Author: Zané Möhr

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Caseware Africa Transforms Firms’ Quality Management with their new SQM App

An innovative solution that proactively manages quality

Johannesburg, 19 August 2022: Powering 20 000 users across the African continent, Caseware Africa, a division of Adapt IT, is a global leader in audit and financial reporting software. With decades of expertise in helping auditors and accountants automate compliance, Caseware Africa has introduced a brand-new cloud-based app to help firms manage their System of Quality Management: SQM Quality.

SQM Quality is designed by audit, data, and quality experts, and provides a quality management system intended to assist firms in fully, and efficiently, complying with the requirements of the International Standard on Quality Management 1 (ISQM 1), whilst leveraging the benefits of technology to proactively facilitate quality management, and ultimately, promote compliance.

The industry shift from the International Standard on Quality Control 1 (ISQC 1) to ISQM 1 has signalled a subtle, yet significant change in focus from ‘control’ to ‘management’. In pursuit of compliance to the new standard, professional audit and accounting firms providing services in various fields, have been required to update their engagements and processes to establish a system of quality management that extends beyond the possession of a manual with policies and procedures.

“In light of how the new standard has done away with most of the mandatory policies and procedures previously included in ISQC 1 and leaving it up to the firms to determine what’s most appropriate for their specific circumstances, it’s more important than ever for every employee to be their own compliance officer. In addition, it is imperative that firms establish a firm-wide environment of collaboration between people and technology to address the problems of the past, and ultimately make compliance more efficient,” says Christiaan Steyn, Assurance Product Manager at Caseware Africa.

SQM Quality empowers finance professionals to design, operate, and monitor their quality management system through the processes of establishing quality objectives, identifying, and assessing risks, and designing and implementing risk responses, in a manner that is effortless and efficient. It also includes a component that allows for the monitoring and remediation of processes to drive continual improvement of the system and, ultimately, the firm’s ability to fulfil the requirements of ISQM 1.

The Benefits of SQM Quality:

  • SQM Quality empowers professionals and firms to easily attend to all parts of the quality management system.
  • Numerous international standards are supported, empowering firms to meet the requirements of various local markets across the world with a single system solution.
  • User permissions differentiate between roles and responsibilities across the firm.
    Responsible parties are guided to document their understanding of the firm, and the nature of its services, to assist in identifying and assessing quality risks.
  • Firms can select objectives, risks, and policy and procedure responses, from a pre-populated library that can be customised and expanded upon as needed.
  • Network firms can export network-wide objectives, risks, and responses to member firms.
  • A built-in form builder enables firms to design tasks as instructions to users to direct, and track, the completion of actions linked to policy and procedures responses.
  • Throughout the process, users can hyperlink to documents and other records saved elsewhere on Caseware Cloud for ease of reference and secure storage.
  • SQM Quality includes a firm-specific quality risk assessment matrix that automates the identification of quality risks for which responses are required.
  • The user with the final responsibility of the system of quality management will be able to review dashboards of information and oversee the publishing, or export, of that information as required by the firm’s operations.

    Designed to optimise the changes and opportunities of ISQM 1, SQM Quality enables firms to design, operate, and monitor their system of quality management with ease, offering a single solution that attends to all parts in a way that is automated, accurate, and complete.

“In a rapidly developing world where spreadsheets are no longer the answer, everyone is accountable and collaboration is key. A solution like SQM Quality becomes more than a ‘nice to have’, it’s a necessity and an investment in efficiency, accuracy, and automation that will get things done – and done properly.” Steyn concludes. 

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Caseware Africa’s new application will revolutionise how SMEs create financial statements

Kenya, 30 August 2022: Caseware Africa, a division of Adapt IT, has introduced a new cloud-based app in Kenya: SME Financial Statements. The new solution, which will be rolled out to various African regions, has been completely redesigned to leverage the benefits of the cloud, as well as everything Caseware has learned from its clients over the past decades, says Nienke Krüger, Product Manager: Financial Reporting at Caseware Africa.

