July 12, 2001
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Intacct Audit is the industry's first web-based auditing solution, delivered as an integrated part of Intacct's enterprise-class web-based accounting service. Co-developed with Deloitte & Touche LLP, Intacct Audit allows CPAs to perform audits online, from any location, day or night. At this exclusive web-based seminar, participants learned how to cost-efficiently gain access to the world-class auditing methodology and tools developed by Deloitte & Touche. They learned much time and effort can be saved by automatically uploading data from the Intacct accounting service directly into auditing work papers and instantly interrogating the data.
You can read the complete transcript of this workshop.
Topics covered in the workshop included:
- An introduction to web-based auditing
- Features & capabilities of Intacct's web-based auditing solution
- The impact of web-based auditing on planning, internal controls, testing, reporting, and audit administration
- The benefits of web-based auditing
- The future of web-based auditing
July 12, 2001 Session Sponsored by Paisley Consulting
Session Moderator: Welcome everyone, and thank you for joining us today! I am happy to introduce Ryan Fox, who will be presenting a workshop on Web-based accounting. Ryan Fox is a manager in the Assurance Services department at Deloitte & Touches National Office in Wilton, CT.
He has been an audit professional for seven years and has served a variety of Higher Education, Insurance, Manufacturing and Service clients. In addition to working for Deloitte & Touche, Ryan has also served as an Adjunct Professor of Accounting at Lehigh Carbon Community College and published various case studies related to Accounting and Auditing. Ryan graduated Cum Laude from DeSales University with a BS in Accounting.
Session Moderator: Welcome Ryan!
Ryan Fox: Hello, my name is Ryan Fox. I am an assurance services manager in National Office at Deloitte & Touche. I am the project manager responsible for the co-development of the Intacct Audit Module with Intacct Corporation. I am glad you have all joined me this afternoon, and I hope to provide you with some valuable information about the concept of web-based auditing.
I would like to use the following format:
First, I will cover a specific topic and then ask for questions. When the questions have been completed, I will move on to the next topic. Please hold your questions until I have completed each section.
Ryan Fox: I would like to begin by giving you a brief overview of Intacct and then introduce the web enabled auditing concept. Intacct is the industry leader in web-based accounting and related business services. As you know, the Intacct audit module was co-developed with Deloitte and Touche and is the industry's first web-based auditing solution. I will now discuss the Intacct Audit module from a very high level then delve into more detail.
One of the nice things about this solution is that it integrates with Intacct accounting solution allowing CPAs to be freed up from the burden of working between separate applications; those being the accounting system and the auditing system in conducting the their audits. Some of the features of the Intacct audit module are that it enables quick and easy manipulation and querying of data since the auditing system knows the data structure of the accounting.
Because of this structured data format, we can build automated file interrogation tests that can allow the auditor to easily manipulate and query the accounting data. The audit module does include a full set of GAAP compliant audit working papers with an auditing methodology. Due to the connectivity between the accounting and auditing system there is automatic data import; auditors no longer have to re-key accounting data in order to populate their working papers.
Questionnaires have what we call smart capability, which is essentially a decision tree support system. When you answer yes or no to certain questions or rate certain questions on a scale of 1 to 5, other portions of those questionnaires will populate as well as other documents to tailor your questionnaires to the specific instances of your engagement. There is work group collaboration which means that multiple people can log into the Intacct website and work within the audit file at the same time over the secure Internet access to the Intacct module. They can do this remotely so they can spend less time at their clients going through paperwork and more time focusing on the key business issues and developing client relationships.
Some of the technology features of the audit module are that since it is a web-based solution there is no software to be purchased and there are no versions of software to be maintained. So as Intacct makes upgrades or enhancements to the audit module, those are rolled out on a bi-weekly basis to users through the Internet without the need to purchase new software and maintain versions of software on their own servers. Additionally, there is no data storage need for the user. All of the audit working papers are maintained on Intacct secure servers. All of this will reduce the IT infrastructure costs of the CPA firms utilizing the Intacct audit module.
Ryan Fox: Are there any questions on the overall structure of the Intacct Audit service?
