Join us for an insightful webinar on staying ahead of your ASQM1 compliance requirements. After a quick refresher on the essentials, we’ll explore the latest updates and provide a brief overview of the Monitor and Evaluate module of SQM, ensuring you’re well-prepared for your annual monitoring and evaluation cycle.

We often receive questions on this topic through support, so we created this webinar to help you and your team. Feel free to share the invite with your colleagues.

High-quality audits are the bedrock of financial integrity and trust. For auditors and finance leaders, delivering precise and dependable audit reports is essential for compliance and safeguarding an organisation’s reputation, fostering investor confidence, and guiding sound decision-making. In an era of heightened regulatory scrutiny and complex financial landscapes, the demand for rigorous, insightful, and error-free audits has never been more critical. A commitment to audit excellence ensures that financial statements are accurate, potential risks are identified early, and organisations are better positioned to achieve their strategic goals.

The stakes have never been higher

Audits are a vital check on an organisation’s financial health and governance. They provide stakeholders, including investors, regulators, and management, with a clear and accurate picture of a company’s financial position. High-quality audits help detect and prevent fraud, ensure compliance with financial regulations, and identify potential risk areas. For auditors, every step of the audit process must be meticulously executed to uphold the integrity of financial information.

However, the ramifications of poor audit quality can be severe. Inaccurate or incomplete audits can lead to financial misstatements, regulatory fines, reputational damage, and loss of stakeholder trust. For heads of finance, a compromised audit could mean facing increased scrutiny, potential penalties, and a loss of confidence from investors and the board. Therefore, achieving and maintaining high audit quality should be a top priority for any organisation.

What constitutes a high-quality audit?

Several key characteristics define high-quality audits:

1. Accuracy and completeness: Ensuring all financial statements are accurate, comprehensive, and free from material misstatements is the fundamental goal of any audit.
2. Objectivity and independence: Auditors must maintain independence from their audit organisations to provide unbiased assessments.
3. Thoroughness: Effective audits delve deep into the financial records, internal controls, and processes to uncover discrepancies or weaknesses.
4. Expertise and competence: Auditors must know the latest accounting standards, regulations, and best practices to deliver reliable results.
5. Clear communication: Effective communication between auditors, finance teams, and stakeholders ensures transparency and a shared understanding of the findings and recommendations.

The strategic advantage of quality audits

For finance heads, high-quality audits are not merely a compliance exercise—they are a strategic advantage. They offer deep insights into the organisation’s financial health and provide a solid foundation for strategic planning and risk management. By identifying weaknesses in internal controls and operational inefficiencies, audits help finance leaders make informed decisions that drive growth and sustainability.

On the other hand, auditors enhance their reputation and client trust by delivering high-quality audits. In a competitive market, the ability to provide insightful, accurate, and timely audit services sets them apart from their peers. Moreover, high-quality audits can lead to long-term client relationships and increased business opportunities.

Elevating audit quality with the right tools and knowledge

Achieving high-quality audits requires expertise, diligence, and the right tools. Technology enhances audit quality by streamlining processes, reducing errors, and providing deeper analytical insights. Leveraging advanced audit software, like those offered by Caseware, enables auditors and finance teams to improve efficiency, accuracy, and compliance.

Download our comprehensive guide to improving audit quality

Understanding the nuances and best practices is essential for auditors and finance heads seeking to elevate their audit quality. Our guide, “Your Comprehensive Guide to Improving Audit Quality,” is an invaluable resource that provides actionable insights, practical tips, and the latest industry standards to help you achieve and maintain the highest audit standards.

As the financial landscape becomes increasingly complex, auditors’ roles have evolved far beyond traditional financial statement analysis. Today, auditors are expected to be forensic investigators, equipped to uncover and prevent organisational fraud. This shift is driven by the rising incidence of fraudulent activities, necessitating a sophisticated, proactive approach to maintaining financial integrity and safeguarding stakeholder trust.

The expanding role and responsibilities of auditors

The contemporary auditor is not merely a financial gatekeeper; they are increasingly viewed as strategic partners in governance, responsible for ensuring that an organisation’s financial practices withstand scrutiny. This expanded role reflects the growing complexity of financial transactions, regulatory demands, and the ever-evolving tactics of fraudsters.

Auditors today need a diverse skill set that includes proficiency in forensic accounting, data analytics, and an understanding of legal frameworks. Their responsibilities now extend beyond the traditional audit of financial statements to include identifying red flags, evaluating internal controls, and thoroughly understanding an organisation’s risk environment. This proactive stance is essential for detecting and mitigating fraud before it can cause significant damage to the organisation’s reputation and financial health.

In this context, the role of an auditor is akin to that of a detective, tasked with uncovering the often hidden or concealed activities that can undermine an organisation’s financial stability. By adopting forensic techniques, auditors are better equipped to delve into the intricate details of financial transactions, identify anomalies, and ultimately ensure that the organisation’s financial reporting is accurate and reliable.

Understanding the scale of fraud and the auditor’s role

Fraud remains a significant issue within organisations, with substantial financial implications. According to the Association of Certified Fraud Examiners (ACFE), businesses globally lose an estimated 5% of their revenues to fraud each year, amounting to billions of dollars in losses. The ACFE’s Report to the Nations (2022) highlights that the median loss per fraud case is USD 117,000, with 21% of cases resulting in losses exceeding USD 1 million.