“This new cloud-based application has been designed from the ground up to revolutionise the way that preparers create financial statements. We have leveraged our extensive experience over many years with our clients to design a process that is user-friendly and streamlined,” she says. “The new approach takes into account regulators’ growing insistence that only material information is presented in the financials – something that can prove quite tricky for inexperienced or infrequent users.”

SME Financial Statements uses checklists, questionnaires and integrated queries that expand and collapse, only displaying content relevant to the current engagement. This will enable users to work much more efficiently by empowering them to focus their time only on relevant items and will greatly assist them in streamlining the process to produce the financial statements as the final output document.

Another big advantage of SME Financial Statements is that it enables users to integrate the trial balance information directly from the company’s accounting package. This eliminates the tiresome, error-prone, and manual process of exporting and importing data via spreadsheets. Currently, direct integrations from Xero, QuickBooks and Sage Business Cloud Accounting are supported, with more packages to be added in line with market demands.

These features provide users with significant timesaving and greatly reduces room for error, Ms Krüger says. A built-in workflow ensures that information is entered only once, reducing the risk of inconsistencies, duplication, and errors. The solution also allows users to insert logos and graphs into the financial statements and save external documents in the same file.

“SME Financial Statements is powered by Caseware Cloud and can be accessed from any device at any location, completely secure, at any time. It enables multiple users to work on the same document at the same time, thus supporting greater collaboration between team members across both the client and accounting firms. That makes for huge productivity gains,” Ms Krüger says. “It’s also much easier to update the application as new functionality is added.

“This app has been carefully designed based on Caseware Africa’s vast experience and intellectual property to assist preparers to create accurate SME compliant statements as quickly and painlessly as possible” says Ms Krüger.

Ms. Krüger confirms that this is a significant development for Africa’s SMEs. “In due course, post the introduction of SME Financial Statements in the Kenyan market, the app will be rolled out to other regions across the continent, which presents an exciting opportunity for practices and SMEs to enhance their business efficiencies as they continue to strive for growth.”

 

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Caseware Africa continues to expand with Caseware IDEA®

Empowering finance professionals to turn their data into insights

Johannesburg, 1 June 2022: Following on from the 2020 launch of Caseware IDEA® – the powerful comprehensive data analysis solution – Caseware Africa, a division of Adapt IT, has announced the expansion of Caseware IDEA® to the Southern Africa market for internal audit, governance, risk, compliance and gathering insights.

The solution – designed by audit, data, and finance experts – provides for advanced analytical functionalities, a powerful data processing engine and the ability to process large volumes of data that empowers professionals to turn their data into insights and optimise their operations. “As organisations continue to enhance their business technologies and the quality of their data, any Internal Auditor, CEO, CFO, FD, and FM is now provided with the opportunity to deliver even higher value through the power of data analytics,” says Christiaan Steyn, Assurance Product Manager, Caseware Africa.

Caseware IDEA® data analytics equips professionals with the ability to transform financial audits, IT audits, operations, governance, and fraud risk management. Every day, over 500,000 global finance professionals rely on Caseware IDEA® to gather deeper insights and make more informed business decisions. “Leaders depend on Caseware IDEA® to help them manage their businesses more efficiently in a timely, cost-effective, and automated manner – whether it is to support internal audit, governance, managing risk, compliance or streamlining operations,” notes Steyn.

Caseware IDEA® empowers finance professionals with significant time savings and the ability to focus their attention to where it is needed most by helping them to:

• Connect and use data from a diverse set of sources.
• Process large volumes of data with ease.
• Generate insights from both financial and non-financial datasets.
• Analyse 100% of transactions, regardless of type, volume, or location in less time.
• Prioritize areas with elevated risk.
• Deliver better audit coverage and assurance.
• Easily identify anomalies.
• Quickly identify suspicious or fraudulent transactions.
• Improve operations, compliance initiatives and internal audit reputation.
• Become trusted advisors within their organisation.