Bud Swartz: So to operate, you need two things: 1) a client using Intacct as an ASP and 2) a license to the audit software. Is that right? Audit software = ASP auditing service
Ryan Fox: We'll discuss it in a moment, but the client does not need to use the Intacct accounting system, but you do need to subscribe to the Intacct audit service.
Jim Kaplan: If the workpapers are maintained on Intacct server where does the supervisory review take place?
Ryan Fox: Everything is done over the Internet by logging into the Intacct secure servers.
Daryn Smith: Does the process include uploading client data such as a trial balance?
Ryan Fox: If the client uses the Intacct accounting system, there's direct interaction, if not, I'll speak about uploading data in a few minutes.
Ryan Fox: The modules that are included within Intacct audit are complete to perform your audit from beginning to end. We offer planning, internal controls, substantive testing, reporting, and engagement administration. In the planning section, we provide a Control Environment, General Business Risk and Monitoring Questionnaire that includes some of those smart features such as the automated scoring of the overall control environment as well as an indication of what areas there might be specific identified risks.
For example, there are 15 statements, such as, "Management exhibits a high degree of integrity." You must select from one (strongly disagree) through five (strongly agree). Any statement receiving a score of one or two will result in the population of a specific risk in the risks table at the bottom of the document.
For example, if you select 'one' for the aforementioned statement, a risk will populate stating that, "Management's integrity may be lacking. Consider the reliability of their assertions during the audit."
Additionally, based on the overall score to all of the 15 statements, the general business risk for the engagement will populate the working paper. We also have working papers for documenting the various business cycles and identifying any risks associated with those business cycles.
There is guidance for help in understanding the clients business and identifying related parties and related party transactions. A smart fraud checklist helps you answer a series of questions and identify areas that may be susceptible to fraud. There is a pre-populated preliminary analytical review that includes a variety of ratios and fluctuation analyses that calculate automatically for the auditor. All of the key activities within each one of these planning documents are captured in the automated planning memorandum. The conclusion that is reached in each one of the planning documents is highlighted in the automated planning memorandum for a reviewer to review from a high level.
Internal controls have templates for each business cycle that include control objectives, the types of potential errors and the account balances that could be affected by the control activities for each one of those control objectives and the suggested test of controls that the auditor may perform.
Ryan Fox: Any questions on the planning or internal controls phases of the audit module?
John DuPree: How are the documents set up to handle Non Profit Organizations?
Ryan Fox: The material is currently tailored to manufacturing, service, and retail operations. Future releases will include industry specific content, including not for profit organizations.
Bud Swartz: How does the online storage/file system integrate with physical items, which may exist in a file (e.g. Engagement Letter)?
Ryan Fox: Physical items can be stored only in electronic versions with the file or a placeholder within the electronic index can be added indicating a manual working paper
Ryan Fox: In testing, we provide GAAP compliant audit programs for each substantive testing area. These programs provide a general introduction to the audit area, how management's assertions relate to this testing area, and a list of summary procedures to be performed. These summary procedures are supported by a detail listing of audit steps. To the extent possible, working papers that support the audit program steps are provided in the audit module. Additionally, these working papers are automatically generated to the extent possible.
Due to the integration with the accounting system, many the working papers will generate automatically based on the client's groupings and the mapping of their individual trial balance accounts. Automatic generation of working papers can generate your lead sheets, ratio analyses, roll forwards, and financial statements. These documents will populate and generate automatically based on the interaction of the auditing system with the accounting system.
As I mentioned previously, there are also file interrogation capabilities with customizable parameters. Since we know the data structure of the accounting data, file interrogation becomes very easy. Current file interrogation capabilities include stratification, probability proportional to size, and systematic selection. These capabilities can be run on the general ledger or individual transactions, the accounts payable detail, or the accounts receivable detail.
Customizable parameters include which leadsheet groups to interrogate, date ranges for interrogation, customers, and vendors. Results of file interrogation tests are displayed in Intacct working papers with signoff, review note, and tickmark capabilities. An additional 10 to 15 tests should be available within the next quarter. The data bank of tests will include internal controls, fraud, substantive, and analytical tests.
