From XU Magazine, 
Issue 34

Verified Analytics: The potential of automated data matching

The FRC is increasingly encouraging the use of technology such as data analytics to enhance quality and increase sample sizes.
This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
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What is Circit’s new product, Verified Analytics, all about?  

Verified Analytics combines independent access to transactional data with data matching to the GL. With quick, secure and reliable access to bank transactions, tests like expenditure testing or debtors testing are made more efficient and 100% verification of ledger records comes within reach.  

What are the use cases for accounting?

Matching transactional data to client records can help identify potentially erroneous, high-risk or unusual transactions and visualise or identify trends in cash balances at a glance.

Some specific examples:  

Cash to sales reconciliation: verification of income in the financial statements  

GL cash reconciliation: 100% verification of GL bank transactions  

Receivables/Payables testing: 100% verification of year end balances to post-date transactional records

Payables omission testing: verification over completeness of year end credit balances  

Cash control testing: verification of controls by mapping how cash postings are handled in the accounting system

Beyond audit, having easy access to transactional data across all your client’s banking providers allows an accountant to aggregate, analyse and gain complete insight into their client’s cash flow, within a platform that allows them to quickly and easily query those transactions by leveraging Circit’s other products.

There are also use cases for Forensic Accounting, where instant access to bank records via trusted, secure APIs can identify potentially fraudulent transactions or those requiring further investigation, and aid in the tracing of assets.

How does Verified Analytics tie in with other products?

Verified Analytics is a part of the Circit platform which provides a range of specialised products. In leveraging Circit’s products, accounts and auditors can query and collaborate on specific samples and transactions. Excel uploads mean data from any accounting system can be easily uploaded into Verified Analytics to leverage its analytics functions.

On the platform, hundreds of Open Banking APIs allow seamless and secure integration into banking providers, with new providers being added regularly across different territories.  

Finally, what ISAs are there around testing and sample sizes? What do they say?  

There are a range of ISAs that cover testing, sample sizing, use of technology and risk identification, and more.  

ISA 315 covers identifying and assessing the risks of material misstatement and focuses on enhanced focus on controls, specifically IT controls and consideration of data analytics for risk assessment.

It references automated tools and techniques for analysis. This is where Verified Analytics comes in: it can be used for all of this from analytics, to reperformance of bank reconciliations and verification of the entirety of bank transactions in the ledger.

Also covered: significant disclosures such as liquidity and debt covenants, distributions and related party transactions, which can be easily accessed and reviewed against actual third-party bank data using Verified Analytics.  

There is also ISA 500: Audit Evidence. This focusses on the source and reliability of evidence acquired, and corroboration of client obtained information. Verified Analytics enables simple access to third party data in-platform that can be used to corroborate client records.

Another example is ISA 560: Subsequent Events. This covers verification of after date balances, transactions related to disclosures in the accounts and identification of significant after-date transactions that may require disclosure. All of this can be made easier and more efficient with direct access to data and a matching engine.

ISA 570: Going Concern is also applicable. A repeatable extraction of after date cash balances can provide ongoing review of going concern and an overview of accuracy of any forecasting and budgeting procedures the entity undertakes while also allowing post year end cash flows and trends to be viewed.  

In conclusion, what can accountants gain from using Verified Analytics?

Companies are increasingly looking for more efficient, higher quality accounting work and audits, while also providing more value. Leveraging a product like Verified Analytics brings more complete testing and automated matching within reach. This brings many advantages: adherence to ISAs and security standards, decreased risk and more efficient time usage for accountants and auditors.

Why leave it there?

To learn more about Verified Analytics

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