The CPA Firm Management Association (CPAFMA) recently released findings from their 2019 Digitally Driven Firm Survey which points to accounting firms continuing to move forward in adopting the profession’s paperless best practices and tools. This survey has been conducted every other year since 2003 and is targeted toward firms with 10 or more members. 173 firms participated this year. In this article, we look specifically at the audit department findings from the survey and share the solutions we see firms implementing to become more “digitally driven.”
Remote Access
Auditors, by default, need to be highly mobile. The 2019 survey found that 77% of personnel working outside of the office were able to access firm applications and information via a remote connection the majority of the time. This points to firms adopting natively cloud-based applications, such as Thomson’s AdvanceFlow, and hosted applications utilizing remote access technologies, such as Citrix and Microsoft Windows Terminal Server, that allow auditors to work effectively through any Internet connection. The obvious benefits of firms adopting remote access technology are that all audit work is completed on centralized servers which eliminates version control issues and the time spent manually checking binders in and out, as well as having to make backups in the field. In addition, this data is capable of being simultaneously accessed by all team members for more effective collaboration. And, since there is no data on the local workstation, the impact of a theft or damaged laptop is minimized.
Mobile Equipment
Simply stated, working effectively away from the office is required for auditors. In addition to laptops, the survey identified other equipment being taken into the field, with external monitors being the most common accessory utilized by 79% of respondents in 2019 (which was a 17% increase over the previous survey in 2017). The survey identified which brands were selected most often, with 37% standardizing on ASUS, 21% choosing AOC, and 14% using Lenovo. So, if you are not utilizing dual screens in the field, it’s time to get onboard! The next most selected audit tool was a Mobile Hot Spot/ MiFi device, carried by 62% of responding firms, which provides roaming Internet access through the 4G digital cellular networks. With more applications running in the cloud and firms being concerned with security and malware on client/public WiFi, we expect more auditors will standardize on using the digital cellular networks as these systems become increasingly more robust and secure. The survey also found that more than half of responding firms (51%) were carrying mobile scanners into the field to scan client source documents, which came as somewhat of a surprise considering the adoption of portals and secure email solutions (described further below). Not surprisingly, the number of firms carrying printers (12%) or multifunction devices (5%) remained on the lower end of adoption, which coincides with our experience consulting with audit team members.
Document Ingress
We have found one of the hallmarks of efficient audit production is formalizing the process to receive all client source documents digitally before the start of the engagement. This requires proactive planning with clients and educating them on the firm’s digital tools to facilitate document ingress. More than three out of four responding firms (77%) stated they received the majority of their documents electronically utilizing a variety of applications, including Thomson Reuters NetClient CS, Citrix ShareFile, CCH Axcess Portal, and SuraLink, with no individual application garnering more than 20% of the responses. Having all documents ready at the start of the engagement allows the team to work more efficiently from the beginning and reduces the scheduling headaches that are caused when clients aren’t ready.
Scheduling
Managing ever-changing staff assignments within an environment of increasing workload compression has always been a difficult problem for accounting firms. More than three-fourths (76%) of survey respondentsmstated they utilized a “digital” tool for scheduling, with 51% of responding firms stating they used Microsoft Excel. Our consulting with firms has found that scheduling, along with CRM (Customer Relationship Management), are the two most cited applications that firms are hugely dissatisfied with, and where they are searching for a better solution than Excel. The most often cited stand-alone tool was ProStaff, with 13% of respondents. But this solution was primarily adopted by the largest firms that could afford to dedicate personnel to manage the application. With advances being made in the workflow tools being integrated with practice management, we anticipate more comprehensive scheduling tools to be rolled out in the next few years that will have firms switching away from Excel.
Data Extraction
With the majority of source documents being received electronically, the next step is to utilize digital tools for
more precise data analysis and extraction. The CPAFMA survey found that 78% of responding firms were already using data extraction tools on the majority of their engagements, with Microsoft Excel once again being the primary application being utilized (59%). This was followed by 18% of responding firms utilizing CaseWare’s IDEA application. The increased awareness and adoption of artificial intelligence tools has spawned a series of data analytics tools that are significantly more automated, so we anticipate smaller firms will be able to take advantage of data extraction capabilities in the near future to save time and improve accuracy on assurance engagements.
Tax Integration
Integrating audit trial balances with tax applications not only saves time in manually re-keying data but also reduces errors. The 2019 survey found that 59% of firms configured their tax groupings within the trial balance to be exported to the tax return. Many firms have found that exporting the tax data at completion of field work and collaborating on the review at that time saves significant effort, as tax issues can be discussed while the knowledge is fresh in the auditor’s mind.
Expense Reports
The survey found that two-thirds (66%) of firms created and submitted digital expense reports for reimbursement. Utilizing the capabilities within the firm’s practice management application to create the digital expense report was the most popular method (selected by 29% of respondents), while 23% of firms were using Microsoft Excel/Adobe PDF to generate and submit their reports. An interesting trend was that 6% of firms utilized a smartphone application which was split evenly between Expensify and Tallie. When firms make the effort to walk through their entire manual expense report process, they quickly see the benefit of transitioning to the digital tools they already have access to.
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