Use data intelligently to refine your business

Valerie Wiggett, Operations Manager, CaseWare  Africa, reveals the three laws of data

“Data—or rather the ability to use it intelligently—is redefining business, and the financial services sector is no exception.”

 

 

The ultimate winners in the data economy will be those companies that know what data they are collecting, and can use it to differentiate themselves. Business is undergoing a data revolution. Increasing digitalisation of everything from business processes to social life is creating a tsunami of data. Whereas once the challenge was where to store it, the question now is who can use it effectively to differentiate themselves and show competitors a clean pair of heels?

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The winners will those who understand the three laws of data:

1.Use data responsibly

It must be used responsibly in line with the law. Perhaps the most valuable data pertains to customers themselves: names, addresses, credit and buying history, preferences and so on. Much of this information is, however, highly personal and is increasingly protected by law—the Protection of Personal Information (PoPI) Act is the main legal framework in this country.

The key principle here is that consumers must know why their data is being collected, and it can only be used for that purpose. Using data irregularly is punishable with heavy fines in many jurisdictions, and will be here just as soon as the Information Regulator publishes the necessary regulations under PoPI. We have already seen huge fines imposed for data breaches in Europe and the United States.

2. Clean and accurate!

It must be clean and accurate. It’s obviously important that this customer data should be accurate. The old axiom garbage in, garbage out has never been more relevant. Technology is helping here because, increasingly, manual inputting of data is steadily being replaced as business processes are automated, reducing errors and creating information stores that can be used across the entire business.

Automation is transforming the financial services sector by ensuring not only that manual data input (and associated errors) are all but eliminated, and data can be shared across systems.

3. Use Intelligently

It must be used intelligently. Unsurprisingly, this is the most difficult to get right. There are two parts to this, perhaps they could be categorised as the front end and the back end. At the front end, the company uses customers’ personal data to create accurate marketing, and highly personalised customer experiences that result in a sale and ongoing loyalty. But at the back end, it has to use the full data set to improve its business processes and to deliver the front end.

At the back end, effective data use can impact a business’s ability to outperform competitors and thus ultimately its profitability. In the financial services sector, for example, XBRL business reporting and the new IFRS standards are all dependent on digitalisation and data. Initiatives like this include forecasting accuracy and better cash projections which are based on facts rather than intuition, as well predictions on customer and operational performance. Accurate financial modelling, as well analysis of payment behaviour, support better planning.

In auditing also, automation and efficient use of data enables the identification of anomalous transactions in real time, greatly reducing the burden on auditors while enhancing the service they offer to clients.

One of the biggest challenges is the sheer volume of data. Firms hold huge and increasing amounts of data, but typically only use between 3 and 5 percent of it. Clearly, those that are able to identify the best and most useful data will be at a huge advantage. Data scientists are becoming some of the most sought-after employees, and are in short supply. Ambitious companies with an eye on the future will be making plans now to ensure they have access to specialised data skills.

“Differentiate your business in a crowded marketplace”

Where the data revolution will take us nobody can be quite sure, but one thing is certain: you need to be thinking hard about what data you are collecting and how you are using it to differentiate your company.

Valerie joined CaseWare Africa in 2014. She is an MBA graduate with over twenty years’ experience in multiple industries, including manufacturing, construction and technology.  Valerie’s roles have been mostly in sales operations and administration and she has worked   in South Africa and internationally in the UK, UAE and Japan.  She was appointed as Divisional Operations Manager for CaseWare in July 2018.

Implement XBRL and open the door to business opportunity!

Jodi Joseph, Divisional Executive, CaseWare Africa, highlights the business opportunities waiting for you when you implement the XBRL standard.

South Africa’s journey towards the widespread implementation of the XBRL standard is well under way but are you taking the time to look beyond compliance and rather understand how the adoption of XBRL can benefit your business?

In 2018 one hundred and twenty one JSE listed organisations were invited by the Companies and Intellectual Property Commission (CIPC) to participate in the pilot phase of XBRL roll out. The results were very positive with one hundred and fourteen successful filings of financial accounts being received during this pilot phase.  Sixty companies from this invited list successfully submitted multiple sets of accounts – a great achievement.

