
  
• Improved collaboration – Cloud accounting software allows multiple people to simultaneously work on the same file. This saves time because team members no longer need to work on different versions of the same file and then reconcile each member’s changes. It also eliminates the risk of firms sending the incorrect version of a file to clients. 

Cloud accounting solutions make it simpler for accounting teams to communicate and work together. Since all files and data are stored centrally, team members can work with one another from anywhere. They can also work more closely with clients, sending and receiving files and communications through secure cloud portals.

How to move to cloud accounting software

Firms can shift to a cloud accounting solution at their own pace. For example, a firm could keep its desktop accounting applications in place but purchase a service from a cloud provider to allow the firm to store engagement files in the cloud, making it easier for employees to access and share information. As employees become accustomed to the cloud, the firm could gradually transition more data and apps to this environment.

Regardless of how quickly a firm decides to shift to cloud accounting, there are several essential steps it should take to ensure a smooth transition:

• Evaluate current accounting systems – A firm needs to assess its existing accounting software and its processes. Only then will it be able to decide what features and functionality it will need from a cloud accounting solution.
  
• Research cloud accounting solutions – Once a firm has established what it needs from its accounting software, it should examine the market to find a provider that meets its needs and budget. Essential considerations include feature set, scalability, user interface ease-of-use and customer support.
  
• Migrate data from on-premise to the cloud – Once they’ve selected a provider, a firm must migrate its existing data from its on-premise hardware to the cloud. Firms can start with a sample data set or select specific client engagements to test on their new cloud platform before committing to a full-scale migration. 

Migrating to the cloud may involve data cleansing – ensuring the format of the firm’s existing data is compatible with the format used by its new cloud accounting software. A firm and its cloud provider must work together closely on this step to ensure there’s no data loss.

• Train staff – Once its cloud accounting system is set up, a firm can work with its cloud accounting partner to train its staff on the new system. Employees will need to understand the cloud software’s features and functionality, how they access those features and how they can best use the software to maximize their productivity.
  
• Switch over to the cloud – Once all the testing and training are complete, you can shift entirely to the cloud. Monitor your cloud accounting solution’s performance closely during the early stages to identify and fix any issues.

A transformational change

The growing use of cloud accounting software is reshaping accounting practices, allowing them to complete work more quickly, improve the quality of their output and act as trusted advisors to clients by offering them more profound insights. Switching to the cloud does take time and commitment, but its benefits make it a worthwhile investment for firms. For practices seeking to modernize their audit and accounting functions, Caseware Cloud offers one secure integrated platform that meets all engagement, analytics and practice management needs.

Caseware Cloud boasts more than 85 cloud applications and tools, along with seamless integration with other Caseware offerings like Caseware Working Papers and Caseware IDEA, as well as other external architectures.

Internal audit teams are continuing to evolve their processes and procedures as they incorporate new technologies into their operations.

Caseware’s 2024 State of Internal Audit Trends Report delves into the biggest opportunities and hurdles facing internal audit departments, including the recruiting and retention of skilled internal auditors, shifting from manual to digital audit processes and the growth of Environmental, Social and Governance (ESG) reporting.

This year’s report is based on the responses of more than 1,000 internal auditors from around the globe, including heads of internal audit, directors of internal audit, chief audit executives and internal auditors.

Download this report to find out:

• What internal pressures internal auditors face within their organizations, such as having to do more work with fewer resources
• How quickly demand for ESG audits, as well as Diversity, Equity and Inclusion (DEI) audits, is growing
• What types of fraud concern global audit teams the most
• The most in-demand skills audit teams are seeking
• How well your colleagues around the world are coping with the shortage of skilled internal auditors

Practitioners today face an array of game-changing trends, such as increasing regulation, a shortage of skilled auditing talent and the adoption of new and exciting technologies like generative AI and automated workflows. This report reveals how your peers are handling these challenges and offers insights you can use to improve your internal audit department.

Some of the key questions answered in this year’s edition of the report include:

• What is the most in-demand skill internal audit departments are seeking?
• How prepared are internal auditors to combat fraud in their organizations?
• What is the number one challenge practitioners are facing today?