“Caseware has been a market leader for over a quarter of a century, helping accountants and auditors to automate compliance. With Caseware IDEA®, finance professionals across professional practice, corporate and government are better enabled to leverage the power of their data, whether it is from their accounting platform or ERP, their HR system or any operational data source and system that is used to manage the business. Given the ever-increasing volume of data within organisations, the onus on data management and the key role that data is playing in digital transformation, it is now more important than ever for firms to implement and take advantage of a robust data analytics solution.” Steyn concludes.

 

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Caseware tailors financial reporting solution for Vodacom South Africa

Vodacom 01

Vodacom South Africa, part of the Vodacom Group, uses Caseware solutions to support efficient and compliant financial statements.

Vodacom South Africa has been using Caseware for some years – prior to my joining the company in 2018. I believe that before this, the team used Excel, which was time consuming – particularly when it came to formatting

Wesley Govender

Caseware Working Papers provides seamless imports of trial balance or general ledger details from over 60 accounting packages, Excel, CSV and ASCII. Govender says what he finds particularly beneficial are automated mapping and lead sheets and the ability to reconcile the trial balance back to the ledger systems with full adjusting journal entry traceability and reporting.

“Vodacom South Africa has been using Caseware for some years – prior to my joining the company in 2018. I believe that before this, the team used Excel, which was time consuming – particularly when it came to formatting,” he says. “Mapping makes life quite easy, and we appreciate the ability to make manual adjustments, write notes and see the whole audit trail of any adjustments or notes – even years later.”

As part of a multinational group, Vodacom South Africa must align with the group’s tailored and standardised financial reporting standards and templates, Govender says. “Over the years, our financials have become quite tailored. Caseware specialists came to Vodacom and tailored the system for us to meet the group’s requirements.”  

Vodacom South Africa also uses Caseware’s Corporate Statutory Reporting Template (Pty) IFRS, Financial Statements for Trusts – SME, and SmartSync.

Vodacom Group is a leading African connectivity and financial services company serving 130 million customers and delivering services including telecommunications, IT, digital and financial services.   Vodafone Group Plc (Vodafone) – one of the world’s largest communications companies in terms of revenue – has a 60.5% shareholding in Vodacom.

Wesley Govender CA (SA), Senior IFRS & Governance Specialist at Vodacom South Africa, says he and his team use Caseware Working Papers (including Connector) as a convenient single tool to prepare annual financial statements.

The Solution

IFRS Financial Statements 01

IFRS Financial Statements

SME FS

SME Financial Statements

Connector

Caseware Connector

CloudSec

Caseware SmartSync

Consolidation 1

Consolidations

CaseWare Cloud

Caseware Cloud

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Bridging the COVID-19 knowledge gap is critical for accounting profession

An existing skills deficit has now become an urgent problem in search of a solution.
By Christiaan Steyn, Product Manager: Assurance, Caseware Africa

Lockdowns and the emergence of the work-from-home (WFH) model is exacerbating a competency problem in accounting and auditing.

Before COVID-19 struck, it was already apparent that students taking the Initial Test of Competency given by the South African Institute of Chartered Accountants (SAICA) were deficient in the requisite skills needed to perform well as accountants or auditors, among them logical and reasoning skills.

The profession is taking steps to remedy a state of affairs that has now become serious. One initiative is the introduction of the new CA2025 training program by SAICA. This includes an updated competency framework that incorporates stronger emphasis on digital and decision-making acumen.

In the past, this lack of skills on the part of those entering the profession was not such a serious issue because they were able to learn on the job as first-year trainees, both from the second and third years with whom they worked daily and, of course, from the senior members of the firm with whom they would have come into contact intermittently. Thus, by the time they had completed the final year of their training contract, they had an acceptable level of competence, and the business world could employ them with confidence.

Research shows that working on projects—the archetypal on-the-job training—is the most effective way of obtaining the professional skills required to be a Charted Accountant. Much of this learning is acquired “by osmosis” through contact with more experienced colleagues, an informal way in which enabling competencies are passed on, as well as subtle lessons about how to conduct oneself as a professional, including the all-important ethical stance so important today.