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The purpose of the pilot phase was to test the functionality of both the CIPC’s upload-portal as well as the client-side software used by the invited companies.  This initial phase was also used to identify technical development issues and possible taxonomy issues as well as the understanding of XBRL requirements by the pilot companies.

The plan was to finalise the standard by July in order that companies could meet the minimum criteria – as mandated by CIPC, and produce their annual financial statements using XBRL, commencing with the latest set of signed off financial accounts.

The targeted 1 July 2018 go live date was achieved by CIPC and thousands of submissions have been successfully submitted since 1 July 2018. CIPC anticipates 100 000 submissions in the first year of implementation.

The motive behind the implementation of XBRL

The CIPC’s vision for mandating XBRL is to build efficiencies in organisations in order to speed up the process of reviewing financials, improve accuracy and build capacity for people to focus on tasks that require insights and analytical review. Receiving data in this format will enable CIPC to fulfil its mandate in a far more efficient way.  Additionally, the standardisation of the submission format will also enable sharing of financial information across regulators.

A successful move to this standard will also ensure that South Africa remains aligned to global reporting trends. However, it is important to note that it would be a mistake to see XBRL simply as an additional regulatory burden.  On the contrary it has gained worldwide traction because it offers many benefits to numerous stakeholders across the entire financial spectrum.

Let’s recap – what is XBRL?

XBRL, or Extensible Business Reporting Language, is a global standard for exchanging business information, based on XML (Extensible Mark-up Language) that is used to encode financial documents. iXBRL (Inline XBRL) is a development of XBRL that both people and computers are able to read and analyse. Globally many countries are mandating for the XBRL standard with the numbers of implementations growing rapidly.

Prior to XBRL most companies transmitted their financial information in one or other digital format; for example, PDF – which facilitates easy distribution and storage. However, anyone wishing to analyse data, or to aggregate it with financial, or non-financial data from their own or other companies, would have to transfer the data manually into their own, or third party systems. This process is laborious, technically challenging and introduces the possibility of errors.

The beauty of XBRL is that tags can be read by any XBRL-enabled software and the tagged information (financial and non-financial) is extracted automatically. This means that the data can be passed between computer systems with human intervention only being needed in the case of exceptions. This process reduces the cost of communicating and maintaining data improves: the usability; integrity and compliance of the data. Additionally, if XBRL is used as the standard, data can be retransmitted without having to transform it to other formats or languages – which may be required by further recipients. 

Where does Big Data fit into the picture?

The benefits of XBRL can best be summed up under one heading – Big Data. XBRL for an organisation’s financial data can be compared to an older retail technology -specifically barcodes. There is so much more to be learned from viewing a barcode than just price – companies are able to discern consumers buying habits, identify products that sell well together, and so much more. XBRL tagging will create a standardised financial view of company’s financial data. Investors, regulators, revenue services and companies themselves will be able to pick up on revenue trends, plus identify gaps and strategies to exploit in the future.

As data volumes multiply, the ability to create high quality, accurate analysis, requires that the data input is standardised. XBRL tagging provides a format that can be easily used in analytical programmes. XBRL enables standardised line items to be tagged, facilitating the comparison of company data quickly regardless of industry, country or even the language of the company report.

How can a company use this data?

Firstly, it can be used to identify financial trends in its own accounts over the years; it can also compare its own figures with those of peers, locally and internationally. This could be of huge value in pinpointing risks and opportunities.

In the European Union, the first wave of XBRL was implemented 15 years ago. Currently they are using XBRL to develop an array of cross-border applications including the creation of the European Financial Transparency Gateway (EFTG). Using Blockchain technology, the EFTG will provide a way to publicly share standardised financial information for companies across the Union. Another application of XBRL by the Single Resolution board in Europe is to use XBRL data to identify banks at risk of defaulting, in advance.

Big Data will enable companies to reflect a standardised view of their data that serves to put a spotlight on financials that are out of sync with those of peers. This kind of information can assist boards of directors, investors and regulators, with early identification of potential problems.