Caseware’s 2024 State of Internal Audit Trends Report reveals how the internal audit profession is evolving and uncovers insights that will help you and your team deliver high-quality audits and insights in the year ahead.

Download your free copy of this year’s report and help ensure your internal audit team is well-equipped for whatever the future may hold.

The story so far…

1. In August, the Senate voted to establish an inquiry into the regulation of auditing in Australia and are set to issue a report on March 1 2020. It will examine the relationship between auditing and consulting services, the level and effectiveness of competition in audit, audit quality and other related matters.
2. Many stakeholders have had input into this report including industry leaders and professional bodies such as the AASB and the Chartered Accountants Australia & New Zealand. 
3. In December, ASIC again documented that audit quality had slipped in 2019 for some firms. 
4. The Brydon report was also issued in the UK and provided a review into their audit industry, which called for the audit industry to become a stand-alone profession and regulated separately to accounting.

See the links below for some useful material.
Following these events, there has been much discussion about how the business of the accounting firm is moving beyond traditional auditing and taxation and this is potentially causing conflicts with the role of the auditor. Closing the expectation gap (the difference between what an auditor does and what stakeholders believe they do) has also been a topic of conversation. The UK proposed that this gap can be closed by auditors asking more questions in their audit process, instead of just relying on financial statements. The AASB recommended mandatory lodgement of financial statements in a digital format, making them more available to standard-setters. Many ideas, some very different.

So, how can Caseware help?

Compliance

We are committed to providing our customers with compliant products that make it easier for them to undertake compliant audits and have been doing this for 25 years. We work with multiple subject matter experts to ensure that we are compliant at all times. This assists with closing the expectation gap as auditors can focus on investigating the data more thoroughly and delivering valuable insights rather than stressing about compliance. All of our analytics tools are a ‘clear box’, producing transparent results that give auditors confidence they understand the results. Our audit trails also allow you to easily understand your audit at any stage and provide proof of what was undertaken and completed.

Online Collaboration & Insights

The cloud also allows for secure collaboration with one centralised location for all staff and stakeholders. Our cloud technology continually undergoes independent security audits and has certifications in ISO 2001 & SOC 2 to help auditors meet their security and privacy obligations. Auditors can, therefore, be more efficient with their audits and ultimately improve the overall quality. Documents can be easily managed with built-in archiving and backup capabilities. We’ve also made collaboration even easier with our latest cloud app, Xtend. This app ensures easy, efficient and secure collaboration with clients, reducing the number of emails sent, tracking documents and datasets received; ultimately saving auditors time. We also recently released AnalyticsAI which gives auditors better insights of datasets by highlighting areas of higher risk. These applications should provide auditors with the necessary tools to produce high quality, compliant audits.

Quality Training

Since the role of the auditor is changing, upskilling and training becomes even more important. Staff need to be well trained to ensure they provide the best possible audit. Caseware offers hands-on training for all levels of staff to ensure auditors are maximising the use of the product within the business. Our refresher courses are also perfect for those who need to brush up on ‘best practices’, or just as a reminder of what is new or different in the last few updates of the software.

2020 is proving to be challenging in so many ways – for auditors, determining how to audit effectively while maintaining social distance, or in actual lockdown, is a particular challenge. Our customers are advising us that there are at least 3 things that are of concern for them right now:  

1. keeping track of what audit evidence they request and get from their audit clients, 
2. how to effectively supervise junior auditors,
3. making the best use of all the experienced staff they might have at their disposal.

Of course, addressing these areas of concern while maintaining robust data security and relevant level access to the audit team, the client and any other stakeholders is also critical at this time.

1. Audit Evidence Requests & Receipt**

Keeping track of all the requests for information from clients has never been more critical if you can’t physically be on-site with them. The queries feature in Agile Audit is proving its worth in this regard for our clients using this new software.

1. Using the Queries feature, you can request specific information from your client, totally within Caseware’s Agile Audit product (instead of using normal, less secure email products) with all the inbuilt data security encryption and features coming into play.
2. Your client can provide documentation and responses via the dedicated portal, and this information is automatically populated into your engagement data files.
3. At any time, you can keep track of what has been provided to you and what is still outstanding.
4. Audit team members can refer to the documentation and responses throughout the engagement file, and decide whether or not to retain it within the final lockdown version of the engagement.