When the state of emergency was initially declared and the country went into level 5 lockdown in March 2020, this cycle of gaining learning and experience over three years was broken for the 2020 first-year cohort, who began work in February. They had little or no induction and, with clients only being available through virtual channels and audits having to move to online platforms, these trainees were denied any of that vital on-the-job learning and experience. The second and third-year cohorts also would have suffered a proportional diminution of workplace training and experience. In addition, they were struggling themselves – learning how to cope with the virtual audit, the technology and how to support the juniors and how to get support from their superiors.

But of course, the vicious cycle did not end there. Although the lockdown levels were reduced, social distancing remained mandatory, office capacity constraints remained in place and working from home or hybrid work models became normalised. In an effort for clients to minimise exposure, some explicitly requested that audit teams do not visit their premises unless absolutely necessary such as for inventory count procedures.

Much of the audit process, as well as training, remains virtual. In short, opportunities for the traditional, largely effortless but highly effective on-the-job training and experience remains scarce and diminishes each year as the more senior cohorts are less and less equipped to pass on skills to the first years. Of course, one should also not overlook the lost opportunities to interact with clients and to deepen one’s knowledge of how businesses actually function.

In fact, this year’s third years who will enter the financial services profession at the start of 2023 will thus be the first cohorts to miss out on the traditional hands-on training across the whole period of their training contract, with significant consequences for the business world. In addition, those that are behind them—2022’s first and second year trainees—will suffer from the lack of skills and experience the years above them possess.

Anecdotal support for this analysis is offered by the significant rise in calls to Caseware’s support centre. In addition, for the first time, basic audit rather than purely technical questions are being asked.

Looking for solutions

One should not fall into the trap of seeing the pre-COVID period as a sort of golden age. As noted above, there were already signs that skills levels at the entry stage were not what they should be, and possibly also at the exit stage.

One of the reasons for this is the increased burden on partners to not only manage engagements, but also run a business in a difficult economic climate. Increased economic and audit fee pressures saw partners and other senior personnel increasingly less involved in the audits to keep costs down.

I see that part of the solution to the growing skills crisis in accounting and auditing will lie in reversing this trend and finding ways for more senior people in the profession to increase their involvement in audits and the contact they have with trainees. A complementary approach would be for audit firms to establish exactly what the skills levels of their junior staff are, and to put in place targeted training programmes to bridge identified gaps. Professional bodies also have a role to play in working with the audit firms to establish what the future skills gaps are and how best to bridge them—after all, they will certify the competence of those completing their training contracts and entering the broader financial services sector.

It’s not a full-blown crisis yet but that is where we are headed – action is required now.

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Integrating monthly, interim, and annual financial statements for efficiency gains

By Nienke Krüger, Product Manager: Financial Reporting, Caseware Africa

Annual financial statement reporting is a process with which finance professionals are very familiar. As this is a statutory requirement, a lot of the yearly planning is built around it, and rightly so. However, the process can be an onerous one, particularly since queries and corrections might relate to transactions from up to a year ago.

Additional reporting is also required throughout the year, and management may need reports at shorter intervals in order to stay abreast of the organisation’s financial status.

In many organisations, the annual, interim, and monthly reports are approached as independent reporting processes, resulting in a disjointed approach that duplicates effort and consumes a great deal of time.

This begs the question of whether we are missing an opportunity to streamline all reporting processes by integrating them.

What is defined as the interim financials?

Different industries use different terminology for financial reporting that is not prepared on an annual basis.

Interim financial statements are defined by IAS 34 and although this standard does not prescribe who must prepare interim financials, it does provide the requirements of how they must be prepared. They are mostly performed by listed entities, but also by some specific industries that are regarded as more volatile.

Management accounts or monthly board packs

These are not legislatively regulated and are normally produced for management and other stakeholders who might not be intimately involved in the detail of the business on a daily basis. Management accounts originated from the manufacturing sector where there was a need to prepare a profit and loss statement on the basis of cost accounting rather than IFRS/SME standard.

Other industries adopted this procedure also but more from a monthly balance sheet and income statement perspective with the same grouping as that of annual financial statements.