Is the right data being used?

The move to XBRL will also have benefits in the Social Media Age. Activists of various persuasions are starting to use social media to comment on the financial performance of organisations. While there is little businesses can do to control this, at least if companies apply a common data standard in the format they publish and share data externally, it will create a level of transparency, ensuring that comparisons being made are using the right data with less scope for data interpretation.

The significance of implementing XBRL in South Africa is that we could begin to lead fellow members of the Southern African Development Community (SADC) towards the same path of digitising financial data. This will empower African countries with the ability to apply learnings from other XBRL regions and adopt best practices relating to taxonomies and application benefits of big data.  All of this will serve to drive better policies, build stronger companies and encourage global investment in the region.

The bottom line is that when it comes to XBRL it is crucial to look beyond compliance. Dig deeper and you will see the incredible analytical power that you can derive from standardising financial reports across industries and within your own financial reporting systems.

Brief Biography:

Jodi Joseph, Divisional Executive, CaseWare Africa, a division of Adapt IT.

Jodi is a Chartered Accountant (CA) SA with incomparable experience as a financial professional. She completed her articles at Grant Thornton – Kessel Feinstein and thereafter joined Investec in various roles including Divisional Chief Operating Officer and Chief Financial Officer. In 2013 she was appointed Chief Operating Officer of CQS Technology Holdings (Pty) Ltd – which was subsequently acquired by Adapt IT.

Technology offers tax professionals a powerful tool that will improve their services to clients while significantly enhancing the efficiency of their own working practices.

The power of automation and visualisation and how it empowers you – the tax practitioner!

Charl Geldenhuys explains why technology can simplify life for tax practitioners—and make you more effective into the bargain.

The onward march of technology can be a challenge all of us. Technology can open up a previously settled market to newcomers and disrupt established practices where, in extreme cases, previously profitable companies could find themselves irrelevant.

At an individual level, professionals can also feel threatened as increasingly sophisticated technologies—think artificial intelligence and machine learning—appear to be encroaching on their competencies.

 

Whilst they are real – these threats are also significantly hyped up by a media that thrives on sensational headlines. In reality, technology offers tax professionals a powerful tool that will improve their services to clients while significantly enhancing the efficiency of their own working practices.  This is achieved by reducing the need for manual, time-consuming and tedious processes and freeing up time for more value added offerings.

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One example is the growing sophistication of cloud-based solutions to help you manage your client base much more easily and effectively. Harnessing the power of automation and visualisation streamlines the difficult and time-consuming administrative task of managing a large number of tax returns from inception through to submission to SARS.

It seems deceptively simple, but it’s always been something of a nightmare for tax practitioners: how do you keep track of where each one of your clients’ tax returns is in the process, year after year?

There’s a lot riding on this, as tax authorities are very ready to impose penalties, and clients’ trust you to handle their entire affairs. You need a way not only to see where each return is in the process, but also to obtain a bird’s eye view of all the returns allowing problem areas to be flagged and omissions identified before they become material.

The dreaded spreadsheet

Until fairly recently, the best option was the spreadsheet, which over the years has been forced into a number of roles for which it was never designed. In this instance, it has to be admitted that spreadsheets are not ideal tracking tools. Firstly, a great deal of manual input is required and subsequent maintenance of changes to data has to be meticulously and manually logged. This is also a very time-consuming process, manual data capturing and maintenance, combined with inevitable user error are notoriously risky processes and almost guarantee the introduction of mistakes into data sets.

Another huge disadvantage of a spreadsheet is that it remains tabular, and thus a less-than-ideal way to get a handle on the elusive “big picture”.

So what’s the answer?

Modern, cloud-based technology! It enables you to see all clients with the status of their return shown graphically, through an interactive dashboard. CaseWare’s CloudTax product is an example of an application that allows tax practitioners to view: all active taxpayers; client status; returns due, as well as missing information.  What is even better is the fact that this application then allows you to drill down into each of the categories to see the detail and take the appropriate remedial action. These visualisations – and there many different kinds you could use – are very useful in allowing a tax practitioner to toggle between a comprehensive big-picture view and the detail of a particular client’s tax file.