2. Supervising Junior Auditors**

Effectively supervising and fully utilising junior auditors who may not have sufficient audit knowledge or experience, is another unique 2020 issue – graduate auditors who were hired this year, have spent barely any in-person time with their senior colleagues, and may not have even ventured out to a client site as yet.  Therefore this busy season is already proving challenging for both them and their supervisors. This is where the Agile Audit and Caseware Cloud team collaboration features like Issues, Annotations and Chat can be beneficial.

Putting together an audit plan is key to performing an effective audit – it sets expectations, provides direction and highlights key areas of concern and focus.  This can be hard for a junior auditor to interpret though, so making use of Agile Audit’s annotation tool to electronically reference between checklists and supporting workpapers, and adding Review and To do points using Issues at the procedure, document or engagement file level, can provide that extra level of clarity and direction for juniors to complete their work. 

Senior auditors can:

• set specific audit tasks and request any anomalies or concerns identified by the junior auditors to be flagged as an “Issue” for discussion or review
• easily reference the list of issues or look specifically for annotations and have a joint point of reference for review of the audit engagement and action items back to the team.

The team can stay in touch with each other and ask questions as they come up using the Chat feature in Cloud, which always displays who else is online.

3. Fully utilising all resources at your disposal**

The quality of remote auditing may be an issue for some teams, and scaling software access for extra staff resources has never been more easy or immediate. With a Cloud licence for Agile Audit, you can easily organise to mobilise retired or remote staff to participate as part of an audit team, as they can use any internet-connectable device to supervise junior staff and become a key audit team member. 

If you’re looking for audit software that needs to address these three concerns, Agile Audit could assist you. Contact us to discuss your unique requirements via sales.au@caseware.com or by calling +61 3 9660 4680.

** All of the features mentioned in these industry challenges, are also available in our SMSF Audit solution.

If my data isn’t in a box in the office, where does it go and who can access it?

This a legitimate concern to have – there are a number of cloud platform providers being used now by Australian cloud-based products. So how can you be sure that your data is safe and secure when you sign up to use one of these products?

Caseware International has written a fantastic piece on the 7 basic criteria that they recommend using to assess the strength of any cloud-based platform and include how Caseware handles each. The full article covering these criteria can be found here. It is well worth reading, especially if you are considering implementing a cloud-based solution.

In summary, the 7 criteria for evaluating Cloud solutions are:

Physical security

This is the security over the cloud server hardware, facilities, personnel, access and availability, and the level of readiness for environmental factors like flooding and power outages. In our case, our Cloud is hosted on Amazon Web Services (AWS) platform which is covered by an SSAE 16 report and is PCI Level 1 certified, ISO 27001 certified, and compliant with all major security control frameworks.

Application security

This relates to the security around the components making up the system being considered, including application code and databases. The best way to get comfort over these is to determine what certifications the offering comes with. Following the lead of AWS, Caseware Cloud is undergoing certification for ISO 27001 and SOC 2 Type 1, which should be complete by the end of this year. Our SOC 2 Type 2 certification is then expected by mid-2018.

Network security

This covers controls like firewalls that limit traffic inbound, outbound and within the system itself. These must prevent all forms of threats and attacks, as sadly they are becoming more common in our modern world. Caseware Cloud has firewalls in place, and the system is continuously monitored. Regular penetration testing is also performed on both our system and AWS, to ensure that they are as safe and secure as they can be.

Data security and privacy

Security of data should be considered in two forms – how data travels over a network/the internet (data traffic) and when it is stored within a system (data storage). Data accessibility and the legalities around where data can be stored are also relevant here.

A key aspect of Caseware Cloud is that all data traffic is SSL-encrypted, and advanced proxy services protect against malicious threats. Plus AWS also has policies and accreditations of their own that provide us with an added layer of data and network security.

As for where data is stored, the data on all Australian Caseware Cloud sites is stored on the AWS servers in New South Wales – no Australian data leaves the country.

