We just finished the financial statement audit of one of our clients. The auditor, with whom we’ve worked for many years, came to see me after he finished filed work to discuss how the audit went and what to expect. I was surprised by how much he had to say about the credit card and bill payment system we had implemented last year for this client.
The client being audited is a not-for-profit organization that operates in a virtual environment. They have staff in practically every state and we operate their entire Finance Department. Last year, we implemented Bill.com for their bills and Expensify for their credit card bills. There are 13 credit cards, since each program director has one. In addition, employees can request reimbursement of expenses through Expensify.
The auditor found that the systems improved the audit’s efficiency for the following reasons:
- The approval history of each bill is permanently stamped on the virtual document. This allowed him to see if at any point along the way the bill was denied and for what reason. He could test the system of controls.
- Payment history of each bill is also stamped permanently as part of the history of the bill.
- There is no longer a “paper trail”. The entire trail – or history of the bill from beginning to end, is online and can be converted to a pdf document, if needed.
- Once a bill is entered, it can be deleted from the list of bills attached to the vendor but will never be erased from the system. This allows the auditor to test for potential fraud. It also eliminates the possibility of a lost document.
- Auditors love consistency and these systems provide consistency across all documents.
- Supporting documentation is attached to all documents. They have the option of scanning receipts at the moment of purchase and uploading them instantly from a smart device into your account in order to complete a report in the future.
- The Expensify forms require explanation for the expense – how many times have we had to chase down employees for adequate explanations? Also, you can establish rules for the client so that when the transactions are entered, they must meet certain pre-established criteria, which we extract from the client’s accounting policies and procedures manual.
From our perspective, it was a much smoother audit. We hosted the auditors in our office, since the client is virtual, and when they gave us the list of transactions to test, we simply downloaded these from the systems into a pdf file and emailed each to the auditor. As simple as that!
It is always a rewarding conversation when an auditor tells you that they enjoyed auditing your client’s systems and documents. As he was getting ready to leave, I almost suggested that we celebrate with happy hour, it was Thursday after all. I stopped short because of the potential appearance of a professional conflict of interest. Later on, I celebrated with my staff and a glass of wine. Well done!
Maribel Ponist, CPA is CEO and Director of Client Accounting Services at Lumix CPAs and Advisors. She is a member of the Advisory Board for CPA.com and the AICPA Digital CPA Conference. She also serves as a peer reviewer for the Maryland Association of Nonprofits Standards for Excellence Institute®. Follow Lumix on Twitter, Facebook, and LinkedIn for the latest insights, news, and updates in accounting and advisory services.