Auditors are critical in uncovering fraud within organisations. A study by KPMG revealed that external auditors detected 16% of fraud cases, while internal auditors identified 14%. These figures underscore auditors’ pivotal role in fraud detection and prevention despite the evolving challenges posed by increasingly sophisticated fraudsters.

Auditors have embraced forensic approaches to address these challenges, utilising advanced data analytics to detect patterns and anomalies that may indicate fraudulent activity. By scrutinising large datasets, auditors can identify unusual transactions or inconsistencies that warrant further investigation, allowing them to catch fraudulent activities early and minimise their impact on the organisation.

Profiling the modern fraudster

To combat fraud effectively, auditors must understand the profile of the modern fraudster. Gone are the days of the lone opportunistic fraudster; today’s perpetrators are often part of organised groups employing sophisticated techniques and tools. These fraudsters are adept at exploiting technological vulnerabilities and can operate from within any level of an organisation.

Notably, the ACFE report indicates that individuals in executive or upper management positions are responsible for the largest fraud losses, with a median loss of USD 600,000. These individuals typically have access to sensitive information and can override internal controls, making their fraudulent activities particularly challenging to detect.

In addition to the traditional forms of fraud, cyber fraud has become increasingly prevalent. Modern fraudsters leverage phishing, malware, and hacking to steal funds or sensitive information, posing new challenges for auditors. This underscores the importance for auditors to stay abreast of cybersecurity risks and incorporate these considerations into their forensic auditing processes.

Standards and guidelines for addressing fraud

Auditors seeking to enhance their fraud detection capabilities can draw upon national and international standards and guidelines. In Australia, the Australian Auditing and Assurance Standards Board (AUASB) provides the framework that outlines auditors’ fraud-related responsibilities. A key standard, ASA 240, “The Auditor’s Responsibilities Relating to Fraud in an Audit of a Financial Report,” mandates that auditors identify and assess the risks of material misstatement due to fraud and design appropriate audit procedures in response to those risks.

The International Standards on Auditing (ISA) provide a framework for dealing with fraud on a global scale. ISA 240, similar to ASA 240, stresses the importance of maintaining professional scepticism throughout the audit process. It also requires auditors to obtain sufficient appropriate evidence to support their conclusions regarding the presence or absence of fraud. These standards emphasise understanding the entity’s internal controls, the environment in which it operates, and the need for effective communication with those charged with governance about fraud risks.

The ACFE also offers guidelines and best practices for fraud detection and prevention, including forensic accounting techniques, providing auditors with valuable resources to enhance their fraud detection capabilities.

Preparing auditors for forensic challenges

Auditors must continuously update and expand their skill set to combat fraud effectively. This involves staying current with the latest auditing standards and guidelines and gaining expertise in forensic accounting, data analytics, and cybersecurity. Training and certification programs, such as those offered by the ACFE, are instrumental in equipping auditors with the necessary skills to detect and investigate fraud.

Beyond technical expertise, auditors must develop critical soft skills such as analytical thinking, problem-solving, and communication. These competencies are essential for conducting thorough investigations, interpreting complex data, and effectively communicating findings to senior leaders and stakeholders.

Collaboration is also key. Auditors should work closely with forensic accountants, IT specialists, and legal experts to enhance their ability to detect and prevent fraud. This interdisciplinary approach provides a holistic view, allowing auditors to tap into various areas of expertise, making it more likely that fraudulent activities will be detected and addressed promptly.

Embracing advanced technology is another crucial aspect of preparing auditors for forensic challenges. Data analytics software, for instance, enables auditors to detect anomalies and patterns indicative of fraud. Additionally, artificial intelligence and machine learning algorithms are becoming increasingly important in enhancing fraud detection capabilities, allowing auditors to analyse large volumes of data quickly and accurately.

Finally, auditors must foster a culture of ethics and integrity within their organisations. By promoting ethical behaviour and implementing robust internal controls, auditors can help prevent fraud. This involves working closely with management to establish policies and procedures that deter fraudulent behaviour and encourage whistleblowing.

The role of auditors has evolved significantly in response to the growing threat of fraud within organisations. By adopting a forensic approach to auditing, auditors can effectively detect and prevent fraudulent activities, thereby safeguarding the financial integrity of their organisations. This approach requires auditors to develop a broad range of skills, including forensic accounting, data analytics, and cybersecurity, alongside a deep understanding of the relevant standards and guidelines. With the right tools, training, and collaboration, auditors are well-positioned to meet the challenge of detecting and mitigating fraud, ultimately protecting the interests of their organisations and stakeholders.

Highlights:

• The history of artificial intelligence dates back to the 1950s, when AI theory was first developed at Dartmouth College in New Hampshire.
• Machine learning, which lets computers learn from data, marked a paradigm shift in AI history. 
• AI’s impact is already significant across accounting and other industries, and it continues to expand as technology progresses. 

Artificial intelligence (AI) is poised to revolutionise countless industries, including audit and accounting. It promises to reduce manual effort, streamline processes and help drive greater efficiencies, among other benefits. And while AI is certainly a hot topic that in many ways seems to have just recently burst on the scene, it actually has a long history spanning decades that has led to today’s current state. 

What is AI?

At its core, AI’s story is about the development of computer systems. These complex programs can do tasks that normally require human intelligence. These exercises include understanding natural language, recognising patterns, learning from experiences, making decisions and solving complex problems. 

