August 16th, 2018: This is the first in a series of blogs by Jotham Ty, who will be sharing the journey of how Gappify is preparing their bot Alan to take and pass the CPA exam in 2020.
YES, this goal is ambitious. And YES, despite the fact that Alan is already performing tasks autonomously today (mainly for AP, AR and GL) - the road to actually building Alan to pass the CPA exam is long, full of challenging obstacles, and also raises many questions. Alan reads/understands ERP data today, but how will he answer multiple-choice questions, write essays, etc.? Will the California Board of Accountancy (or any other agency) allow Alan to take the exam?
Instead of tackling these questions (which we'll do in future blogs), I'd like to start this blog series by answering the most frequently asked question we receive:
NO, bots will not eliminate the accounting profession.
Every accounting leader I have spoken to about this subject are skeptical about the idea that bots/AI will replace accountants. As someone who is currently running a company that designs and builds advanced automation solutions for the profession (e.g., our bot Alan), I completely agree with them 100%.
Unless you understand the mechanics of debits/credits, the application of technical accounting rules/ASC's, and the high level of precision/objectivity required from financial statements and reports we have to produce - I don't believe one would ever understand the level of human intuition and dynamic decision-making necessary to fulfill our responsibilities. There are far too many variables involved in the execution of our daily duties, which are even-more challenging to juggle due to the rapid changes in today's business environment, accounting standards, and systems/technology.
Of course, as a company developing a bot to pass the CPA exam by 2020, I'm a firm believer that bots will vastly improve our ability to perform our jobs efficiently and effectively. With a bot like Alan, imagine how much time can be spent on strategizing/planning for the many changes your organization is continually introducing. For example if you're in AR, if Alan is managing/actioning routine invoice collection activities - you may actually be able to stay on top of incorporating/configuring new SKUs within your existing accounting systems and processes (rather than being the last one to know about it during the final day of AR close).
I will also concede that accountants who perform clerical, mechanical, and spreadsheet-type work will need to evolve. In my mind, this is no different than standard evolution we see in other industries. A VCR repair-person at some point, for example, needed to evolve into a DVD repair-person. Those that make the effort to evolve continued on. In accounting, this means accountants will need to lay down their spreadsheets and start learning how to become bot-managers. I'm very proud to say that Gappify will be taking a lead role in that regard...but more on this later ;)
I hope this first blog series post clearly establishes our intentions. We did not build Alan to eliminate our profession. In fact, we are excited to rally and work together with our industry to accomplish this historic milestone. There will be many obstacles to overcome, but with the support of our community we believe we can develop a bot to pass the CPA exam by 2020.
For more on Alan's capabilities today, visit our page here.
Charlene Garland from Gappify Inc. shares some high level SOX 404 tips.
Question: What are some trends you are seeing regarding IPE (Information Provided by Entity)?
Answer: One item that I’ve noticed with the clients that I work with is just all around documentation. Control owners need to be diligent about documenting how they get comfortable with the completeness and accuracy of information that is used within their key controls. So it’s two-fold: 1) whoever is preparing the controls needs to maintain evidence of how they got comfortable with the data so if it is a report, for instance, maybe they take a screenshot of the report parameters and 2) on the reviewer’s side they need to document how they are getting comfortable over the information that they are reviewing. The challenge for a lot of companies has been to understand exactly what the requirement is and also to educate the control owners about what type of evidence they need to maintain for audit purposes.
Question: What are some of the SOX evidence trends that you are seeing?
Answer: Related to IPE’s, I just mentioned screenshots of the report parameters that would be taken by the preparer of the control. On the reviewer side, they also need to demonstrate how they got comfortable with the data so what we are seeing is either reviewers re-performing the report exports and providing their own report parameters, making sure control totals and date ranges match the original report that was run by the preparer, or they will put review comments in the Excel file or if there is another way that they track comments. The reviewers will document details of what they looked for, such as making sure the date range was correct and that other report parameters were accurate. So this is a lot of additional documentation that individuals are not necessarily use to, but this is something that has been scrutinized more by auditors. Everyone is trying to get to a point where it just becomes second nature versus this thing that is a big question mark.
Question: One SOX tip for 2018?
