The Traditional Way
Auditing has traditionally been a resource to give management, investors or creditors a comfort level about the accuracy of the financial data and reports of a business. As businesses grow, management is further away from the day to day operations and as such must rely on systems and reports to know what is going on in their business.
Traditional audit and assurance services have performed the essential
roles of:
- Comfort level of data integrity
- Compliance with banking, bonding and SEC requirements
While we believe these are and always will be an essential need, we also believe we can improve on the audit process and provide management and stakeholders with much greater insight and understanding of their business.
The Next Generation - The DRDA Way
Traditionally, auditors used statistical sampling to provide a comfort level of the accuracy of information within an “acceptable” level of deviation. Historically, audits were a labor intensive process. Since no one could afford to audit every transaction in a manual environment, statistical sampling and ratio analysis were the best tools available to give the auditor and management a comfort level of the integrity of the data.
With the development of Artificial Intelligence (AI) software and data analytics tools, we now have the ability to audit every transaction. We can look for inconsistencies: what vendor has been recorded in multiple accounts; what ratios are different at different times of year; what vendors, customers or employees have the same or similar addresses; what number patterns are outside the statistical norm; and a host of other metrics. This information is important to the auditor for performing the audit and reaching an opinion on the integrity and accuracy of the financial statements. But it is also important to management to provide insight as to trends in margins, days turns in inventory and by product line, days outstanding and cash turns in A/R and A/P, trends in labor or direct costs vs fixed costs, and a host of other important business elements.
We have developed a data bridge between the AI software we use for auditing and a Management Information Platform (MIP) that can provide unparalleled insight into the history and trends in your business as well as a platform for forecasting and predicting operating results of your company. With the MIP you can uncover the root cause of the anomalies or problem trends discovered in the audit process and determine the best approach for resolving them. It isn’t enough to know there is a problem. In business you have to fix problems and move forward.
Using AI and advanced audit techniques gives you state of the art assurance of data integrity. Using a MIP gives you the ability to take the audited data and turn it into information to more profitably and efficiently manage your business today and into the future.
If you would like to learn more about how these tools can help you manage and grow your business more profitably and efficiently please contact Laurian Tollett at Laurian@drdacpa.com or 281-954-6022
