From Smart Meters to Smart Audits: Why It’s time to embrace open accounting
Remember the last time you had to submit an electricity meter reading?
Digging past clutter, writing down numbers, triple-checking entries on a platform. Now, that data moves seamlessly from your smart meter to your supplier, giving you faster information without the hassle.
This was one of the first data enhancements, but industries are quickly embracing seamless data sharing – even in the highly regulated finance industry.
Today, people apply for loans or credit cards with a click in their banking app. Small businesses submit tax returns directly from their accounting software. Work expenses link to email inboxes, automatically logging invoices. Budgeting apps connect to all your accounts, giving real-time financial snapshots – they even automatically move money into your savings.
Millennial Expectations: The new decision-makers demand more
This is what millennials expect and have embraced. Now in leadership roles, they’re the decision-makers. If firms aren’t offering customer experiences to match, they’ll be left behind.
The Audit Data Dilemma: Still stuck in the past?
So why do many auditors still insist on collecting financial data manually?
The average audit data request goes something like this:
- Send initial data request to clients
- Client compiles the data and sends it back (hopefully in a timely manner)
- Audit team cleans the data (assuming it’s all there first time!)
- Auditor asks client for more data/docs for testing/procedures
Typically, this process is handled by both the manager (because it’s client facing) and the junior staff (who do all the data cleaning work). No wonder the industry is facing such talent retention issues!
The Challenge: Standardizing data from thousands of accounting systems
Audit is falling behind, largely because standardizing data from thousands of accounting packages, each with different formats, is challenging. Building a solution requires in-depth expertise in both accounting and cutting-edge technologies.
It’s not just about connecting systems; it’s about understanding and standardizing diverse financial data structures.
The Current Reality: A time-consuming, manual process
There are great tools out there to help the collaboration. But the financial data sharing still looks like a dropbox. Business owners can securely share data in their personal life, but not when the auditor comes calling…
Many firms keep doing the same thing as last year because ‘it works’. Well sorry to break it to you, but it’s not working. The industry is under huge pressure to change.
The Alternative: Streamlined, automated data collection
An alternative audit data request could go like this
- Auditor sends a single, secure link to all clients, initiating the data request process.
- Clients click the link and choose to either: a) Connect directly to their accounting package, or b) Upload relevant financial files.
- The system automatically extracts and standardizes the data into a uniform chart of accounts.
- Auditor receives an instant notification that standardized data is ready, including financial statements, trial balance, and sub-ledger details.
The whole process takes minutes.
This dramatically reduces time spent on data collection and preparation. No manual compilation, no back-and-forth emails, no data cleaning required. It’s a seamless, digital experience that matches the efficiency seen in other industries.
I know which I’d prefer as a junior auditor.
Taking Action: Your checklist for modernizing audit data standardization
Ready to modernize your audit process? Here’s a quick checklist to get started:
- Assess your current data collection process. How much time does it take? Where are the bottlenecks?
- Research modern audit data collection tools. Look for solutions that offer standardization across multiple accounting packages (Hint: Validis does this)
- Gather feedback from your junior staff – they’re often closest to the data collection pain points.
- Calculate the potential time savings and improved data quality. How could this impact your audit quality and efficiency?
Want to learn more about streamlining your audit data collection? Let’s chat about how you can bring your audit process into the 21st century.