AI is now widely applied and influential. It is reshaping industries, work environments and societal norms. We have personal assistants on our smartphones, like Siri and Google Assistant. There are also more intricate systems that drive autonomous vehicles, diagnose diseases and improve customer service through chatbots. The footprint of AI in our lives is significant and growing every day. 

The technology is also having an impact in nearly every professional industry, including finance. AI smooths operations in accounting. It automates routine tasks and predicts trends, personalising customer experiences. These functions boost efficiency and open new vistas of innovation and opportunity in fields such as auditing. But the road to this future was paved with years of theory, technological tinkering and a quest to understand computational intelligence’s potential. 

To answer the question, “What is artificial intelligence?” and fully appreciate AI’s present and future, we must first understand its past. Let’s take a journey back in time to fully appreciate how AI has developed into one of today’s most promising and exciting technological developments.

The history of AI, explained

Scientists sowed the first seeds of AI in a quest to build machines capable of human thought and action. What began as speculative enchantment eventually assumed the form of practical computing. The first generation of AI research focused on problem-solving and logical reasoning. It aimed to make machines process language, recognise patterns and solve complex problems.

Who first developed AI theory?

The history of AI theory began at Dartmouth College in New Hampshire in 1956. It was at a workshop led by John McCarthy and attended by prominent thinkers, including Allen Newell and Herbert A. Simon. Science fiction was about to transition into a scientific pursuit, and researchers formally established the field of AI.

The ‘Logic Theorist’

The Logic Theorist was a program developed by Allen Newell, J.C. Shaw and Herbert Simon in 1956 at the RAND Corporation. It automated mathematical problem-solving. It was one of the first AI programs that proved able to solve problems better than humans in a specific domain. It excelled at solving problems involving propositional calculus, a branch of math that deals with logical statements and their relationships. 

The program represented problems symbolically and used algorithms to manipulate these symbols based on established rules or “heuristics.” Doing so could break apart complex issues into simpler sub-problems. Then, it was possible to solve the sub-problems step-by-step, like a human mathematician. The Logic Theorist was an early example of AI applied to problem-solving. It laid the groundwork for future research in this area.

General Problem Solver

Following the success of the Logic Theorist, Newell and Simon embarked on creating a more adaptable AI program. They succeeded in creating the General Problem Solver (GPS) in 1957. They designed GPS as a universal problem solver that could tackle numerous issues, not just a specific domain like its predecessor. This aspiration marked a significant milestone in AI research. It symbolised the pursuit of a machine with the capacity to emulate the broad problem-solving skills of the human mind.

The General Problem Solver approached tasks by breaking them into smaller, more manageable parts. It used “means-ends analysis,” where it identified the differences between the present state and the goal state and searched for actions to minimise the gap. This method allowed the GPS to solve structured problems logically, mirroring the step-by-step reasoning process humans often employ.

Shakey the Robot

Developed during the late 1960s at Stanford Research Institute (now SRI International) in California, Shakey was the first robot to exhibit the capabilities of making decisions and solving problems autonomously. Named for its somewhat unstable movement, Shakey came complete with a camera, sensors and motors that allowed it to interact with and traverse its environment.

Shakey’s software let it view its surroundings, analyse situations and act on them using “if-then” statements. This approach helped Shakey navigate rooms, move items and execute tasks by fragmenting elaborate commands into simple actions.

Shakey’s development was a major advance in robotics and the history of artificial intelligence. It underscored the potential of merging movement with decision-making. This robot served as a baseline for further research in robotics, specifically for self-navigation and problem-solving.

Expert systems 

By the 1970s, AI had started making its mark in business by introducing expert systems. Expert systems were a giant leap in AI. They could tackle specific challenges by copying the decision-making of human specialists. Their designs aimed to solve complex problems in narrow domains: diagnosing diseases in medicine, making financial forecasts in economics or interpreting geological data for oil exploration, for example.

Expert systems combined a knowledge base with a set of inference rules. They were effective because they could use vast, specialised knowledge that often surpassed that of any single human mind.

Machine learning

Machine learning, on the other hand, marked a paradigm shift in AI history. Where expert systems rely on predefined rules, machine learning lets computers learn from data. This approach allows computers to improve their performance on a task over time without direction on how to handle every possible situation. Machine learning includes many techniques, including neural networks, decision trees and reinforcement learning. Each is suited to different types of duties.

Machine learning models are flexible and outstanding at learning. This ability has made them central to AI’s evolution. They power speech recognition, autonomous vehicles and personalised content recommendations. Expert systems and machine learning are two distinct but complementary approaches to AI. They bring us closer to developing machines that think and absorb information like humans.

AI winter

The 1980s marked a defining period in AI’s background. The technology captured the public’s imagination but also over-promised and under-delivered. AI entered a period known as the ‘AI winter,’ characterised by reduced funding and interest in the field.

The AI winter was a sobering chapter when the limitations of early AI technologies became apparent. Computational power could not yet support the complex neural networks necessary for robust AI, and funding dried up. For a time, the field of AI lingered in relative obscurity.

However, the AI renaissance was waiting on the other side of the valley. Thanks to Moore’s Law and parallel computing, big data exploded and processing times got faster.

Moore’s Law and parallel computing

Moore’s Law, a prediction made by engineer Gordon Moore in 1965, remains a foundational principle in the technological world. It posits that the number of transistors on a microchip doubles every two years while the cost of computers halves. 