But the cherry on the cake is to link this visualisation capability with automation. In our example, this means linking the tax management application into the SARS e-filing system. This will show: all the submissions not yet sent to SARS; queries and requests already submitted to SARS; returns that have been successfully filed; all the correspondence with SARS, and more. The integration is controlled by a sync function that assimilates the details of the tax practitioner’s clients with SARS e-filing.

Automation and visualisation—a winning combination that will enable you to manage multiple client returns more effectively while freeing up time to provide a more strategic advisory and planning function to clients on their respective tax affairs.

Now you have to agree that’s progress!

Digital technology lighting the way through dismal accounting ethics tunnels

SA should look to harnessing digital technology to improve transparency and underpin ethical practices in accounting and auditing.
By Christiaan Steyn, CaseWare Africa

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2018 proved to be another year laden with ethics-related challenges emerging across both state-owned enterprises and private sector organisations. These issues raised concerns about the state of ethics and professionalism in our sector, but also served to illustrate that the time has come for organisations to embed new technologies, standards and models into processes to underpin transparency and ethical practices. Fortunately, there is light at the end of the gloomy ethics tunnel, with the emergence of new standards and multiple advanced digital accounting and auditing solutions to support ethical practices.

So what’s to be done?

IAASB Framework for Audit Quality International Standard on Quality Control 1 (ISQC 1) and International Standard on Auditing 220 (ISA 220) are welcome measures for the auditing sector to address challenges facing the profession. These standards, facing their first refresh in around a decade, will go a long way to addressing accounting issues in a vastly changed environment. In addition, updates to SAICA’s own Code of Professional Conduct in line with the IESBA Code, also add impetus to efforts to ensure professionalism, accountability and ethics in the sector.

Cooling down the debate on ethics lapses

The reasons for lapses in ethical behaviour have been hotly debated. They may have arisen due to an increasingly flexible understanding of what constitutes ethics, professionalism and quality. But they may also have occurred because of the sheer volumes of data and transactions now requiring monitoring and processing.  Another contributing factor is the pressure on businesses to perform in a declining economy; and also to adapt to a fast-changing technological, political and socio-economic environment.

Many local accounting and audit firms still rest heavily on manual and spreadsheet based solutions. As pressure increases to generate more revenue, and as the amount of data and number of transactions in question increase exponentially, it becomes increasingly difficult for senior personnel to interrogate every ledger and every transaction. This opens the door to fraud and simple, old-fashioned human error. Automation uses the information already being generated by the company’s ERP and other systems to perform an audit, reduces repetitive and time-consuming manual tasks, supports integrated reporting as recommended by the various King Reports, and ensures greater integrity of the data. This data can then be used to analyse patterns in near real time to identify suspicious activity, predict risk and ensure compliance.

Fresh new approach due to Analytics

Traditional methods of assessing a small sample of transactions are not effective when dealing with millions of transactions a day. However, with advanced analytics, auditors can not only interrogate all the transactions, but they can also spot anomalies and suspicious behaviour – for example, a single account manager regularly processing a particular’s client’s transactions on weekends, and always just under the authorisation limit. Real-time analysis could also be applied to the activities and holdings of directors, to highlight conflicts of interest or worrisome expenditure.

Predictive analytics can add impact to the analytics arsenal, by helping organisations identify and predict emerging risks and opportunities.

Real-time auditing

Digitally-enabled real-time auditing is another advance likely to emerge to overcome the challenge of fraud that escalates throughout a financial year and is only discovered at year-end. By implementing real-time audit tools, auditing becomes a continuous process and auditors gain the ability to spot suspicious transactions or activities virtually as they happen.

Are you compliant?

Digital reporting tools also support compliance with new accounting standards such as IFRS 9, IFRS 15 and IFRS 16, which bring with them significant changes in reporting, which demands extensive preparation that could potentially divert focus from risk and fraud taking place.

