The American Institute of Certified Public Accountants is inching closer to audit data standards that are intended to make audits more efficient and more effective for everyone involved.
The Emerging Assurance Technologies Task Force of the AICPA’s Assurance Services Executive Committee has finalized two audit data standards for subledgers, focused on order to cash and procure to pay. Companies that voluntarily adopt such audit data standards, which provide a common framework covering data fields and files commonly requested by auditors, could find the work to fulfill auditors’ file requests trimmed from days to hours, says Amy Pawlicki, director of business reporting at the AICPA. In addition to facilitating information transfers, they also facilitate the use of data analytics, the AICPA says.
“Just like XBRL is there for financial reporting, we’re developing audit data standards for the collection of data for audit,” says Pawlicki. “And it’s not just for external auditors. It is also valuable for internal audit purposes.”
Auditors currently spend a great deal of time collecting data from clients in various formats and from various systems, says Pawlicki. It represents a significant part of the total audit effort. “Auditors are spending an enormous amount of time getting data into consistent formats and normalizing it so they can then do the value-added part of the audit,” she says. “The point of the audit data standards is to eliminate that step.”
More pilot testing is needed to better define the actual or potential efficiency both for companies and auditors, not to mention the costs savings, Pawlicki says. “We already know this is making it easier to transmit data to the auditors,” she says. “We’ve seen it in action with internal audit departments facilitating their data collection process. They have said the effort required to put it in place was well worth it.” Companies also have found the ability to facilitate data analytics, to view or access data that previously was inaccessible, was “eye opening,” she says.
The AICPA’s effort has engaged ERP vendors with the goal of assuring the standards will work across platforms, even across international borders. ERP vendors are developing mapping tools, according to Pawlicki, to help companies implement new audit data standards as they emerge. “It’s not as big of an effort as XBRL tagging,” she says. “It’s much quicker and easier.”
The development of audit data standards is meant to facilitate more efficient and meaningful audits, Pawlicki says, but it’s also part of the proliferation of data standards beyond financial reporting and even government reporting. “There are limitless applications of data standards,” she says. “The longer term visions is to facilitate audit analytics as part of the traditional financial statement process. Once it is in an interactive format, auditors will spend less time collecting and normalizing data. They will have more time to analyze data and build applications and models that can tell them interesting and important things.”