This swift advancement that the law describes has propelled the progression of computing power, enabling AI systems to evolve in complexity and capability. Within AI development, Moore’s Law has played a pivotal role in processing vast amounts  of data and executing intricate algorithms previously deemed unattainable.

Parallel computing entails dividing substantial problems into smaller components solved concurrently across various processors. This method dramatically cuts the time needed to process lots of data or run complex algorithms. In AI, parallel computing streamlines the training of deep learning models on large datasets. AI researchers can use more complicated models by spreading the load across many units. They can also iterate faster. 

The synergy between Moore’s Law and parallel computing has dramatically propelled the advancement of AI. These systems mimic human intelligence with unprecedented fidelity.

Deep learning

Deep learning is a revolutionary subset of machine learning. It aims to imitate the human brain through artificial neural networks comprised of layered algorithms. Each layer processes an aspect of the data, starting from the simplest to the most complex features. Deep learning refers to the number of layers that transform the data. More layers allow for higher abstraction and complexity. They let the model recognise patterns and make decisions with astonishing precision.

One of the most striking aspects of deep learning is its ability to learn feature representation automatically. Traditional machine-learning algorithms rely on human-engineered features. However, deep learning models can independently discover functional patterns in data, which is clear in fields like image and speech recognition. 

The future evolution of AI

Due to AI and automation, the future landscape of work will significantly transform. This shift is especially true in fields like auditing and accounting. One key concept is blending human and machine work. This notion could involve AI handling routine tasks while practitioners focus on analysis, strategy and human connections. 

This collaboration will let them shift to roles that require human judgment, innovation and ethical oversight, such as strategic advising and regulatory compliance. Another idea suggests that accountants will evolve into data scientists, focusing on understanding complex data patterns.

Moreover, there is speculation about new jobs opening up in accounting involving ethical monitoring and improving AI systems. These concepts point to a future where artificial intelligence technology will enhance and empower the profession. These transformations will require the learning of new skills, and will create new opportunities to add value in unprecedented ways.

The AI renaissance has brought about a new era of possibilities. With technological advancements and computing power, AI research has seen rapid progress, particularly in deep learning. AI’s impact is already significant through the development of applications for various industries, and it continues to expand as technology progresses. Its future promises to be just as exciting as its past.

Accurately disseminating corporate information is crucial to business success in a complex, rapidly moving global economy. The tried-and-true financial audit is the key to compiling and reporting that data. 

However, in the face of increasing business complexity, multijurisdictional audits, threats to auditor independence, and a shrinking talent pool of audit professionals, the quality of audits can be compromised. These are the very challenges that the new Caseware white paper, Your Comprehensive Guide to Improving Audit Quality, addresses, making it a valuable resource for professionals like you.

Get your free copy of this informative and timely resource to learn more about:

• why audit quality is important and how it is measured
• how audit quality can be compromised – and improved
• the role of corporate culture in producing optimal audits
• technology’s impact on audits and how it can drive higher levels of quality

Understand the changing landscape of financial audits and how your organisation can ensure your experience is marked by high quality standards.

Artificial intelligence (AI) has shifted from a theoretical concept to a transformative force across various industries, including finance and auditing. Rapid advancements in machine learning, natural language processing, and data analytics characterise the current AI landscape. These technologies are embedded into enterprise systems, reshaping business operations and decision-making processes.

AI applications in finance and auditing are not just theoretical concepts, but practical tools that can automate mundane tasks and provide deep insights through data analysis. The integration of AI is not just a trend, but a necessity to enhance efficiency, accuracy, and compliance, setting new standards for financial integrity and operational excellence. However, the full potential of AI in these sectors is not just a possibility, but a reality that depends on data quality, robust algorithms, and organisations’ willingness to embrace change.

AI advancements in accounting

AI has already made significant strides in financial reporting and auditing. According to a recent article in the Journal of Accountancy, AI is used to analyse vast amounts of economic data, identify anomalies, and predict trends. These capabilities are precious for auditors who must sift through complex datasets to detect fraud or errors efficiently.

Moreover, AI has enabled real-time data processing, allowing for continuous monitoring of financial transactions. This shift from periodic to constant auditing represents a significant leap forward, enhancing the ability to detect and address issues promptly. KPMG’s insights on AI in financial reporting highlight that AI tools can now perform tasks such as journal entry testing and transaction validation, which traditionally require extensive manual effort.

How are auditing and financial reporting impacted by Generative AI (Gen AI)?

Generative AI, a subset of AI that involves creating new content from existing data, is poised to revolutionise auditing and financial reporting. This technology has the potential to generate financial reports, draft audit summaries, and even simulate financial scenarios to predict future outcomes. The applications of generative AI in finance are extensive, as noted by Forbes, which outlines various use cases ranging from automated insights generation to discrepancy detection in financial records.

Generative AI’s ability to process and analyse unstructured data, such as emails and contracts, also offers a new dimension to auditing. It can identify potential risks and compliance issues hidden in textual data, providing auditors with a more comprehensive view of the financial landscape. This technology increases the accuracy of financial reporting and enhances the auditor’s ability to provide strategic advisory services.

How can auditors leverage AI?

AI is not just a tool, but a partner that can enhance auditors’ efficiency, accuracy, and value proposition. AI tools are not just for automating repetitive tasks, but for empowering auditors to focus on more complex and strategic activities. According to KPMG, integrating AI into auditing processes is not just a suggestion, but a game-changer that can significantly reduce the time and cost associated with manual auditing tasks.