By embracing new standards designed to improve transparency and ethical behaviour, and by harnessing automation, analytics and other digital advances that take error- and fraud-prone processes out of the equation, the accounting sector is positioned to build ethical practices into the heart of all processes.

Brief Bio:

Christiaan Steyn, Assurance Product Manager, CaseWare Africa, a division of Adapt IT.

Christiaan is an Associate General Accountant (SA), with extensive technical knowledge and a passion for technology.  He completed his articles at a medium sized auditing firm where he gained experience in various industries.  He was later appointed Template Developer and then moved to the role of Product Manager at CQS Holdings – which was subsequently acquired by Adapt IT and renamed to CaseWare Africa.

There is No Time to Waste in Getting the Groundwork Ready for IFRS16

By Michael Mncube, Product Owner – Financial Reporting at CaseWare Africa

IFRS16 is the third significant reporting standards change in under two years and it is set to have a huge impact on businesses in 2019.

Preparing for the change demands extensive groundwork now. This comes hot on the heels of the implementation of IFRS 9 and IFRS 15 by the International Accounting Standards Board (IASB).  IFRS 16 comes into effect on 1 January 2019 and will completely change the accounting treatment of leases. So going forward from the ‘lessee’s’ perspective operating leases will be included on the balance sheet, with potentially huge impacts on financial metrics such as EBITDA, asset turnover, interest cover and gearing ratios.

Lease vs. Buy Decisions

These changes may affect loan covenants, credit ratings and borrowing costs, and could result in other behavioural changes which may compel many organisations to reassess certain ‘lease versus buy’ decisions.

With IFRS 16 eliminating nearly all off balance sheet accounting for lessees, entities must reassess their lease agreements across big ticket items such as office space, industrial equipment and employee cars and laptops, through to smaller items such as office furniture and printers. This will require the gathering of information relating to all leases including: terms and conditions; cancellation periods and the implications of early cancellation. Entities may have to go to great lengths to source the original lease contracts on long-standing agreements, and they may have to renegotiate the terms.

Departments including: IT;  procurement; facilities management; legal; corporate real estate; HR and payroll, and finance and accounting, will collectively have to work together to ensure that all the necessary lease data is gathered, that all leases are negotiated optimally, and – crucially – that ERP systems are updated and able to support the new reporting standards.

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The process is likely to prove challenging and time consuming for large entities, and potentially confusing for SMEs. However, for stakeholders, IFRS 16 will offer a more accurate overview of an entity’s financial standing, with greater transparency in the long term. And considering the effective date of annual periods beginning on or after 1 January 2019, entities have no time to lose in preparing for the new standard if they have not done so already. IFRS 16 is a hot topic in the market at the moment, with auditors and advisors being called in to help them implement the necessary changes, and a swathe of seminars being held to help entities understand what will be required.

The latest change comes after a challenging year in which entities also had to adopt the new IFRS 9 and IFRS 15 reporting standards – which became mandatory for annual periods beginning on or after 1 January 2018. IFRS 9, which addresses accounting for financial instruments, and IFRS 15, which covers accounting for revenue from contracts with customers, both demanded a restructuring of reporting, impacting every entity and requiring revamped ERP systems to cope with the change.

If you Snooze you WILL lose

Those entities that delayed in laying the groundwork for IFRS 9 and IFRS 15 found to their dismay that new reporting standards require comprehensive preparation, and IFRS 16 is likely to require even more extensive preparation.

The Solution – minimum effort – maximum benefit

To support entities in meeting the new requirements, CaseWare has integrated the IFRS 9 and IFRS 15 standards into its automated processes, enabling clients to comply with both standards with minimum effort. Work is now underway to integrate IFRS 16 standards into CaseWare, with this update expected in mid-2019.