Ryan Fox: Any questions on substantive testing or file interrogation capabilities?
Bud Swartz: How would one perform an ad hoc test not in the "bank of tests?"
Ryan Fox: Ad hoc tests are currently not available. That's a feature being explored for a future release.
Session Moderator: Is there any suggestion panel or place where ideas for future releases can be submitted?
Ryan Fox: Requests can be submitted directly to Intacct via their Web site, or directly to me at [email protected]
Bud Swartz: Is the auditing module integrated with every component of the "accounting system" or data upload (e.g. inventory ledgers, a/r ledgers, etc.)?
Ryan Fox: Bud, the audit module is integrated with every component currently supported in the accounting system, which currently includes accounts payable, accounts receivable, general ledger, and inventory.
Ryan Fox: There are also templates to generate necessary audit confirmations as well as audit opinions, engagement letters, and other correspondence that would be sent out during the audit. You can utilize these by filling out the engagement profile in the beginning of the audit. This document is where you enter pertinent information such as the name and address of your firm, the name and address of the client, and the date of the audit.
This information will populate all of the audit confirmations so that you do not need to re-key that data each time you generate an audit confirmation or other piece of correspondence. Each one of the working papers within the Intacct audit module contains the ability to have a preparer and reviewer sign off, review notes to be attached to the working paper, as well as the ability to add tickmarks throughout all of those working papers.
In the reporting section of the audit module, we have subsequent events, loss contingencies, and related questionnaires that you would fill out during the reporting phase of the audit. We also provide a spreadsheet to summarize any errors that were discovered during the audit that remained unadjusted by the client. There is also a working trial balance where you can capture any adjusting and reclassification entries that were made during the audit.
We also provide GAAP and GAAS questionnaires to help ensure compliance with GAAP and GAAS. There is also a reports library that includes various audit opinion templates, reportable conditions templates, and material weakness letter templates as well as related report dockets.
Ryan Fox: Any questions on the reporting section of the audit module?
Bud Swartz: on GAAP/GAAS, are there any resources on the site/service re: technical literature (e.g. D&T analysis of FAS 133)?
Ryan Fox: The target date has been established to provide GAAP and GAAS literature as well as D&T interpretations. The target date is September 30.
Ryan Fox: In the engagement and administration section there is an engagement budget and time summary that is provided for the auditor to track their progress of the audit. There is a confirmation control summary to track the status of confirmations sent and received as well as a permanent file index. Some of the other features included in the Intacct audit module are the ability to append supplemental documents like letters, memos, and scanned documents.
We have provided within the audit module a structure that includes everything we feel is necessary to perform an audit from beginning to end but of course there are client specific circumstances where you may want to add other documents such as a Power Point presentation that you made to your client or some other type of document. These can be easily uploaded into the Intacct audit file and stored on the Intacct server with the remaining Intacct documents and you can again download it to your local drive in the future for use again on your local computer. All of the documents and working papers are available in PDF format so that you can print them and view them.
John DuPree: Can the information on the audit budget be uploaded WorkForce - Paisley Consulting Staff Scheduling Software?
Session Moderator: Paisley Consulting is sponsoring this workshop - you can find more about Workforce staff scheduling software and Paisley consulting by clicking on the banner above, or by going to their web site at www.paisleyconsulting.com
Ryan Fox: Intacct is currently working to integrate staff scheduling into their services. There is also document locking to prevent simultaneous preparation by two or more users. As I mentioned, various people can be working in the same audit file but we do have the capability to prevent two people from working within that same document in that audit file.
Ryan Fox: Any other questions on the engagement administration section of the audit or other administrative features? There is a very comprehensive help system that comes along with the Intacct audit module. There is online help that includes references to professional guidance and the purposes and uses of each working paper that is document specific.
There is also Live Help where you can go to get technical support or assistance in learning how to use the working papers or the audit module in general--you can chat directly with an Intacct Customer Support representative.
John DuPree: Is there a place where we could see a sample the engagement budget and time summary?
Ryan Fox: You can go to the Intacct Web site and sign up for their free 14-day test drive. www.intacct.com It's just an Excel spreadsheet that's uploaded into the system.