Access controls (logical)

These are controls like passwords and multi-factor authentication that determine who can access a system, and to what level. With Caseware Cloud, all registered staff access the Cloud using password authentication. Their staff role type in the Cloud then determines what actions they can perform on the Cloud, and what entities they can access.

Availability

These criteria relate to what guarantee a provider can offer that all of their services will be available and perform as expected when you need them. At Caseware, continuous monitoring, regular integrity checks and several other measures help us to ensure our Cloud is stable and always available. Plus we also perform regular backups to prevent any loss of data and work.

Business partnership and trust

These final criteria don’t relate to technology. Instead, this is about the service providers themselves… Are you comfortable heading into a business partnership with them? Caseware has been the leading provider of powerful, purpose-built audit and financial reporting solutions to the profession in Australia and New Zealand for more than 20 years. Our reputation and our proven track record of being a long term, premium products and services provider, with a continual investment in technology improvements and engagement with the legislative and standards associations, demonstrates our commitment to the industry. We are investing a significant amount of our resources into the Cloud and SMSF Audit areas, and are committed to further improving our products and service in this space long term.

In 2010, the Australian Auditing and Assurance Standards Board (AUASB) issued 41 clarity standards.  It was a particularly challenging time for the audit industry, as there were 500+ individual requirements across the standards that had to be considered on every engagement. 

This saw the emergence of ‘checklist auditing’. This type of auditing was seen as a way of getting comfort that all necessary and relevant requirements had been addressed.  

Thankfully, a bulk update like this has not happened since.  Instead, individual standards have been progressively revised.  But does this make it any easier to stay up to date?  Although less significant, revisions made to only one standard still mean there may be changes to consider to workpapers, audit approaches and what’s documented in files.  

You don’t have to wait until a standard is revised to understand and account for its impact.  Getting involved early in the consultation phase gives you early access to the planned changes. It means you may also help change how the standard is revised. 

How can you learn more about proposed changes to Australian Auditing Standards?

There are plenty of opportunities for auditors to both understand, and contribute to, the development and revisions of standards well before they become requirements.

We recommend you do the following:

• Subscribe to newsletters. The following organisations send out regular communications. They always highlight events and resources relating to proposed standards:
  • AUASB newsletters (to subscribe, use the  link at the bottom of the page)
  • CA ANZ Reporting & Assurance News (members only)
  • CPA Australia (members only). 
• Regularly review your professional member body’s online resources:
  • CAANZ – Tools & Resources & Technical > Audit & Assurance
  • CPA Australia – Tools & Resources > Audit & Assurance.  
• Follow regulatory bodies on LinkedIn and other social media. AUASB often share links to their recently released publications and roundtable consultation events.
• Review AUASB Consultation Papers and Exposure Drafts:
  • These can provide helpful introductions to proposed changes and elaborate on the reasons behind them
  • Firms can elect to submit feedback on these. Alternatively, contribute to a combined submission that is normally done on behalf of members from both the CA ANZ and/or the CPA.
• Get involved in AUASB outreach activities:
  • Respond to AUASB surveys to share your opinions on proposed changes
  • Attend AUASB roundtables to hear how others in the industry interpret and respond to proposed changes and contribute to the conversation yourself.

What is required to update your audit workpapers?

This is where the true benefit of using a purpose-built audit solution comes into play – you need to do very little to update your workpapers!

At Caseware, we recognise the important role we play in this. As a solution provider to the industry, we ensure that all our audit and financial statements product content complies with all relevant standards and legislation. Our customers receive content updates before new standards and requirements are applicable, in plenty of time to implement them,. We also regularly hold webinars and have our subject matter experts present on impending changes and what you need to do to prepare.

What are you waiting for?

Changes to standards are ultimately designed to enhance audit quality and consistency across the board, for all sizes of entities. If you’re having issues keeping up to date with your knowledge of the standards, changes to legislation and overall general requirements in this space, now may be the time to consider a specific, easy to use and comprehensive audit software solution.

Give us a ring or type a query in the chat box below. Or, you can check out our website information to see whether Caseware’s audit solution might be worth investigating.

