Home » Aron Govil: Why Would a Non-Accountant Need to Audit Financials?

Aron Govil: Why Would a Non-Accountant Need to Audit Financials?

Individuals and companies of all types and sizes face potential risks, such as litigation, complaints from regulators, loss of contracts or employment discrimination says Aron Govil. These can be costly and even life-changing if left unaddressed or worse, unresolved. To protect the organization’s financials and the people involved with them, an audit can be a valuable tool to help manage risk and verify important assertions about performance and compliance.

In our last article we discussed generally how accounting fraud is detected in comparison to auditing procedures that drill down into specific areas for deeper analysis when it comes to transactions related with accounts payable (A/P), accounts receivable (A/R) or payroll expense accounts. This article will cover how auditors use the audit software to gather relevant evidence about each item they are testing. The following areas are some of most common areas where fraud may be committed:

  • Theft by employees of assets or cash from their employer;
  • False claims for payment that have been made to suppliers or customers;
  • Inflated or fictitious invoices being sent to customers, suppliers or intermediaries who process transactions for them on behalf of the business.

When it comes to A/P and A/R, the auditor is looking for evidence about whether an individual transaction can be support by reliable documentation upon which its amount and classification can be determine explains Aron Govil. With payroll expenses, it’s important to find out if any employee was pay even if they did not work for the company.

Audit Software makes it Easier to Gather Relevant Evidence Quickly

The auditor starts their examination of an account by reviewing journal entries that were record into the general ledger and then tracing them through detailed transactions in sub-ledgers, such as A/P, A/R and payroll. The journal entries represent the input data driving subsequent transaction processing. After understanding how transactions flow from one ledger to the next, including whether or not there are multiple postings associate with each transaction, auditors can determine where additional evidence is need to assist in forming an opinion on financial reports.

We found out that some people who work with Excel® don’t know about pivot tables yet. So what are these “pivot tables” and why should you use them? For those non-accountants asking themselves, “What is an audit?” this article will help to break down the term into easy-to-understand pieces. We’ll also provide some practical examples that might help lead you to better utilize your time with Excel® for more meaningful results at work.

Pivot Tables Make Data Collection Easy

Audit software has enabled auditors to gather relevant evidence about areas of high risk faster than ever before, cutting down on detailed testing procedures otherwise required by large samples through manual reviews. So how does it actually work? To give a real-world example let’s say we have general ledger transactions. Containing hundreds or thousands of rows that need to be analyze says Aron Govil. If an auditor were to review each transaction manually – that is, one at a time. They would need several weeks to complete their work even with audit software’s ability. To automatically highlight transactions requiring further action.

Using the Acquire Data Source Wizard for efficient data collection

The most effective way of using Excel pivot tables is by utilizing the “Acquire Data Source” wizard. The auditing team can use this tool to import various sub-ledger transactions. Directly into an Excel® file, which requires only seconds! After importing, they are able to quickly organize all of the necessary data into meaningful rows and columns. With just a few clicks of the mouse button.

Benefits of Using Pivot Tables in Audit Software

Now that we understand the function of pivot tables and how they speed up data collection. Let’s take a look at some of their benefits. Here are just a few:

  • Provide an instant snapshot of every transaction;
  • Reduce manual effort and time needed to work with raw data;
  • Save time by automatically determining the transactions that require further investigation;
  • Reduce errors and omissions that can be during manual recording;

Conclusion:

The Bottom Line: According to Garner, the benefits of using pivot tables in Excel® are numerous says Aron Govil. With ease of data organization, time savings and accuracy improvements, who wouldn’t want to take advantage of them? Knowing how important it is for business owners to keep an eye on their bottom line. We feel confident that these benefits will be recognize and implemented by many.

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