Furthermore, AI can enhance the accuracy of audits by reducing human errors and biases. Advanced machine learning algorithms can analyse vast datasets to identify patterns and anomalies that might be overlooked by human auditors. This capability is advantageous in detecting fraud and ensuring compliance with regulatory standards.

Auditors can also use AI to provide more insightful and forward-looking analyses. AI-powered predictive analytics can help auditors forecast potential risks and financial trends, enabling proactive risk management and strategic planning. Gartner predicts that the future of generative AI will involve its deep integration into business processes, which will act as a crucial tool for decision-making and risk assessment.

Mastering the use of AI

As auditors master AI, the profession is expected to transform profoundly. The traditional audit, characterised by periodic reviews and manual processes, will evolve into a dynamic, continuous, and data-driven function. AI will enable auditors to provide real-time assurance, where financial health is monitored continuously and issues are addressed as they arise.

The future of auditing will also see a greater emphasis on strategic advisory services. With AI handling routine tasks, auditors will have more bandwidth to focus on providing value-added services, such as risk management, financial planning, and compliance consulting. This shift will elevate the role of auditors from compliance enforcers to strategic partners.

Moreover, integrating AI into auditing will necessitate new skills and competencies. Auditors will need to develop expertise in AI technologies, data analytics, and cybersecurity to harness the power of AI effectively. Continuous education and professional development will prepare auditors for this new landscape.

Embracing AI for the future

Integrating AI into auditing and financial reporting holds immense potential to transform the profession. By automating routine tasks, enhancing accuracy, and providing deeper insights, AI empowers auditors to deliver more value to their clients. The future of auditing, driven by AI, promises to be more dynamic, continuous, and strategic.

For auditors, the key to benefiting from AI lies in embracing the technology, investing in high-quality data, and developing the necessary skills to leverage AI tools effectively. As the profession evolves, auditors who master AI will be well-positioned to thrive in the new financial reporting and auditing era.

To learn more about using generative AI as an auditor, click here.

Accountants are witnessing an era of unprecedented change in their industry, from the rise of new technologies to the ongoing challenges around talent acquisition and retention.

The latest installment of Caseware’s An Executive View video interview series helps practitioners make sense of these top trends of 2024. Join Caseware CEO David Osborne and special guest Jim Bourke, Partner and Managing Director, Advisory Services at Withum, as they offer their insights and advice around such topics as:

• The talent test – How is the industry dealing with the still-pressing challenge of attracting and retaining the talent they need to prosper in the modern age? The speakers offer their analysis of the situation and discuss solutions that can ease the pressure, both in the short and long terms.
• Growth of client advisory services – Today’s clients are looking for more than simple tax and audit services. Find out how firms can respond to these diverse demands and become proficient at providing strategic guidance in an increasingly complex financial and regulatory environment.
• Tech developments – Get an inside perspective from these two thought leaders on how exciting new technologies such as generative AI, automation software and Dynamic Audit Solution (DAS) are revolutionising the field and enabling previously unthought-of possibilities.

Both David and Jim were named to Accounting Today’s recent list of the Top 100 Most Influential People in Accounting. You won’t want to miss their conversation!

Cloud accounting software is quickly becoming the new normal in the accounting profession. Our world has changed in the past decade, making most businesses at least partly remote, and the accounting industry has been no exception. Because of that, accounting firms need a solution that allows them to work smoothly with teams and clients in various locations. Local accounting software, bound to a computer in your office, is no longer sufficient.

The answer has come in the form of cloud computing. Cloud accounting software can be accessed from any device in any location, through a secure user portal. It can be utilized by your entire team and with clients so everyone stays connected and up-to-date on any pressing accounting needs. There are obvious benefits to this method, though some decision-makers still feel intimidated by the adjustment from on-premises software to the cloud. The good news is that it might be less complicated than you expect.

On this page, we’ll discuss everything you need to know about cloud accounting software: What benefits does it offer your accounting firm, what forms does it take and what does it look like to adopt it into your usual workflow?

What is cloud accounting? 

To start off, let’s go back to the basics and define a cloud-based accounting system. What is cloud accounting? It’s a method of accounting in which the firm is able to perform its work on a secure remote server. All data is stored in the cloud and can be accessed only through a secure user portal. Those who have permission to use that portal, however, can access the software from any device in any location.

What is cloud-based accounting software, then, and what are the different ways it can be used? The truth is that cloud-based accounting software can be used in many of the same ways that on-premises accounting software is, but the big bonus is that it can be utilized remotely. There are also added benefits, given that the software is in the cloud and can be accessed by those who aren’t in your office. Some cloud-based accounting software features include:

• Storing, reviewing and accessing financial statements and client data
• Protecting sensitive accounting information
• Creating invoices, reports and statements
• Organizing your workflow 
• Communicating and collaborating with clients, including deadline reminders

By February 2024, the staffing site Robert Half listed more than 5,000 remote accounting jobs, which speaks to the drastic change this industry has seen since the COVID-19 pandemic. New accountants getting their start in the field are often looking for hybrid or remote positions so they can have that flexibility. Because of this, more and more accounting firms have had to familiarize themselves with cloud platforms. 

