Accountants turn to software to speed computation: programs eliminate manual work, increase analysis time.

Accountants turn to software to speed computation 

Computerized auditing has simplified tedious chores for accountants in the past few years and now more sophisticated software is helping certified public accountants analyze their clients' financial performance.

Auditing software can save an accounting firm "time, staffing and it even eliminates human error in transferring data," said Richard Weglarz, auditing director at Los Angeles accounting firm Levine, Cooper, Spiegel & Co. He estimated automated auditing takes 10 percent to 15 percent less time than the old paper and pencil method.

But new, more sophisticated software can also assist accountants in performing auditing tests to determine if a company can improve their inventory methods and cut costs throughout their operations, said Scott Farber, senior audit manager at the Irvine office of the nationwide CPA firm Grant Thorton.

Farber said Grant Thorton has not laid off any clerical staff as a result of automating the auditing process, but the software has "allowed the staff to do fewer manual steps and allowed them to spend more time with more complex auditing analysis." The better electronic analysis frees CPAs to devote more time with executives to understand their businesses and help them achieve their financial objectives and goals.

Levine, Cooper, Spiegel & Co. uses Fast (Financial Audit Systems), manufactured by Prentice Hall Professional Software in Atlanta, to download clients' general ledger data and perform simple calculations.

The accounting firm's CPAs travel to clients' offices armed with a laptop computer loaded with that software and a portable printer. The accountant then downloads the company's complete general ledger financial information by just hooking up his laptop to the client's main computer system with a cable and special software.

Using the software cuts down on writing out the financial information by hand and it also does several calculations that formerly were done with a 10-key machine.

The software program has a built-in word processor to help CPA's prepare reports and several programs that enable accountants to do depreciation and loan amortization calculations.

Levine, Cooper sends out clients' data to another company, CCH Computax, that does the tax preparations but the accounting firm is able to use the same data that they downloaded using the software program.

Once Levine, Cooper accountants have the general ledger data on their computers, they use another Prentice Hall product, Answers, to perform more analytical functions such as calculating more than 100 standard ratios: the dollar amount of account payable versus turnover, overhead costs to labor, cost to sales and additional ratios can be added that are specific to certain industries. These ratios are used by the accountant to determine if the company is spending too much money in certain areas.

According to Welgarz, that program provides analytical capabilities that border on artificial intelligence and assist the auditer in "evaluating relationships and discover areas [of the company's finances] that needs to be investigated further."

Welgarz added that computers still cannot look at original documents such as checks and invoices but the software offers a preliminary step highlighting areas of the clients' financial information that require additional and more in-depth audit procedures.

Cathie Siegel, a Prentice Hall account executive, said that Fast is compatible with over 750 different general ledger computer systems. Siegel said that over 1,500 large and small California accounting firms have purchased the software since the product was first introduced in 1983. Two main competing auditing software products are Accountants Trial Balance and Ace, manufactured by McGladdery & Pullen, a CPA firm.

Grant Thorton, explained Farber, uses auditing software developed by Commerce Clearinghouse - a publishing company - that has been modified by his company for internal use and called Cbeam. The firm automated its operations about eight years ago.

Just like at Levine, Cooper, Grant Thorton accountants download clients' financial information electronically and use the software to eliminate several manual data transfer and calculation steps.

Grant Thorton has also in the past two years started using a software package Idea, developed by the Canadian Accounting Society, that is similar to Answers and helps the firm in discovering errors in the company's financial information that need to be investigated more carefully by the accountant.

Idea saves accountants days on steps such as picking statistically valid inventory samples and finding problems during audit tests.

Farber said that Grant Thorton CPAs use this in-depth analysis to prepare an advisory letter for the client when it completes the financial statement. In the letter, the accounting firm gives its clients several recommendations on ways for it to minimize costs or boost profits through better inventory control or other improvements.