Audit Data Standards: Revolutionizing Business Information
One of the challenges that management and auditors face is obtaining accurate data in a usable format following a repeatable process. That’s why the AICPA’s Assurance Services Executive Committee’s Emerging Assurance Technologies Task Force seeks to increase audit efficiency by developing the following voluntary, uniform audit data standards: base standard, general ledger standard and accounts receivable subledger standard.
These non-authoritative audit data standards present a new way of optimizing efficiency and effectiveness in reporting and assurance by facilitating automation and enhancements in the analysis of business information. In addition, audit data standards identify the key information needed for audits and provide a common framework covering:
- data file definitions and technical specifications;
- data field definitions and technical specifications; and
- supplemental questions and data validation routines to help users better understand the data and assess its completeness and integrity.
Who will benefit from their use? A number of stakeholders, from internal and external auditors to software vendors. Let’s discuss.
All CPAs, plus managers and non-CPAs in business and industry: The benefits of audit data standards are all encompassing and CPAs in business and industry as well non-CPA management will also find value in their use. Audit data standardization will provide companies with data consistency and the opportunity for more extensive data analysis. By providing real-time access to key general ledger and subledger data in a standardized format, audit data standards will enable enhanced analytics to be performed on company information, leading to insights such as potential growth opportunities and areas for improvement. This will not only enhance the value of the audit, but will also facilitate enhanced decision-making by company management. Similar to the ways in which audit data standards aid auditors, they will enable companies to drill down and better identify higher risk areas or suspect transactions and will assist with standardizing analysis across multiple business units that may have been acquired with different reporting systems still in place. By utilizing one common framework, this will allow for similar analysis that can be shared across the locations. Companies and individual business units will be able to:
- better evaluate key metrics in order to substantively predict company performance;
- analyze growth opportunities; and
- screen for questionable transactions.
Audit committee members: With audit data standards in use, audit committee members will receive more timely and valuable information that will assist in their oversight of the quality and integrity of the company’s financial process. Auditors will consistently deliver a more timely and detailed analysis of business performance to audit committee members that will support effective oversight.
Software vendors: Producers of analytic software will also find audit data standards helpful, because they can now begin to develop ready-made extraction programs to provide common data views of production data for companies to implement in their systems. Instead of companies having to interrogate their systems with custom queries, software providers could implement the extraction programs directly into the existing system. Software providers could also offer audit data interchange in a cloud or similar means designed as an external, secure data repository, in which companies and auditors could access data on demand.
These are just a few of the many exciting opportunities that these standards can offer the CPA profession and businesses.
You can access the audit data standards, through the AICPA’s Financial Reporting Center. You’ll notice that the base standard provides additional field and file information to be used in conjunction with both the general ledger and accounts receivable subledger standards, while the general ledger standard and accounts receivable subledger standard offer field and file information specific to those accounts. The standards are offered in flat file format (pipe-delimited UTF-8 text file format) as well as eXtensible Business Reporting Language Global Ledger Taxonomy Framework.
How do you think audit data standards will change your firm’s audits or your business?
Dorothy McQuilken, Manager – Business Reporting, Assurance and Advisory Services, American Institute of CPAs. Dorothy is the lead staff liaison to the AICPA Assurance Services Executive Committee’s Emerging Assurance Technology task force and Risk Assurance and Advisory Services task force.