Answer: Overarching, based on my experience working with various clients over the years, is really for SOX Directors, managers and leads to communicate regularly with the organization, specifically with the control owners. It’s helpful for those directors, managers or leads to send reminders to control owners to provide updates in key processes and reminders about the type of evidence that will be reviewed during testing. They can also ask questions about documentation or justification around thresholds that are being used, which is another popular SOX topic. Communication about the SOX process and what is expected is helpful for employees to realize how important it is for controls to be properly maintained because employees also have their day job and there is often not a priority put on SOX. Having that constant communication and exposure to the SOX team re-emphasises that this is something that the company takes seriously and is required for public companies. This is something that is important for process owners to put at the top of their priority list. So my tip is just to make sure there is a good communication line and that process owners understand the importance of internal controls. This will hopefully set everyone up for a successful SOX audit.
Gappify asked Natasha Castelli from Apta Consulting Group some questions that all companies should consider when debating whether to purchase a Revenue System.
Question: Why buy a revenue system?
Answer: When you talk to anyone on an accounting team where revenue is a big concern, which is many of the clients in the bay area, you will find that you spend a lot of time just getting through the details. You don’t have enough time to focus on the big meaty issues because you are so bogged down in the details of getting through the transactions. A revenue system allows people to automate 80% of their transactions and allows people to spend their resources and brain power on the 20%. It allows people to focus on the more complex areas and allows the more simple transactions to flow through in a more automated way. Without all those additional manual steps involved in the process, there is less risk for error in areas that are just easy. There is nothing worse than doing a review or having your auditor find a error that was so easily avoidable when you are spending all this time trying to get the technical accounting right. That is the biggest pro to a Revenue System: eliminate the noise and make sure you get the easy stuff right and free up your time and resources to really focus on the technical questions and the more complex transactions.
Question: If someone has a revenue system, are there some common pitfalls for those implementations?
Answer: As with any system there is that good ol’ saying - “garbage in is garbage out.” A lot of people get excited about a revenue system but the reality is if your upstream systems aren’t ready or if your upstream systems aren’t in a good position, then your revenue system isn’t going to work. That is one thing to pay attention to and that is a relatively well-known system pitfall in general and it is certainly something to pay attention to here. Also, in terms of getting through the project, a lot of times the project can get unnecessarily dragged out because people just don’t have the time or the resources. Plenty of revenue accountants are just so busy and can’t find time for anything. So try to find a focused period of time and dedicate some internal resources and figure out how you backfill your revenue accounting close. This will help you focus on it for a period of time and figure out how to just get through it. I have seen these projects get dragged out and deadlines get pushed back over and over again. In reality, you need some internal resources to focus the time and there is really only so much external resources can do without the input from the internal team.
Question: What is one revenue system tip?
Answer: Revenue implementation projects start with going through your existing revenue accounting process and what are your requirements going forward. First of all, it is really important to not spend too much time on that step which may prevent you from moving forward. Second, it is very important to prioritize and figure out from a requirements perspective: What are your goals? What are the transactions that need to work within this revenue system? For example, I have clients where 90% of their revenue transactions are straightforward and that is what you want to automate. For the 10% that is not straightforward, then you figure out what needs to be automated and what is easy to automate because you have the necessary data, etc. It is important not to get too bogged down in trying to automate everything because that will drag out the project or over-customize things. The key is to prioritize and determine: What do I want to automate, what is nice to have and what is absolutely necessary? Moving forward it is important to keep that in mind so that when you are in a meeting or working on a document you can take a step back and ask, “Is this going to be a show stopper? Will this drag the project down? Is this a priority?” If the answer is “No” and you can come up with an Excel solution or a work-around, whether it is permanent or even temporary, maybe that is the right answer because you don’t want to stop the entire project for a nice-to-have.
Shortening your close checklist can also help shorten your month-end close.
Many of us are about to start our first quarterly closes of the new fiscal year. Before the fun starts next week, consider taking some time to clean-up your accounting close checklist. Below are a couple good reasons for going through this exercise:
How do you go about trimming your close checklist? Below are some suggestions!
As an accounting technology advocate, I naturally point to software solutions first when asked about how month-end closes can be shortened. If your team is serious about closing the books in less than a week, for example, I can’t imagine GL Teams being able to accomplish this without these 3 solutions (non-revenue):