Cloud accounting offers firms a comprehensive solution. With it, they can carry on with essentially all of the functions of their job through one secure remote server, accommodating remote or hybrid work for new accountants or more senior staff transitioning to spend more time at home. In the future, it might just be that we see even more of a need for cloud accounting. 

How cloud accounting differs from traditional accounting software

All accounting requires some kind of software. In the past, most firms used on-premises software, which means their software was installed on office computers. To serve an entire accounting firm, the software would need to be installed on every single computer, updated on every computer and maintained on those computers. A firm might also purchase an expensive local server in order to share files, or it might have to share files through email. 

This, of course, has its drawbacks. On-premises accounting software is expensive, for one thing. You need office equipment for every person who would use the software, an IT staff to maintain the office equipment and expensive software installed on every computer. Servers add an additional charge. 

It also takes a considerable amount of time. In order to collaborate with clients, files have to be emailed back and forth and then added back into the software. And if anything happens to the office computers on which the software is installed, teams could stand to lose all of their work.

Cloud accounting offers many of the same functions that on-premises software features. You can store and review documents, create reports and statements and draft invoices or notices through both. 

The key difference is that cloud accounting software is not installed on any one computer, but rather, it’s stored in the cloud and accessible through a remote user portal. Because of this, accounting teams don’t have to work in the same physical space. In fact, they don’t need a physical office at all, which means they don’t need the office equipment. 

Why use cloud accounting software, aside from the remote work benefits? The best cloud accounting platforms often have built-in technical support, so there’s no need for an IT team to maintain the software all on its own. You won’t need an office-wide server. And if anything happens to your office equipment or your power goes out, you don’t have to worry about losing your work. As soon as you’re back online, you can find all of your accounting resources, stored right there in the cloud and ready to use.

Benefits of cloud accounting

We’ve already touched on some of the benefits of cloud accounting software, but now let’s go a little more in depth. Cloud accounting can change the game for your firm, making it more efficient and flexible, and even boosting your team’s morale. Some of the chief advantages of cloud accounting include:

• Easy integration: With cloud accounting software, you don’t have to worry about installing it on every computer or setting up a dedicated server. It’s just a matter of purchasing the software and then establishing your team’s user portal. You can upload old legacy files with ease, saving time and avoiding the headaches that come with installing traditional software.
• Removing manual grunt work: You can use templates to automatically draft invoices and move data from your financial statements directly into your bookkeeping program. This eliminates much of the manual data entry, so your team can focus on what it does best.
• Easy collaboration, from anywhere: With remote access, your team and your clients can collaborate from any device. Instead of emailing documents back and forth, you can review them and make edits directly within the software itself. This makes for instant, convenient and efficient collaboration.
• Secure data: Because you’re using online software, you don’t have to worry about manually backing up your work. Everything is stored in the cloud and kept safe behind encrypted user portals. 
• Cost savings: One of the biggest benefits of cloud accounting is the cost savings. You won’t need to pay for constant training and updates, IT maintenance or office equipment. Instead, everything you need is built into the software itself and stored in the cloud.
• Data and documents in one central location: Instead of searching through files and emails, you can find everything you need in one central repository. Most cloud accounting programs also have a dashboard that is updated in real time, showing all of your analytics. 
• Enhanced security: Using the cloud eliminates the need for your staff to worry about installing the latest software patches and other updates that help to keep hackers and bad actors out of your data. With the cloud, these are handled automatically by your cloud provider.
• Recruitment appeal: Because you’ll be able to offer remote work, you can appeal to a broader range of talent, including Gen Z and younger millennial accountants.

Challenges with migrating to cloud accounting software

Any change can come with some amount of resistance, even when it’s a good change. This is certainly true in the business world, and cloud accounting software for accountants is no exception. While many firms are embracing cloud accounting software, others have lingering questions and concerns that can make the final step a challenge.

Which of the following statements concerning cloud accounting are not true?

• Cloud software is more expensive than on-premises software.
• It’s hard to migrate from on-premises software to cloud software.
• Cloud software is easy to hack and less secure due to being online.

If you answered “all of them,” you would be correct. These are all common myths about cloud accounting, but they can be easily disproved. 

Let’s start with the myth of cloud software being more expensive. Cloud software is typically purchased with a monthly or annual subscription. However, many of these programs have different plans, so you pay only for what you need instead of spending for features that you’ll never use. And since you won’t have to pay for new updates, maintenance, servers and added office equipment, you’re likely to save money. 

Change can be intimidating for many people, but migrating from traditional software to cloud software is actually easier than you might expect. Cloud migration processes leverage automation to help you migrate all of your files and information. You won’t need to install the software over and over, and many of these programs come with built-in tutorials, making training much easier for the whole team.

The most common fears about cloud accounting arise from cloud security myths. Because cloud software is online rather than on a local server, there’s often a fear that it will be easier to access and steal sensitive information. But is the cloud actually more secure than on-premises solutions? It depends on the program you use, but often, the answer is yes.

Cloud accounting software uses encryption to secure files – the same technology that banks use to protect digital information. This means that even if someone manages to hack into your cloud server, all of the data will be encrypted in an illegible code.

Features of world-class accounting software

Like anything else, cloud accounting technology can vary in quality. If you make the switch to cloud accounting, you want to be sure that you choose the right software. So what are the accounting software features that you want to keep an eye out for in world-class accounting software?

