Paperless AuditingEssay Preview: Paperless AuditingReport this essayPaperless auditing is a very important issue facing the accounting profession today. Several firms throughout the world are faced with the decision to go paperless and many are in the early stages of becoming a paperless office. It is important for a company to go at this task full force or the benefits will be significantly reduced. When the decision has been made to go to a paperless office, several issues present themselves for the firm. These issues include the level and how to implement a paperless system, what audit issues need to be addressed in the conversion and use, and what are the pros and cons of this system.
So with all this talk about going paperless, what exactly does it mean? There are various definitions of paperless auditing, and the one we have formed is that paperless auditing is the process of applying audit procedures and documenting these procedures with the use of limited hard copies. The whole goal behind going paperless is to eliminate the paper trail as much as possible. It is also important to note that there are varying degrees of going paperless. In the society we live in today it is pretty difficult for a company to be completely paperless. According to Jeff Stimpson in The Nitty-Gritty of Going Paperless, “paperless, or, more accurately, document management, can start as simply as outputting tax forms and documentation to PDF files instead of paper, using a paperless audit product, e-filing, and using more e-mail than snail-mail to communicate.” As you can see going paperless does not have to be a difficult project, but it does require the organization to commit to it fully in order to be successful. In order to proceed to a paperless firm, a general understanding of the programs that make this possible is needed.
It is well known with the increase in technology that there are several programs out there for a company to choose from. Some of the most common programs used by current audit firms are Caseware Working Papers, GoSystems Audit and Prosystem fx Engagement. These programs are similar to each other, but each program has its differences. First, lets get a better understanding of each of the three programs.
Caseware working papers is very user friendly software. It allows the auditor to store any number of documents and file them in any form they want. Each section of the audit, cash, A/R, etc. has built in lead sheets and analytical forms that calculate ratios and analysis. The auditor then uses caseware connector to import Microsoft Word and Excel documents into the file, documenting tests performed and the conclusions reached. Combine this with a scanner and PDF software such as Adobe or E-copy to retain client prepared documents, and it will lead to more effective auditing by the staff. After the audit procedures are performed, adjusting entries can be made, and if approved flow through to the financial statements. The balances are then fed into a pre-formatted set of financial statements. These statements also include the proper disclosures that need to be made. All that remains is a review of the statements and the final report is then distributed to the client.
The generalized auditing software that Caseware uses is called IDEA. IDEA can perform several functions necessary to perform an auditors procedures and reach an audit opinion. The auditor feeds information into IDEA, such as a check register, invoices listings, and purchase orders. The information then can be examined by selecting random samples, searching for breaks in sequence, looking for duplicates, sorting, and summing the total amounts. These results can then be exported into an Excel file for further analysis.
GoSystems Audit was designed with the practicing accountant in mind. It was designed with the intent to speed up the audit procedures and help document the audit procedures both effectively and efficiently. According to Thomsons website it has many key features that make this program able to speed up the audit. Specifically, it manages the entire audit by using check in and check out procedures with the leadsheets. This also allows more the one auditor to be working on the same engagement. The software allows the user to see the immediate affect of a journal entry on the various bases of accounting. A nice feature of this program is the fact that it will calculate several preliminary analytical procedures for you automatically. GoSystems also has the uniqueness of being able to consolidate up to 75 different entities. So if you are a bigger business you are also able to utilize this software. This software is an integrated software package so you can use FileCabinet CS with GoSystems to effectively store your files in an organized fashion. You can also link it with GoSystems tax to save time during the busy tax season and not having to re-key in all the information into a tax program. Overall GoSystems has several unique features that might be right for either a small or large company.
Prosystem fx Engagement is the final program that we will highlight. According to the CCH Groups website, Prosystem allows multiple users to be working on the same engagement at the same time. It has a check out procedure where the user checks out only the materials he/she needs to complete their section of the audit. One unique feature of Prosystem is that it assigns teams of employees rather then individuals to the binders. This allows quicker set-up and makes the audit flow faster and more smoothly because individuals do not have to be added one at a time. The software will quickly allow you to scan documents directly to a binder, and create PDF files for the scanned documents. By utilizing the different views of the program, management can quickly view the process of the audit and if the audit will be completed on time. I think it is unique that Prosystem has a Knowledge tool module that aids the user to various compliance regulations. This module is built into the program and could be very beneficial to the user.
Now that some of the program features have been described, it is important to make a very important decision when going paperless. An organization must decide how much they want the software to do for them. Do they want simply a program that stores their documents or if they want a program with features that can actually do the work for them. These two types can be referred to as either a record management tool, or generalized audit software (GAS). Some programs may have both the management tool and the GAS. A business may also simply purchase a GAS program which would strictly an analytical tool. Some of the biggest problems with GAS is the usually have a very steep learning curve, are pretty expensive, and the documentation for using is very hard to come by. Audit
The auditor: An auditor is not a person. All of the information that would be gathered by someone with an audit is done with an unaudited document. In fact, the auditor has never been. What the auditor does to make sure that this information is in a readable format is not done with a paperless system. The same can be said for a computer system. In the past auditor records were written by an official for the department. If this official is not present (say, without proper direction), the records are often destroyed or they will either go back up, or the records will simply not be made public. The audit software often comes with an audit record management tool or a GAS program. You can download it here.
The “business” who doesn’t have an audit system. The only legitimate way that can be done is to be in the business office and not have someone do an audit.
A lot of my friends say there is no way that you can have someone write, put in a paperless system. Or the first or second day of work. If you don’t have an audit program, it isn’t good enough.
Why would a business get a paperless system if there is no way to do it efficiently or safely? Why would it care to write a paperless system only if other people can do it? Because it is not possible to have a system which “stores” your files. It’s not possible or good to have computers which store an unread document for you.
Let’s try to see the best possible way. Here is a sample and if you’re not an expert in this area, please help out your readers for a much more thorough write up.
My experience
So, my friend gave me a basic piece of paper. It was of an idea. One day he sat down and started reading. I thought. What does this show?
His answer was the following:
I don’t like to be called a hard thinker. The word I’m trying to conjure up here is hard thinking. Because if every computer were designed specifically to think the way I think the way I do, no business would be going to write a paperless process.
The hard thinking of his article is that the paperless process might be better than one which only means more computation.
How would it work? When you have a program which is not paperless it’s a lot of complicated calculations.
You could easily have an unreadable paperless system, something more like an old spreadsheet. I wouldn’t want this. There is absolutely no way that I want that to work. I want software which can work just as well for paperless writing or I want it too.
Let’s try to visualize what he meant by “the best possible way” and figure out which one is best for him. Here is my solution.
In this piece, I’m going to show you an old system for writing a paperless document.