Step 1: Generation of Planning Audit Programs (Automated)

AP 4.0 utilizes the latest technology of AP 3.01 to generate customized and completed audit programs.  For the details on AP 3.01 and its functionalities, please visit our page at http://www.eqcadvisory.com/ap3-0

When using the Full version of AP4.0, two sets of APM are generated.  One at the beginning of an audit, thus determining planning materiality ,and planning performance materiality.  At this stage, the report date may not be known and total revenue, total assets and profit / loss before tax may not be finalized.   

After steps 2 to 4 below, these financial statement benchmarks may be finalized, and the report date will also be finalized.  A second set of APM are then generated in Step 5 of the AP4.0 Audit Process.  

By simply completing the forms used in AP3.0, you will indicate to the program some of the key parameters that will be used by AP4.0 in generating the right set of APM and audit documentation for each of your audit engagements.  These may include the type of financial statement line items that are present in the audit engagement, the financial reporting framework, the preliminary expected audit opinion, and the principal activities of the engagement. 

Step 2: Importing the TB and Mapping with Error Checking Automation (Manual Input)

Based on the completed forms from Step 1, we will use AP4.0 to generate a balance sheet and an income statement with only the financial statement line items that have been selected in Step 1. In this balance sheet and income statement import templates, you may fill data directly from the trial balance.  

For account balances, you will complete the opening balance, the total debit and total credit during the financial period, and the closing balance.  For income statement line items, you will complete just the total debit and total credit during the financial period.  

AP4.0 will also generate a CoA-FSLT Mapping import worksheet, in which you can easily map the accounts found in the client’s Chart of Accounts against the Financial Statements.   

To facilitate this mapping process, we have built in an error-checking mechanism.  where by simply a click of a button, AP4.0 would be able to check the following:

1. whether there are any financial statement line items that were indicated in Step 1 of the AP4.0 Audit Process as present, but were not mapped to any accounts in the CoA-FSLT mapping. 
2. whether the balance sheet is not balanced
3. whether there is a mismatch between the profit / loss for the year, with the movement in retained earnings

If any errors are found, an error list is generated listing out what the error is, and the to-do action to fix the error. 

Step 3: Importing the Ledgers with Error Checking Automation (Manual Input)

After importing the TB, AP4.0 would generate blank ledger templates for each financial statement line item.  For those financial statement line items where there is more than 1 account is mapped, a ledger import template designed for multiple accounts will be generated. 

Further, by automation, AP4.0 would generate a summary indexing page that lists out all the blank ledger import templates, with hyperlinks added next to each template, allowing you to quickly jump to the specific blank template that you are working on.  

To facilitate the process of importing ledgers, we have built-in an error-checking mechanism that upon a click of a button, AP4.0 would list out all the mismatches between ledgers movements and opening and closing balances against the trial balance imported in Step 2.   If no mismatches are found, a clean error list is generated. 

Step 4:a Year-over-Year Analytical Reviews (Automated)

Now, we have the trial balance and ledgers imported from Steps 2 and 3, AP4.0 uses automation to generate a series of working papers and audit documentation that are set out in Step 4a to Step 4f.  

AP4.0 is incredibly smart.  It can prepare line-by-line analytical reviews on the income statement and statement of financial position.  It detects the nature of the year-over-year fluctuation, and also determines whether the fluctuation is material.  For material changes, the analytical reviews would be more extensive and detailed than immaterial fluctuations. 

AP4.0 is trained to apply auditor’s judgement that closely resembles to a human auditor writing analytical reviews.  In addition, the fluctuation is written based on the financial reporting framework chosen!

For fluctuation analyses on revenues and cost of sales / direct costs, AP4.0  would use its knowledge regarding the client’s operating industry to customize the reasons for year-over-year fluctuation analyses.  

Pro-Tip: Savings in Time Costs

To give you a scope on timing, Steps 4a to 4f are all completed within seconds by ONE click of a button.  It sounded a lot! With AP4.0 as your assistant, we have replaced the most manual and labor-intensive procedures with an intellectual assistant that costs less than the salary of an entry-level junior!

Just imagine the costs that you will save, the laptop, MPF, employment insurance, training costs, sick-leaves and recruitment times in handling staff turnover, the office and desk space, and of course the salaries.   