There is also an online tutorial, which is a step-by-step guidance that takes you through navigating and using the Intacct auditing application. The benefits of using the Intacct audit system overall are due to its integration with the accounting system. Due to this integration you can cost efficiently apply sophisticated auditing techniques. You can perform auditing functions with greater accuracy since there is less re-keying of data by the auditor from the client's hard copy trial balance and other records imported so you reduce the likelihood of errors.
You can provide a higher level of client service while minimizing the traditional demands made on clients with a live system integration. Less are you re-keying data and spending a significant amount of time typing things into your audit module but your focusing on the analysis and interpretation of that data and in doing so, no longer do you need to ask the client for access to a lot of paperwork.
You can drill down through the web to the supporting documentation and the level of detail that you need to support your audit evidence. You increase your audit efficiency with file interrogation, automation of the working papers, and references within the working papers and the help documents to the authoritative guidance that you may need to access.
Ryan Fox: Are there any questions on the benefits of using the integrated, web-enabled audit application?
Bud Swartz: is the system currently live (i.e. companies/auditors using it)?
Ryan Fox: The audit system has been live since January; the accounting system has been live since spring of 2000.
Ryan Fox: Some of the upcoming enhancements that will be made in the near future to the audit system, under active development are live links to online professional guidance (AICPA and the FASB) from the online help, the audit programs, and the working papers. Right now those are hard coded references but in the future they will actually be live links directly to the relevant professional guidance.
Additionally, the audit service has recently been expanded to include reviews and compilations. Some of the things we are looking at for subsequent releases are the ability to generate tailored audit programs that are specific to individual needs of each and every client. We are also going to create industry specific audit modules. Right now the audit module has generic content that would lend itself well to a manufacturer, retail client or service client, but we will tailor that content to be more specific to various industries over time. We will also add some of the back office operations to the CPA service such as staff tracking, invoice generation, and AR management.
Also being developed for mid to late summer release is the ability to have a CSV upload capability for clients that do not use the Intacct Accounting system and that is going to be a two phase release, the first being the ability to upload the client's trial balance which will help you in populating all of your working papers and the second phase of that capability will be the ability to upload all of the supporting detail behind the trial balance including the GL detail, the AR subsidiary detail and the AP subsidiary detail so that you can run the file interrogation test on that base detail.
Ryan Fox: Are there any questions on the upcoming enhancements or any other aspect of the Intacct Audit Service?
John DuPree: Are you going to focus one particular accounting system (i.e. MAS 90) or will the new release allow you to upload from any accounting software.
Ryan Fox: The new release should allow you to upload from any accounting system.
Bud Swartz: how many users does Intacct have, 1) companies/accounting users and 2) audit firm users? Is there a practical company-size limitation as to what the Intacct ASP service will support (e.g. companies with less than $x revenues)?
Ryan Fox: I'm not sure - you might want to ask that questions directly through Intacct's Web site. The Intacct service is targeted for companies with 50 - 500 employees, and therefore the small and regional size CPA firms. If you would like more information about the benefits of web-based accounting, you can contact Intacct sales consultants toll-free at (877) 886-7600.
Bud Swartz: Thanks for the overview.
Session Moderator: Any other questions for Ryan before we finish here?
Session Moderator: I'd like to thank Paisley Consulting for their sponsorship of this workshop today.
Ryan Fox: Thank you for your time today. I hope I was able to provide you with valuable information about web-based auditing.
John DuPree: Thanks so much for your time. I will be looking into Intacct.
John DuPree: Thanks. I want to share it with some of the partners and managers of the firm.
Session Moderator: Thank you all so much for attending today, and thanks to Ryan for an excellent workshop!
Ryan Fox is a manager in the Assurance Services department at Deloitte & Touche’s National Office in Wilton, CT. He has been an audit professional for seven years and has served a variety of Higher Education, Insurance, Manufacturing and Service clients.
In addition to working for Deloitte & Touche, Ryan has also served as an Adjunct Professor of Accounting at Lehigh Carbon Community College and published various case studies related to Accounting and Auditing. Ryan graduated Cum Laude from DeSales University with a BS in Accounting.