About Michael

Michael is a qualified CA(SA) and holds a Master’s Degree in Taxation. He served his articles at Grant Thornton where he was exposed to both the private and public sector. He gained experience in both listed and unlisted entities, with various industries including Healthcare, Retail, NPO’s and Mining & Support services.  Prior to joining Adapt IT – Caseware Africa he was with Vodacom as an IFRS Specialist assisting with the implementation of IFRS 9 and transition from IAS 17 to IFRS 16, and drafting Annual Financial Statements for the groups’ divisions. His journey in finance started in 2007 where he worked for an SME Electrical and Mechanical contracting company as a Bookkeeper for just over 8 years. He gained valuable experience in Financial and Management Reporting, Tax, Project tracking, Governance and Internal Controls. His Masters’ degree focused on Tax Strategy and Tax Administration with a Dissertation titled “A comparison of SME tax incentives among BRICS countries: Lessons for South Africa”. He currently works as a Product Owner-Financial Reporting focusing on IFRS and IFRS for SME.

Two-factor authentication

What is two-factor authentication?

Also known as, 2FA, or multi-factor authentication- it is a method of identity verification using two different components, such as a password and security token or one-time pin (OTP) sent to your mobile device. This method combines something you have (a token or OTP) with something you know (a password). Two-factor authentication is more effective in securing account access than a password alone, making it more difficult for criminals to access your data/accounts.

Scammers often use malware, phony websites, and other methods to crack a password. Many people use the same password on multiple websites and 46% use passwords that are at least five years old. In addition, 64% of millennials have had their online and mobile accounts compromised.   More than three billion usernames and passwords were stolen in 2016, and Business Insider reported in November 2017* that there are 1.9 billion stolen passwords and usernames available on the black market, and up to 25% of them will still work on a Google account.

2018 certainly isn’t much better with daily reports on hacking of passwords and user identities from many high profile organisations including: The British National Health Service; British Airways; and Liberty Life in South Africa – to name just a few.

So what can you do to help secure your data?

CaseWare has revolutionised the way you manage your engagement Information online with the help of CaseWare cloud. To ensure that your information and other related data on CaseWare Cloud remains well protected, CaseWare introduced two factor authentication to provide an additional safeguard to users when they log in.

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It also integrates with your CaseWare Working Papers when you assimilate it into your instance of CaseWare cloud. This means that you and everyone in your team who has access to your cloud do not need to set up a separate protection setup of username and password. Simply use your CaseWare cloud credentials.

How does it work?

Two-Factor Authentication is a security feature that requires you as a user to supply three things when logging in:

    • Your CaseWare Cloud username
    • Your password
    • A once off One Time Pin (OTP), sent as a text message (Also known as an SMS) to the user’s mobile phone.

Users will supply their login username and password, which will trigger Two-Factor Authentication. A screen will prompt the user to refer to a text message that is being sent to their mobile phone containing their OTP. Once this OTP is entered, the user gains access to their CaseWare cloud profile. This method helps to ensure that you are the only person who can access your CaseWare Cloud account, even if someone else manages to get access to your password.

How does my CaseWare Administrator activate this security feature?

Your company’s CaseWare Cloud Administrator (who can be the CaseWare champion as well), will enable Two-Factor Authentication on your cloud’s instance via the settings menu. In addition to ensuring that this feature is enabled, he/she will also need to ensure that all users have the correct mobile phone number captured on their profile. This is because Two-Factor Authentication will use your user’s mobile number to send text messages containing the secure OTP for logging in.

What else can I do to protect my data?

A simple starting point is to change your passwords—regularly!  Passwords are identified as a very weak means of authentication especially when used as the only protection against phishing attacks.

What you really need is a second factor of authentication. That’s why many internet services, a number of which have felt the pinch of being hacked themselves have embraced two-factor authentication for their users. Global organisations including: Yahoo; Google; Facebook and many financial institutions have all embraced the two factor authentication system.

Biometric systems** which include: scanners for fingerprints; retinal scanning or face recognition systems are also growing in use due to innovations including: the iPhone X’s Face ID and Windows Hello. In most cases, including two factor authentications for your Google account and other popular services is simply a numeric OTP – a few digits sent to your phone, which can only be used once.

Many online services such as Dropbox, Facebook, Google and Instagram let you create backup OTPs, which you can print out or screenshot. That way if you lose your phone or don’t have a cell signal, you can use a backup OTP as a second authentication factor to log in. If you keep printouts of your back-up OTPs, just make sure you keep them in a very secure place.