Step 4b: Lead-Sheets and Breakdowns (Automated)

AP4.0 can automatically generate lead-sheets and breakdown audit schedules of each financial statement line item and extract financial information from the ledgers, trial balance and chart of accounts to achieve this. 

For debtor / creditor line items, such as trade receivables, trade payables, amounts due from / (to) related parties, banks, bank loans, obligations under finance lease, etc., AP4.0 will breakdown by debtors / creditors.  

For other financial statement line items, such as operating expenses, property, plant and equipment, revenues, cost of sales, etc., the generated lead-sheets will breakdown the total balance by nature, which is often segregated into multiple accounts in the books.  

In each lead-sheet / breakdown schedule, AP4.0 would list out the most relevant audit procedures that should be performed, usually ranging from 3 to 6 procedures, and these are listed out directly below the breakdowns in the same worksheet.

To further facilitate your follow up and review procedures, AP4.0 would automatically generate hyperlinks and working paper cross references next to each audit procedure, so you may directly access the respective working papers on each audit procedures by clicking on the hyperlinks. 

This saves your CPA Practice enormous amounts of time in cross-referencing to the audit working papers, especially when done across multiple engagements.  Let automation perform the most labor-intensive work for you.   

Pro-Tip: Savings in Time Costs

To give you a scope on timing, Steps 4a to 4f are all completed within seconds by ONE click of a button.  It sounded a lot! With AP4.0 as your assistant, we have replaced the most manual and labor-intensive procedures with an intellectual assistant that costs less than the salary of an entry-level junior!

Just imagine the costs that you will save, the laptop, MPF, employment insurance, training costs, sick-leaves and recruitment times in handling staff turnover, the office and desk space, and of course the salaries.   

Step 4c: Sample Selection Planning (Automated)

AP4.0 is trained to corroborate the assertion-level risk levels determined in audit planning programs to determine the appropriate sampling risk factors, and utilize the financial figures from the imported trial balance to calculate the sample sizes. 

Sample sizes are calculated for test of detail and when sampling is required for the circularization of audit confirmations.  

In addition, AP4.0 is so intelligent that it dives into the imported ledgers and automatically determine the number of samples that are greater than the respective risk-based performance materiality, and determine the total value of these samples to deduce the residual population that may require additional testing. 

Imagine the resources that you would save if  your audit team only has to liaise with the client to provide the management accounts and ledgers, or if the affiliates that your Practice works with, prepare the accounting books directly using our import templates, and by a click of a button, the sample sizes, and working papers, for all testing and audit confirmations for all your audit engagements are generated within seconds. 

Enjoy your next holiday while AP4.0 works for your Practice. 

Pro-Tip: Business Strategy Proposition

Our Business Partner, Binery, has just been upgraded by Xero becoming one of the handful of Platinum Partners of Xero in Hong Kong.  Platinum is the highest partnership level that Xero offers.  Binery can re-sell licenses by bulk at discounted prices, and also assist to perform book-keeping functions for your clients, and the books may be directly exported to our AP4.0, creating a seamless operational flow for your clients’ accounting and auditing processes. 

Pro-Tip: Savings in Time Costs

To give you a scope on timing, Steps 4a to 4f are all completed within seconds by ONE click of a button.  It sounded a lot! With AP4.0 as your assistant, we have replaced the most manual and labor-intensive procedures with an intellectual assistant that costs less than the salary of an entry-level junior!

Just imagine the costs that you will save, the laptop, MPF, employment insurance, training costs, sick-leaves and recruitment times in handling staff turnover, the office and desk space, and of course the salaries.   

Step 4d: Test of Details and 5-Step Audit Procedures (Automated)

The capabilities of AP4.0 is similar to multiple audit seniors and audit juniors combined into one system.  AP4.0 can generate test of detail templates based on the audit procedures set out in each line item’s Lead-Sheets generated in the previous steps.  

However, take note that the generated test of details working papers are not simply a table for you to record sampled information.   AP4.0 will write out 5 detailed audit procedures in each test of detail working paper describing how the testing should be performed.  These 5 procedures are then incorporated into each test of detail working paper, allowing you to tick the procedures that were performed for each tested sample, as well as documenting the particulars of source documents. 

Further, AP4.0 extracts the calculated sample sizes from the respective Sample Selection Planning papers, and dives into the ledger to extract exactly the number of samples that need to be selected.  It automatically extracts the transaction amounts, voucher dates, voucher numbers and description from the ledgers and help you to fill in these data into the testing templates.  