• A focus on collaboration: Collaboration is one of the most important benefits of cloud accounting software. The key is that you can collaborate from anywhere, at any time. So your platform should be built for connectivity and collaboration, including secure user portals that can be accessed from your device and dashboards that show your progress in real time.
• Comprehensive functionality for engagement and practice management: Your cloud accounting software should have a wide range of apps so you can manage your accounting practice and monitor your engagement directly from the software. A search engine is a must to help you wade through all of the different functions without wasting time.
• Flexibility and customization: No two accounting firms are the same, and what you need from your software may differ as well. Good cloud software will offer a number of application programming interfaces (APIs), so you can customize it to suit your own needs, including your workflow and analytics.
• Strong data protection and compliance: Again, most cloud accounting software uses encryption to protect data. Caseware, in particular, uses bank-level encryption to make sure that sensitive information is as safe as possible. A world-class cloud accounting platform will also have compliance measures built in so that you can always stay up-to-date with relevant regulations.

How to migrate your firm to the cloud

So perhaps cloud accounting seems like the right call for you, and you just need to get started with the software migration. With an accounting platform like Caseware, cloud computing implementation is a breeze. The cloud migration costs will be for the software itself, depending on how much functionality you need, and potentially to train your team. Caseware charges by user license, so the more users you need, the more you’ll pay up front. It’s a good idea to determine this beforehand so you can set your budget accordingly.

Here are the steps you’ll need to take:

• Choose your cloud accounting software, plan and features.
• Create user profiles and sign up your team and clients.
• Set up the platform in the way that suits your firm.
• Move old legacy files, statements and data into the new cloud software.
• Go through the tutorials or teach your team how to use the new software.
• Start working from your new cloud accounting platform!

You’ll also want to develop a change management strategy to help everyone on your team adjust to the migration from on-premises software to the cloud. Consider holding meetings where you can discuss the changes and answer any questions, and let your employees know whom in your firm they can speak with if they have further questions. This can also be a great time to dispel some of those myths mentioned above. 

The future of cloud accounting

We’ve said that cloud software is the future of accounting. But what is the future of cloud accounting? As we move further into 2024, let’s look at some of the accounting trends that speak to the future of the accounting profession with cloud technology:

• More AI and machine learning: AI is already used in many cloud accounting software programs to automate and optimize tasks and workflows. You can use AI for financial reporting, data entry and invoicing. But as AI continues to develop, we can expect to see even more advanced uses for it in cloud accounting technology.
• More data analytics: Data is essential for accounting firms today. In fact, more and more, practices that serve commercial businesses are asked to give insights into consumer behaviors and spending. This means accountants will need more complex, real-time data analytics to provide the best insights. With analytics dashboards and AI-generated reports, cloud technology is already rising to the demand.
• Big data: This concept refers to large and varied sets of data that are collected by organizations en masse. It gives you a breadth of information — but there’s also quite a bit to mine through. Accounting firms are likely going to look for cloud accounting software that can help them find relevant insights in both structured and unstructured data. 
• Remotely connected teams: Remote work has been on the rise since the onset of the COVID-19 pandemic. But four years later, remote work remains popular because many professionals have found that the traditional office space just isn’t for them anymore. With cloud accounting software being so easily accessible, you can expect more accounting firms to take advantage of that remote connection and even go fully remote.

Want to be a part of the future of cloud accounting? Get there with Caseware Cloud. Contact us today to request a demo. 

Organizations are rapidly shifting their technology investments away from on-premise hardware and software towards cloud computing solutions. Gartner, a global technology research firm, recently forecasted that worldwide end-user spending on public cloud services would grow by more than 20 percent year-over-year to reach a staggering $679 billion in 2024.

Accounting firms are no exception to this trend. A combination of business benefits and evolving client expectations are leading practices to adopt more cloud accounting technology. Caseware’s 2024 State of Accounting Firms Trends Report found that 76 percent of global survey respondents used cloud-only tools or a mix of cloud and desktop solutions to help manage their practices. 

Moving your accounting to the cloud can lead to significant cost savings, higher-quality engagements and deeper client relationships.

Cloud accounting defined

Cloud accounting represents a shift from how firms have traditionally deployed their software solutions. In a traditional on-premise implementation, software is installed on local computers or servers at a firm’s offices. All the data processing and storage takes place on-site, meaning accountants must be physically present or have a secure connection to the office to access the software. It also means the firm is responsible for buying, maintaining, upgrading and securing its own servers and software.

In a cloud accounting scenario, a firm doesn’t buy or license its own servers or software. Instead, it partners with an online accounting software solution provider, which – for a recurring subscription fee – securely stores the firm’s data on its own advanced cloud technology infrastructure. Employees can then access the programs they need through a browser or portal. While accountants still do all their work on the devices they’re accustomed to using, their data is stored securely in the cloud. This means they can access it anywhere – at the office, at home or on the road.

Benefits of cloud accounting software

Organizations have realized the benefits of cloud accounting in recent years and increased their adoption of the technology. Some of the advantages cloud accounting offers include:

• Cost savings – Firms that invest in cloud accounting solutions don’t need to buy their own servers, install their own software or maintain their equipment. Instead, they pay a monthly fee to their cloud solution provider. If the firm grows, it doesn’t need to buy more hardware to support additional staff. It can just purchase more cloud licenses. This makes it simpler for accounting firms to increase or decrease their technology spending, depending on how their business evolves. 