Is two factor authentication the security silver bullet for safe data?

No security product can claim to offer fool proof protection, but by combining two of the above three types of authentication, and changing your passwords regularly; two factor authentication makes it harder to get into your account. You not only make your accounts more difficult to attack, but you also make them less attractive targets.

CaseWare Africa to release update in line with IRBA 2017 Public Inspections Report

CaseWare Africa will release an updated version of its Probe Audit software on 7 November to help clients deal with the issues highlighted in the most recent Inspections Report issued by the Independent Regulatory Board for Auditors (IRBA). The update will also help auditors deal with the implications of IFRS 9 and 15, which became effective for all annual periods beginning on or after 1 January 2018.

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The IRBA conducts inspections of audit firms and audit files annually and releases a report to highlight findings and themes that the audit industry should note. The IRBA’s 2017 Inspections Report, issued in May this year, indicates that many of the findings do not differ significantly from what was reported in the previous two years.

“As a trusted software partner for the auditing profession, we take these annual Inspection Reports very seriously, and use them as an opportunity to update and refine our software, as needed, to help our clients overcome the challenges indicated in the Report,” says Christiaan Steyn, Product Owner: Audit, CaseWare Africa. “The fact that the IRBA highlighted recurring issues prompted an in-depth consultation with our own experts as well as officials of the IRBA to ascertain exactly what issues auditors are struggling with.”

The IRBA highlighted four key areas where auditors are consistently falling short:

    • Revenue auditing, which is of particular relevance as IFRS 15 introduces new guidance for accounting for revenue. Mr Steyn says that the nature of revenue has changed substantially over the past several years, especially as more complex warranties and guarantees have become the norm, as have loyalty points. All of these may create future liabilities that must be properly assessed. In addition, the fact that many performance bonuses are linked to revenue can tempt executives to overstate revenue. Revenue recognition remains a significant risk area and auditors must pay particular attention to this aspect.
    • Inadequate documentation. The golden rule of auditing is that enough documentation should be on file to allow another professional reviewing an audit to come to the same conclusion that the auditors did. The IRBA found a consistent weakness in this area.
    • Evaluation of misstatements on the Schedule of Unadjusted Audit Differences. The issue here is that the misstatements on the schedule should not be of a nature to affect the overall assessment of the company’s performance. However, auditors are consistently failing to analyse the cumulative effect adjustments could make to the ratios (such as the Price-to-Earnings (P/E) and Return on Assets (ROA) ratios) on which most investors rely. In other words, auditors need to probe the question of materiality and unadjusted journals much more deeply.
    • Significant estimates. The IRBA Report indicates that auditors are too ready to accept corporate estimates of building, vehicle and other asset values and depreciation times. By writing off assets quickly, companies realise tax advantage prematurely. Auditors need to cultivate a professional scepticism with regard to significant estimates, as well as more generally, Mr Steyn says.

“The updated version of CaseWare Probe Audit will help our clients address the issues raised by the IRBA and the IFRS 9 and 15 standard, helping them to realise the benefits of automation while enhancing their compliance with relevant industry standards,” he concludes.

CaseWare enables clients to benefit from new IFRS 9 and 15 standards

Two important standards issued by the International Accounting Standards Board (IASB), IFRS 9 and 15, come into effect this year. Jannie Marais, Product Manager at AdaptIT, says that both have considerable benefits to offer but could be challenging for organisations to implement.

“CaseWare, as always, has put its team of developers to work in order to integrate the new standards into our automated processes,” he says. “That means that clients can comply with both standards with minimum effort, and realise the substantial benefits that each has to offer.”

 

Although both standards were available in 2014, they only became mandatory for annual periods beginning on or after 1 January 2018.

IFRS 9 addresses accounting for financial instruments. Its final version is essentially the IASB’s response to the 2008 financial crisis. It revises accounting standards for financial instruments whose apparent deficiencies seem to have contributed to the scale of the crisis. A key reform wanted by the IASB was a logical model for classification and measurement of financial instruments using a single, forward-looking “expected loss” impairment model. It also wanted to reform hedge accounting substantially.