AP4.0 also segregates the samples that are greater than PM and those samples that are tested on the residual population, allowing you to cross tie the total sampled amounts to the respective totals set out in the sample selection planning sheets.  As with all functions within AP4.0, this all can be done in seconds. 

Pro-Tip: Savings in Time Costs

To give you a scope on timing, Steps 4a to 4f are all completed within seconds by ONE click of a button.  It sounded a lot! With AP4.0 as your assistant, we have replaced the most manual and labor-intensive procedures with an intellectual assistant that costs less than the salary of an entry-level junior!

Just imagine the costs that you will save, the laptop, MPF, employment insurance, training costs, sick-leaves and recruitment times in handling staff turnover, the office and desk space, and of course the salaries.   

Step 4e: Audit Confirmations (Automated)

Since AP4.0 already calculates the sample sizes for test of details.  How could it leave out the sample selection for audit confirmations.  Using the same method, sample selection planning is automatically generated for all non-related party debtors and creditors accounts.   Similar to tests of details, AP4.0 will identify the debtors and creditors accounts that have an outstanding balance in excess of the risk-based performance materiality, and automatically prepare audit confirmation for all of these samples.  

In addition, AP4.0 determines if additional samples are needed on the residual population, and also prepares audit confirmations for them. AP4.0 is so intelligent that it looks through the entire ledgers for the largest samples, thus increasing your audit coverage to the maximum. 

Pro-Tip: Savings in Time Costs

To give you a scope on timing, Steps 4a to 4f are all completed within seconds by ONE click of a button.  It sounded a lot! With AP4.0 as your assistant, we have replaced the most manual and labor-intensive procedures with an intellectual assistant that costs less than the salary of an entry-level junior!

Just imagine the costs that you will save, the laptop, MPF, employment insurance, training costs, sick-leaves and recruitment times in handling staff turnover, the office and desk space, and of course the salaries.   

Step 4f: Non-Replied Audit Confirmations (Automated)

Now audit confirmations have been prepared and the client is filling in the recipients’ addresses, what is left to do? AP4.0 might as well complete the alternative tests of details assuming that none of the audit confirmations will be returned. 

AP4.0 dives into the debtors’ and creditors’ ledgers and extracts the movement data in these account balances and automatically fill in alternative testing procedures templates generated for each financial statement line item where audit confirmations are circularized.  

Pro-Tip: Savings in Time Costs

To give you a scope on timing, Steps 4a to 4f are all completed within seconds by ONE click of a button.  It sounded a lot! With AP4.0 as your assistant, we have replaced the most manual and labor-intensive procedures with an intellectual assistant that costs less than the salary of an entry-level junior!

Just imagine the costs that you will save, the laptop, MPF, employment insurance, training costs, sick-leaves and recruitment times in handling staff turnover, the office and desk space, and of course the salaries.   

Step 5: Generation of Final Audit Programs & Revisions to Sample Sizes (Automated)

If you are a current user of AP3.0, you may have come across the issue of not knowing the report dates, or the final audited sales amount when you generate the audit programs. 

We have resolved this issue in AP4.0!  When using the full function of AP4.0, we will grant you 1 free generation of audit programs and working papers, after you have proposed and agreed with the management on any audit adjustments, or after your client has finalized their management accounts.  AP4.0 enables you to automatically re-visit planning materiality and re-visit sample selection calculation and notify you if there have been any increase in samples.  

This is also a good chance if you have decided that a different audit opinion needs to be issued, as the audit completion programs can also be updated. 

The free generation of Final Audit programs is only given when all features of AP4.0 are used.  In essence, we are giving out a 20% discount for Practices that support our solutions fully and adopt all features of AP4.0 in their audit processes!

Note: Only limited parameters can be updated.  You may not use the free generation on another audit engagement, so the financial reporting framework, principal activities, presentation currency, company name, acceptance and preparation dates, and director names, etc.  cannot be changed in the second generation of audit programs. 

Step 6: Issuance of Audited Financial Statements and Archive (Manual Completion)

Yes, the preparation of audited financial statements is still a manual process.  As financial statements should be prepared by the clients, not the auditors.  It would be strangely non-compliant if auditors are found to have a program that generates information that should have been prepared by the client!   

So yes, retain your audit seniors and supervisors! You still need them to comment on the client-prepared financial statements for your review!