Integration benefits

By integrating and aligning the reporting requirements, organisations are essentially preparing their annual and interim statements throughout the year, as they prepare monthly reports.

This is perhaps where the biggest efficiency gain will be for an organisation, not only on a monthly basis, but also enabling management during the audit period to get back to running their businesses a lot quicker as there are no surprises at year end.

  • As you are preparing management accounts on a monthly basis, you will stay close to the numbers, and therefore, any adjustment or analysis of the transactions can be done with the details at the forefront.
  • The grouping of the accounts is also performed monthly, and as such, the audit can commence with no changes required to the line items on the financials. This also helps to avoid duplication of work due to rework on audit packs as groupings are amended.
  • Adjustments can be made throughout the year for depreciation; expected credit loss calculations etc., and this increases the predictability of more accurate final numbers.
  • Provisional tax calculations are more accurate and therefore, the risk of incurring interest and penalties is less likely.
  • Then for the issue that is perhaps the most relevant to businesses – cash! This will enable you to have more accurate cash flow projections and make more informed operational decisions.

At Caseware Africa, we encourage the principle of one data source as this empowers our clients to have one version of the truth. This in turn enables you to have greater confidence in the information presented and make operational decisions that are right for your business. We believe if you use the annual solution, on a monthly basis, you can achieve the monthly board packs you require and if you need a more robust solution, you can also use the Interim template. But all emanating from the same data source and building on the work performed on a monthly basis for the efficient preparation of your annual financial statements.

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Powerful Data Analytics with Caseware IDEA®

Caseware IDEA® Data Analysis is a comprehensive commanding data analytics tool that guarantees data integrity and accelerates the performance of analytics that yield faster and more effective external audits.

As an external auditor, making sense of the organisational data of your clients can be challenging, to say the least. Caseware IDEA® enables you to read, display, analyse, manipulate, sample and extract data with ease and from almost any source through a user-friendly, intuitive interface.

Auditors can quickly produce tailored reports, identify trends and outliers and detect fraud in the external audit.

According to Christiaan Steyn, Assurance Product Manager, Caseware Africa, auditing teams spend a significant amount of their time selecting samples and analysing client data for audit engagements. “It is now more important than ever for auditors to look at all of the data in the audit, rather than just a sample. This is because of the explosion of the amount of data available to auditors, together with the fact that risk-based auditing is now the expected standard for external audits, as well as the focus upon the analysis and management of risk that’s applied within the risk-based auditing approach.”

Steyn confirms that although auditors cannot be expected to identify 100 percent of all fraud in all cases, they have an obligation to find material misstatements that would change the audit opinion.

“It doesn’t matter whether it’s due to an error or fraud – if it’s a material misstatement, auditors need to identify it. With IDEA®, auditing teams can increase their data coverage, by investigating a larger number of items and potentially covering 100% of the transactions,” he explains.

What took hours, now takes minutes with IDEA®.

“IDEA® enables teams to save an enormous amount of time using a built-in risk-based sample model that allows for systematic, random and monetary unit techniques, and prioritises areas of elevated risks. Not only can teams easily sample within minutes, but also take advantage of over 100 audit functions for a robust analysis, including ageing, duplication detection and Benford’s Law,” says Steyn.

IDEA® allows audit teams to import information seamlessly and easily from almost any data source, in almost any format.

Once data is imported, IDEA® protects source data integrity by providing teams with read-only access. With built-in workflows, teams are empowered with a full suite of analytical tests for financial audits, that drive additional efficiencies and again saves an incredible amount of time.

Steyn further explains that IDEA® allows auditors to display data in different ways, and to generate analyses that would otherwise not be available. “IDEA® can also be helpful in identifying unusual or strange items, testing the validity of items by cross-checking them against other information, or validating calculations.”

Pinpoint trends and perform advanced analytics with ease with IDEA®

Additional features include the ability to pinpoint patterns, trends and outliers visually based on the outcomes of tests, to focus audit efforts. IDEA® provides for a built-in audit trail that easily enables repeatable analysis, and which can also be used as audit evidence. It further enables users to implement bespoke advanced analytics in the analysis process with Python scripting support.

