Can technology improve the audit confirmation process?
The auditing world continues to transform at a rapid pace with changing regulations and new technologies. Zoi Therapou, Commercial Director at Confirmation.com, discusses the audit evolution.
Investors, lenders, government agencies, and the public rely heavily on an external auditor's independent opinion from a financial audit on whether a company's financial statements are accurately presented. As such, auditing professionals know the only constant within the profession is change itself. They also understand amidst the complexities, it is they who are responsible to control the audit confirmation process and ensure reliability of audit evidence.
The problem with manual audit confirmations
The audit confirmation process has been around for more than 100 years. Even with advances in technology, and regulation changes, a paper-and-post system endures.
The manual confirmation process also makes it possible for fraud to go undetected. When using a manual confirmation process, the reliability of the information received from third-party responders is not guaranteed. The person responding to the confirmation may not be knowledgeable about the information being confirmed, and the integrity of the information may be compromised.
The 2003 Parmalat fraud in Italy is a perfect example of where confirmation fraud can cost auditors, banks, and investors billions of pounds and can result in criminal charges for all parties. The executives were able to hide the €12bn fraud by arranging a forged confirmation to be sent to the auditor disclosing €4bn of assets that didn't exist. When the forgery was finally unearthed it revealed the company's debt amounted to €14.3bn, eight times more than originally stated.
Evolution of the audit confirmation process
Accounting firms that move to a paperless audit process experience positive changes throughout their firm, including increased efficiency and happier staff.
Implementing a paperless audit confirmation process is possible when auditors have the right technology in place. The ideal process supports validating third-party responders, utilises a highly secure platform, and provides responses in days rather than weeks.
The advent of an online confirmation service has altered the audit landscape forever, offering a more efficient and streamlined process, and having armed auditors with the tools required to maintain control over the process with the ability to directly communicate with validated third-party responders.
Leading online technologies better prepare auditors to meet changing audit standards, support professional skepticism, and ensure reliable audit evidence.
It also supports a true paperless audit process. Today, auditors can make the ideal audit confirmation process a reality.
Contact us to learn how to improve your audit confirmation process
About the company
Confirmation.com is the global leader in secure online audit confirmations. Performing the process electronically helps auditors to cut paper and post, dramatically increase efficiency, enhance their client service, reduce the risk of fraud, and deliver on-time audit opinions. We simplify the confirmation process and eliminate the need to track down responses.
About the author
Zoi Therapou is a Commercial Director for Confirmation.com, leading the engagement of banks and audit firms in the UK and the Nordics. She has over 10 years of experience in the financial services industry internationally and has an MBA from IE Business School. Zoi started her career in Investor Relations and moved to the Asset Management industry before joining Confirmation.com. She gained extensive experience working with global financial institutions internationally through her previous roles and is now using this experience to onboard financial institutions in the Confirmation.com network and ensure that audit firms have the best possible experience using the network.
This blog is one of a series of articles from our commercial partners.
The views expressed are those of the author and not necessarily those of ICAS.