Our past experiences have a significant influence over how we perceive a set of circumstances and influences how we react to those circumstances.

One of the keys to smarter decision making is understanding and acknowledging our own shortcomings. In order to do this, we need to turn the microscope on ourselves and become aware of our own personal biases and blind spots. How well do you know yours?

A LinkedIn post caught my attention last week, and it resonated with me:

Ask people feedback and they sometimes tell you what you want to hear. Ask them about blind spots, and they’re more likely to tell you what you need to hear.

We view the world from a limited perspective. Our perspectives are shaped by how we view and engage with the world. What and how we have experienced things in the past, will likely influence how we perceive and act in response to any given set of circumstances. When it comes to considering the authenticity of similar types of documents for other clients, for example, an auditor who has known clients to forge documents will likely be more sceptical than an auditor who has not.

In practice, both intuitive and detailed systems of thinking and reasoning are necessary for the completion of an effective and efficient audit. An auditor will switch between these systems depending on the specific audit task being undertaken. Applying the right mode of thinking, at the right time, can limit bias and lead to smarter and more efficient decision-making.

Intuitive Thinking and Reasoning

Used in the proper circumstances, intuitive thinking and reasoning can provide a quick and accurate means of identifying, assessing and responding to risk. For example, consider an auditor conducting a risk assessment for PPE which consists solely of office furniture and IT equipment. An experienced auditor is not going to spend time documenting a detailed justification as to why PPE, in this instance, is not complex; nor is it a subjective balance; nor is it sensitive to changes in the market and other economic factors; nor does it contain accounting estimates subject to estimation uncertainty; nor is it susceptible to misstatement due to management bias or other fraud risk factors.

Rather, they might simply conclude that based on auditing balances with similar characteristics to other audits, the risk of material misstatement relating to this audit balance is likely to be the same – low.

Common Biases

One of the pitfalls in applying intuitive thinking and reasoning, however, is that it can expose a person’s lack of understanding of risks relating to an audit area. The following are common examples of biases that play out in an auditing context (and more regularly than you might think):

• Confirmation bias – favouring information that confirms our existing beliefs or what we think we know, and limiting consideration of alternative perspectives.
• The Dunning-Kruger effect – thinking we know more than we do, and oversimplifying a complex matter or issue.
• Representative bias – concluding the degree to which A is representative of B, by determining the degree to which A resembles B – and potentially overlooking important distinct characteristics which differentiate A from B.

A failure to adequately identify and manage these biases presents challenges to an auditor being able to exercise the levels of professional judgement and scepticism required when conducting audit procedures.

Using technology to aid auditor decision-making

The right audit software with assisted automation options, used in the right way, can help support the intuitive decision-making process. Smart software can automate a variety of audit processes that would otherwise have to be manually (and tediously) processed and documented, for every audit engagement.

Automation built into software also improves the consistency and efficiency of documenting decision-making processes in the audit file and provides more effective time to devote to audit matters that require a more considered and detailed examination approach.

A good example of smart automation assisting auditors is the tailoring technology in Caseware’s Agile Audit solution.

‘The Optimiser’ determines the workpapers and ASAs relevant to the engagement and populates the engagement file based on an auditor’s answers to a few key questions relating to the entity.
Auditors can use the in-built documentation decisions to further tailor the checklists and their layout, to document the appropriate level of detailed and sufficient audit evidence required.
With this type of automation assisting the compilation of reasonably standard audit documentation requirements relative to the entity, the level of inherent bias within a particular auditor is reduced and process workflow and consistency are promoted.

Audit software in the future

Looking into my crystal ball I see a future not too far away, in which audit software will make suggestions to the auditor based on what it has learned from auditors’ actions and decisions on other audit files (e.g. suggesting risk assessments, audit approach and audit procedures).

It will also start to identify repetitive behaviours of auditors and identify circumstances where the auditor may be susceptible to applying their personal biases. The audit software may then prompt the auditor to step back and re-confirm a decision made.

I have no doubt the auditor will have the option to dampen or heighten this software-generated ‘voice’ of scepticism, but it is going to be fascinating to see what emerges in this space.