Steyn acknowledges that while new auditing tools and emerging technologies hold the key to evolving the audit process, strategic risks around their adoption remain, and must be acknowledged to ensure the industry continues to develop systems that generate value for firms and their clients. The quality of data, auditor’s knowledge of databases, and experience will contribute to the success of the processes that IDEA® enables.

“Not only will the amount of Internet of Things (IoT) and real-time generated data dramatically expand, but so will the amount of data that will be created and managed by enterprises. It is estimated that by 2025, nearly 60% of the 175 zettabytes (~175 billion Terabytes) of existing data will be created and managed by enterprises versus consumers,” says Steyn.

He encourages auditors to empower their teams with analytical tools like IDEA®. “Given the volume of transactions, quantity of data and the rate at which both are growing, it is imperative for auditors to embrace analytical tools.”

He notes that in his experience, the best way for firms to build adoption is by starting small. “Identify a few audit engagements and commit the partner and the team to start and, especially to complete the audit, enabled by IDEA®.”

IDEA® Powering the audit of the future.

By building up a collection of successful audit engagements powered by analytics in IDEA®, teams build expertise, confidence, and skill. “The audit of the future will undoubtedly not be possible without data-driven analytical tools. Audit firms that drive adoption first, will be best-placed to meet the needs of the rapidly changing audit landscape,” Steyn confirms.

Key Features

Connect & Consolidate
Import information seamlessly and easily from almost any data source, in almost any format.

Source Data Protection
Protect source data integrity with read-only access to all imported datasets.

Key Insights

Deliver Key Insights
Use over 100 audit functions for a robust analysis, including ageing, duplication detection and Benford’s Law.

Risk-based-transaction-analysis
Apply a risk-based sample model using systematic, random or monetary unit techniques, and prioritise areas with elevated risks.

Built-in-Workflows
Execute a full suite of analytical tests for financial audits with the SmartAnalyzer FinApp.

Explore-&-Visualise
Pinpoint patterns, trends and outliers visually based on the outcomes of tests to focus audit efforts.

Record-Process
Follow a clear built-in audit trail that allows for repeatable analysis and audit evidence.

Advanced Analysis Using Python
Incorporate advanced analytics in the analysis process with Python scripting support.

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Adapt IT International awarded prestigious MQA certification

Mauritius Tuesday 11th January, 2022:

Adapt IT International, the Mauritius-based subsidiary of Adapt IT Holdings Limited, has been certified as a Registered Training Institution by the Mauritius Qualifications Authority (MQA). This is a significant achievement and will position Adapt IT International as one of the elite group of MQA-certified training institutions in the country.

“MQA certification is an extremely rigorous process that took us two years to achieve, and we are very honoured to have been judged to meet the Authority’s high standards,” says Sandrine Permall, CaseWare Africa’s Mauritius Branch Manager. CaseWare Africa is a division of Adapt IT and is the African reseller for CaseWare International – the global leader in auditing and financial reporting software.

MQA-certified training companies must also demonstrate that they have policies and procedures in place to deliver training effectively, and to gather, and act on, client feedback. The aim of the MQA is to ensure that the Mauritian workforce is constantly being upskilled to maintain its position as Africa’s governance and finance hub, in line with the mandates of the Human Resource Development Council (HRDC). Moreover, up to 75% of training costs provided by MQA-registered training institutions can be claimed back from the HRDC.

Mrs. Permall confirms that financial professionals and auditors have a key role to play across commerce. A highly skilled corps of accounting and auditing professionals is essential if Mauritius is to continue along its current growth trajectory and realise its goals as a country. Mauritian accounting and auditing professionals need to be able to use the latest technologies to improve their productivity, enhance the quality of their outputs and ensure that they comply with an increasingly complex body of global regulations—especially since Mauritius is seen as a desirable domicile for international companies operating in Africa.