• Reduced IT maintenance costs – Investing in cloud accounting software means IT staff no longer need to spend time maintaining, updating and troubleshooting a firm’s servers. Organizations that rely on external IT consultants for their technology maintenance will be able to reduce their spending. Firms with internal IT staff will be able to dedicate them to higher-value technology projects.  
  
• Automatic updates – With cloud accounting solutions, firms no longer need to worry about updating and patching their servers. Their cloud accounting software provider automatically updates their applications, saving time and money.
  
• Better accessibility – Cloud accounting allows employees to access their files from any location, whether at the office, on-site with a client or at home. This enables them to be more productive.
  
• Better data security – Cloud accounting solutions are protected by robust security features, such as data encryption, permission controls and multi-factor authentication. This ensures essential data doesn’t get into the wrong hands. Since all data is stored centrally in the cloud, accountants don’t need to copy files onto external hard drives or flash drives, which can be a serious security risk if those drives are lost or misplaced. Finally, data stored in cloud accounting solutions is backed up regularly, meaning it won’t be lost if a computer goes down.
  
• Improved collaboration – Cloud accounting software allows multiple people to simultaneously work on the same file. This saves time because team members no longer need to work on different versions of the same file and then reconcile each member’s changes. It also eliminates the risk of firms sending the incorrect version of a file to clients. 

Cloud accounting solutions make it simpler for accounting teams to communicate and work together. Since all files and data are stored centrally, team members can work with one another from anywhere. They can also work more closely with clients, sending and receiving files and communications through secure cloud portals.

How to move to cloud accounting software

Firms can shift to a cloud accounting solution at their own pace. For example, a firm could keep its desktop accounting applications in place but purchase a service from a cloud provider to allow the firm to store engagement files in the cloud, making it easier for employees to access and share information. As employees become accustomed to the cloud, the firm could gradually transition more data and apps to this environment.

Regardless of how quickly a firm decides to shift to cloud accounting, there are several essential steps it should take to ensure a smooth transition:

• Evaluate current accounting systems – A firm needs to assess its existing accounting software and its processes. Only then will it be able to decide what features and functionality it will need from a cloud accounting solution.
  
• Research cloud accounting solutions – Once a firm has established what it needs from its accounting software, it should examine the market to find a provider that meets its needs and budget. Essential considerations include feature set, scalability, user interface ease-of-use and customer support.
  
• Migrate data from on-premise to the cloud – Once they’ve selected a provider, a firm must migrate its existing data from its on-premise hardware to the cloud. Firms can start with a sample data set or select specific client engagements to test on their new cloud platform before committing to a full-scale migration. 

Migrating to the cloud may involve data cleansing – ensuring the format of the firm’s existing data is compatible with the format used by its new cloud accounting software. A firm and its cloud provider must work together closely on this step to ensure there’s no data loss.

• Train staff – Once its cloud accounting system is set up, a firm can work with its cloud accounting partner to train its staff on the new system. Employees will need to understand the cloud software’s features and functionality, how they access those features and how they can best use the software to maximize their productivity.
  
• Switch over to the cloud – Once all the testing and training are complete, you can shift entirely to the cloud. Monitor your cloud accounting solution’s performance closely during the early stages to identify and fix any issues.

A transformational change

The growing use of cloud accounting software is reshaping accounting practices, allowing them to complete work more quickly, improve the quality of their output and act as trusted advisors to clients by offering them more profound insights. Switching to the cloud does take time and commitment, but its benefits make it a worthwhile investment for firms. For practices seeking to modernize their audit and accounting functions, Caseware Cloud offers one secure integrated platform that meets all engagement, analytics and practice management needs.

Caseware Cloud boasts more than 85 cloud applications and tools, along with seamless integration with other Caseware offerings like Caseware Working Papers and Caseware IDEA, as well as other external architectures.

Internal audit teams are continuing to evolve their processes and procedures as they incorporate new technologies into their operations.

Caseware’s 2024 State of Internal Audit Trends Report delves into the biggest opportunities and hurdles facing internal audit departments, including the recruiting and retention of skilled internal auditors, shifting from manual to digital audit processes and the growth of Environmental, Social and Governance (ESG) reporting.

This year’s report is based on the responses of more than 1,000 internal auditors from around the globe, including heads of internal audit, directors of internal audit, chief audit executives and internal auditors.

Download this report to find out:

• What internal pressures internal auditors face within their organizations, such as having to do more work with fewer resources
• How quickly demand for ESG audits, as well as Diversity, Equity and Inclusion (DEI) audits, is growing
• What types of fraud concern global audit teams the most
• The most in-demand skills audit teams are seeking
• How well your colleagues around the world are coping with the shortage of skilled internal auditors

Practitioners today face an array of game-changing trends, such as increasing regulation, a shortage of skilled auditing talent and the adoption of new and exciting technologies like generative AI and automated workflows. This report reveals how your peers are handling these challenges and offers insights you can use to improve your internal audit department.

Some of the key questions answered in this year’s edition of the report include:

• What is the most in-demand skill internal audit departments are seeking?
• How prepared are internal auditors to combat fraud in their organizations?
• What is the number one challenge practitioners are facing today?

Caseware’s 2024 State of Internal Audit Trends Report reveals how the internal audit profession is evolving and uncovers insights that will help you and your team deliver high-quality audits and insights in the year ahead.

Download your free copy of this year’s report and help ensure your internal audit team is well-equipped for whatever the future may hold.