The standard will confer a number of benefits, including reduced profit and loss volatility. IFRS 9 will also offer an enhanced risk management toolbox that reflects more accurately how an entity manages risk; that considers time value as a cost of hedging and treats it as a separate element of equity; and that better aligns hedge accounting and risk management strategies.

IFRS 15 is intended to provide guidance on how to account for revenue from contracts with customers. Among its many advantages is that it will provide a single global standard for recognising revenue. Although the United States has not adopted IFRS, this standard goes some way towards standardising with US GAAP. This is expected to facilitate global investing and borrowing, and generally support a more efficient global financial system.

In addition, IFRS 15 will improve the consistency of reporting across financial statements for multinationals, and will also make budgeting, planning and performance management more effective.

“Recognising revenue across multiple jurisdictions is always going to be an extremely complex business, but once companies have implemented IFRS 15 it will make things easier for them,” says Mr Marais. “For CaseWare clients, transitioning to IFRS 15 and then using it will be that much simpler, and the benefits will be realised more quickly.”

CaseWare makes preparing financial statements easy and fast

It has been a hard and tiring journey for us trying to get a solution to our time consuming and exhausting preparation of the annual report and financial statements which not only has strict time lines but requires quality output.

This journey came to an end about two years ago when we met Caseware Africa. Caseware Africa’s software has made our preparation on quality financial statements fun and timely.

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With the use of Caseware, we are now able to complete the preparation of the financial statements and review them in less than a month, giving management and the board humble time to review and approve the statements. Previously we had to call for an ADHOC board to approve the statements given that they would be ready the last day of the statutory timeline.

Thank you Caseware Africa. – NHIF (National Hospital Insurance Fund)

Get up to speed on CaseWare Working Papers fast, easily and for free!

Class of 2018 is available to first year articles clerk (and anyone else who is interested) and provides all you need to train up on CWWP to future proof your career.

 

Like all great software, getting real value from solutions depends substantially on knowing how to use the products. That’s why CaseWare has created “Class of 2018”, a fit-for-purpose training programme to get you up and running on CaseWare Working Papers (CWWP) fast.

Class of 2018 is available to first year articles clerk (and anyone else who is interested) and provides all you need to train up on CWWP to future proof your career. The course is designed to help CaseWare build a community of champion users, while taking care of the all-important induction and upskilling of new users to start a journey towards success when using CaseWare Africa products.

Best of all, the training is free of charge and you can sign up and download it right away to get started.

Why is training in CWWP important?
The work of the modern professional and chartered accountant has changed drastically in a short space of time. With the introduction of modern technology like CWWP (and the broader CaseWare portfolio), much of the repetitive, time consuming work is being automated.

This frees up trainees to focus on adding value rather than capturing figures, and enables greater transparency as financial results can be accessed easily as frequently as desired, not only at year-end.
Proficiency in tools which accelerate productivity and improve efficiency is crucial for the success of the trainees of today and tomorrow.

What can you expect out of Class of 2018?
Go ahead and sign up and you’ll receive the eLearning module via email. The application works offline, so you don’t have to be connected to the internet to use it. With a blended learning approach, Class of 2018 combines weekly e-mails, videos and social media engagement, making the learning process engaging and rewarding.

Consider Class of 2018 a way to jump start your drive to achieve career goals. It is an ideal way to start learning the technical functionality of the software you’ll be using without having to wait on, or rely on, internal training processes. You’ll find it will supplement and fill any gaps in on-the-job training, aligning to the audit processes/cycle. Because the content on the module can be accessed at any stage in your audit, review and compilation cycle, it serves as a handy reference should you need help.

Join us online: LinkedIn Group
We’ve established a closed LinkedIn group for audit, accounting and finance professionals who are learning about and using CaseWare Africa products. Join us to start conversations with peers, ask questions, get guidance and contribute to the CaseWare community, which includes Training Facilitators and CaseWare Champions.