CaseWare has a proven track record of helping the accounting and auditing profession to work smarter. For example, CaseWare Cloud allows distributed teams to collaborate easily and maintain strict version control while the CaseWare platform ensures that wasteful and inaccurate manual inputting of figures is minimised with one version of the truth. CaseWare’s templates are constantly updated to ensure compliance with all applicable regulations and standards mitigating a key risk for the profession and its clients.

“CaseWare has a major role to play in equipping all Mauritian financial and auditing professionals to compete with international firms and provide their clients with the best possible outcomes,” she says.

“MQA accreditation means that we are now in an even better position to provide our clients with the training they need to realise the software’s full potential, underpinned by the refund of up to 75% of the total cost of the training,” Mrs. Permall concludes.

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ISRS4400(R): Agreed Upon Engagements

What is an agreed-upon procedures engagement?

This can be defined as an engagement in which a practitioner agrees on specific procedures, usually audit-like in nature, with a client or a third party, and provides a report on findings against those agreed procedures. There is no assurance provided by the report, and the user is left to draw their own conclusions based on the agreed procedures and the findings reported against them. Previously, these were often referred to as factual findings.

Are these engagements subject to a standard?

Yes! The standard that applies to Agreed-Upon Procedures is ISRS4400 – International Standard on Related Services 4400 (Revised): Agreed-Upon Procedures Engagements. This standard was recently revised by the IAASB, and the revised standard is applicable for engagements where the terms of engagement are agreed on or after 1 January 2022. The revision of this standard by the IAASB (previously ISRS4400 – which replaced ISA920) Engagements to Perform Agreed Upon Procedures Regarding Financial Information) addressed the increasing demand for these types of engagements for both financial and non-financial information and incorporated the types of updates generally being made to the standards to enhance professional judgment, independence, accountability and consistency in the profession.

Are these engagements common?

Yes, increasingly so. In many cases, agreed-upon procedures are requested by third parties on specific aspects of a client’s business, and often these parties have a template or format for the reports they require. When this happens, practitioners may not always identify that the engagement being performed falls into the scope of ISRS4400. The term “factual findings report” may be more commonly used or identified. These engagements are the ones that fall into the scope of ISRS4400 (and are now referred to only as findings, and not factual findings). Some common engagements that fall into the scope of agreed-upon engagements include:

  • Reports to a funder on whether grant expenditure by a grant recipient is incurred in terms of the conditions of the approved grant or contract.
  • Confirmations or certificates of turnover provided to franchisors on the turnover earned by franchisees.
  • The verification of claims against investment or incentive schemes managed by the Department of Trade and Industry (for example in automotive, IT, import and export sectors).
  • Section 18 certificates for non-profit organisations confirming that donations are spent for the intended purpose.
  • Business TV licence audits.
  • Due diligence reviews.
  • Confirmations of earnings or EBITDA or other calculations for debt covenants

What is challenging about accepting and conducting these engagements?

Even with the revisions in the new standard, the nature and extent of these engagements varies greatly in size, frequency, complexity and risk. Although they are not assurance engagements, the report issued by a practitioner must still comply with the standard as well as with the extant ISQC1 and the new international standards on quality management – these will become effective in 2022, and thus, still exposes practitioners to quality risks. Given the extremely varied nature of these engagements, applying a consistent approach has been challenging in the past. Some of these challenges have arisen from the following:

  • The previous standards applied to financial information which provided very little guidance on procedures that were compliance, performance or non-financial in nature.
  • Difficulty in establishing a consistent, repeatable approach between engagements and between recurring engagements. Because all engagements require procedures that are unique to the activity, it is not possible to apply a standard set of work programmes, and therefore, very difficult to obtain, and maintain, a consistent approach with comparable work flows, work programmes and internal quality management mandates.
  • The standard is not well known and does not generally form part of the graduate accounting education syllabi. This means that practitioners need to read, understand, and interpret, the standard for themselves, if they are aware of it at all. This has resulted in the past in inconsistent approaches between practitioners.
  • Difficulty in communicating requirements of procedures with clients or third parties. The engaging party is usually clear on what they need in a report and what it will be used for, and thus provide their understanding of the procedures they require to be performed. In the execution of these procedures, there is often more detail or a sub-set of additional processes that the practitioner needs to perform to identify and acquire the information required to report against the original method. It can be challenging for team members to determine how to obtain the evidence needed to perform the required tasks, or what to request from the client – this may need to be explained differently to the wording of the agreed-upon process.
  • Where these engagements are performed manually i.e., not through specifically designed software, there is substantial repetition between recording the agreed-upon procedures in an engagement letter; doing so again in the working papers and again in the Agreed-Upon Procedures Report. Where the engagement comprises many procedures, this is very time consuming and subject to many errors of omission or transposition and carries a higher risk of the report not aligning with the initial required methods in the engagement letter.
  • The higher volume of manual documentation and repetition can also result in these engagements not being as viable – in terms of the time required in relation to the fees earned for these activities.
  • There is also the additional cost of having to repeat, or re-populate, documentation on engagement files for recurring activities in said manual files.
  • The use of manual engagement files always carries an increased risk to practitioners’ inefficiencies through the requirements for manual signoffs, document misplacements, lack of evidence on completion, timelines of reviews etc., and ensuring that file assembly and archiving requirements are met.

An efficient, quality solution to conduct Agreed-Upon Procedure engagements

Caseware Africa has introduced a cloud-based Smart Engagements solution for Agreed-Upon Procedure Engagements called ISRS AGREED UPON, that addresses and resolves many of the quality and efficiency challenges.

  • By using ISRS AGREED UPON for engagements, files can be populated with client and standing information relating to acceptance, continuance, skills, capacity, and independence requirements in the first engagement, and rolled forward to subsequent encounters, enabling practitioners to harness efficiencies in recurring events.
  • The procedures included in the ISRS AGREED UPON solution have been compiled to ensure compliance with the requirements of the new ISRS 4400(R) standard relating to acceptance and continuance, ethical and independence requirements and the other changes brought into the new standard, for example, the use of experts. These changes have been fully incorporated and thus practitioners using this product will not have to rewrite previous manual work programmes for the changes in the standard.
  • ISRS AGREED UPON can be adapted for the level of guidance required by your team. There is an option to select procedures that are core, or that are extended. Both facilitate compliance with the ISRS(R)4400 standard. Core procedures create efficiencies by reducing the number of procedures required for experienced users who understand the requirements for documentation, whist the extended procedures facilitate better documentation and therefore, make compliance easier for inexperienced users who require more detailed prompts or questions in order to arrive at the conclusions that an experienced user would.
  • ISRS AGREED UPON automates the inclusion of the actual agreed-upon procedures throughout the engagement file and related documents. The procedures themselves are captured once, and the engagement letter, work programmes and the Agreed-upon Procedures Report is populated from this source. This drives efficiencies by reducing the amount of repetitive documentation, and also resolves challenges relating to inconsistencies between agreed processes and reported procedures and findings.
  • ISRS AGREED UPON enables the practitioner to “reword” or tailor an initially agreed procedure to an inquiry or procedure that will facilitate asking for relevant information from clients in a manner that is understandable and will elicit the correct information/response. This “rewording” continues to be linked to the originally agreed procedure, ensuring a clear link between the work performed and the procedure to which it relates.
  • ISRS AGREED UPON enables the practitioner or team members to capture, at the time that the procedure is performed and concluded upon, the finding that should be integrated into the Agreed-upon procedures report. This finding is automatically transferred to the report within ISRS AGREED UPON, creating efficiencies between executing procedures and compiling the Agreed-upon procedures report. This also ensures that the agreed-upon procedures are directly aligned to the conclusions per procedure that are included in the Agreed-upon procedures report.

Last say

One of the primary drivers of the IAASB’s revision of the Agreed Upon Procedures standard was the increasing use of these engagements for both financial and non-financial information. Taking into consideration the changes and expansion in financial and non-financial reporting and the increased level of assurance that users, funders, and regulators require from businesses, the investment in a solution that facilitates compliance and drives efficiencies will ensure that you are able to viably provide these services to clients with confidence, increasing the value offered to clients and improving efficiencies and quality.

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