Top tips: How to master remote auditing Remote auditing – Changing more than location

Remote auditing changes the information you need from your client. Prior year lists should be adjusted to request information which would usually have been inspected or discussed with the client when on site. 

Obtaining transactional data significantly reduces other information requests. You should remove requests for transaction listings or analysis which is available from the data to benefit your client. Around 20-30% of traditional requests can potentially be obtained from complete data sets.

Investing time into your request list demonstrates that you value your client’s time and focuses your audit approach. Creating standardization across client information requests also increases opportunities to centralize certain audit activities. Such standardization also creates opportunities to leverage advanced techniques such as robotic process automation (RPA).

When performing audits remotely, one of the first priorities should be establishing a consistent approach to collating client information.

Whatever the prior approach, clients are accustomed to receiving a list of information requests from their auditor. Transitioning information requests to a structured, secure platform housing these familiar information lists minimizes the change for clients.

The opportunity goes beyond the secure transfer of information to and from client contacts though. Layering workflow into the exchange removes any ambiguity over the process and embeds strong project management across the engagement.

Communication is also improved through a transparent, single place for information exchange and for everyone involved to discuss the engagement.

Delivering remote audit services profitably relies upon strong project management.

Accountability across both your team and the client team is an important component. All tasks and activities should be assigned to a single individual accountable for its completion.

Each task and activity should also be assigned a deadline for completion, agreed on up front and monitored throughout to ensure resources can be appropriately assigned.

This applies equally across information exchange and completion of the audit file.

Collaboration and file exchange technologies which include project management functionality eliminate significant time spent checking status and following up on outstanding information.

As an added benefit, such technologies objectively record delivery against deadlines.

Inflo provides accountability, deadline monitoring, and automated reminders to project manage engagements for you.

Remote auditing provides a greater opportunity for your team to work across a portfolio of engagements rather than being allocated to a specific client.

With a single platform performing all file exchange, your team can instantly see all their assignments and the client information ready for their review.

This has the added advantage of making your business less susceptible to client delays, allowing teams to quickly refocus their efforts towards other engagements.

Changes in the availability of your team, whether through illness or reprioritization of service delivery, also have less impact as work can quickly be reassigned to other members of your team.

Working remotely can present challenges when you need to ask the client team quick, simple questions.

However, obtaining transactional data from the client’s accounting system provides your team with a deeper level of information. It allows them to answer their own questions and reduce your reliance on client interaction.

This has the effect of granting you read-only access to the client’s accounting system. But even better than that, the user interface for your teams is identical across all of your clients, regardless of the accounting system they use.

Intuitive visualizations help your team drill down and explore the origins of variances on any device, making the work more engaging.

Obtaining transactional data from the client’s accounting system also serves to eliminate version control issues when you have multiple engagement teams and client team members working on an audit engagement at different times from different locations.

Activities such as preliminary analytics and risk assessment reviews should be the foundation audit work is built from.

With reduced access to client team contacts when remote working, it is of increased importance you have additional tools available to understand the entity you are auditing.

The identification of unusual trends and relationships lets your teams visualize, drill down, and explore the transactions within an account or balance. This allows you to truly focus your work and reduce audit effort on low risk areas.

It is also important to be able to remain skeptical and have a means of challenging or verifying the explanations provided to your teams.

When auditing less complex entities, this work coupled with an appropriate level of testing the notable items identified, can often provide sufficient evidence on an account or balance.

Audits involve performing various substantive tests, often via sampling accounts or balances.

In what can often feel like a dated approach, significant time can be wasted performing very basic tasks.

Checking breakdown sums correctly, reconciling to trial balance accounts, calculating samples, selecting items, and documenting work all take time and are susceptible to manual error.

Review time is also often increased, and the quality of work impaired, through inconsistent approaches and varied documentation by team members.

Working remotely means audit teams can find themselves more reliant on clients providing digital support  for samples. Selecting samples as early as possible provides greater flexibility to client staff, allowing them to distribute the effort across their team.

Auditing to address the risk of fraud and management override of control benefits from face-to-face interactions and the ability for auditors to follow their intuition.

When remote auditing, data analytics and artificial intelligence techniques provide a vital supplement to auditing this risk.

A key part of the audit involves analyzing transactions to identify risks of fraudulent entries to the system.

Performing such procedures on journals to prepare financial statements, or on partial system extracts of “manual journals”, is rarely an acceptable approach.

Fraudsters are sophisticated and fraud can be perpetrated at any time. An effective audit approach must therefore review every single transaction, automated or manual, which underpins the financial statements.

Our recommended steps for designing an effective and robust testing strategy

1. Extract transactional data 
2. Transform data
3. Verify the validity and completeness of data
4. Define the population for testing
   
5. Identify high-risk transactions for testing 
6. Identify and test high-risk transactions
7. Document your work

Even in normal circumstances, traditional substantive methods often prove to be challenging when testing revenue.

Sampling often necessitates large testing volumes. Substantive analytics are often impaired by an inability to define independent expectations and corroborate variances.

When auditing remotely this challenge is magnified.

An innovative audit approach incorporates data analytics which analyze 100% of revenue transactions.

Such techniques can be used to perform advanced risk assessment analytics and reduce substantive procedures. Or to go further and obtain substantive audit evidence, replacing traditional tests.

Audit teams must be mindful of addressing all assertions relevant to both the risk of fraud and the risk of misstatement. For example, where completeness of revenue is deemed the focus of fraud work, this should not result in the testing of occurrence being ignored.

When delivering audit services remotely, the outputs of the audit process are of vital importance to articulate the work performed and demonstrate the value of the audit to the client.

Traditional outputs, such as PDF reports, can be enhanced through incorporating visualizations. This offers you an opportunity to tell the story of how the audit was performed.

Advancements in technology also allow for new outputs and interactions to be possible. You can share Dynamic Dashboards with clients, where the results of data analytical analysis are presented in a client view for them to analyze.

Often the insights possible from data analytics go beyond the scope of a traditional audit.

This presents an opportunity to incorporate high-level findings within audit outputs, and delve deeper should clients express further interest.

Where appropriate, this can lead to additional non-audit services to more deeply analyze an area. For example, to provide advice around a client’s operations.