Are You Using Electronic Workpapers? Start Today!

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When I worked at a CPA firm, we used a sophisticated software program to manage our work. The software had advanced features such as importing and rolling forward our client’s general ledger, and we could document the multiple levels of review from our managers and partners. References to other workpapers could be working links. Only one staff member could have custody of a workpaper at a time, meaning our efforts weren’t duplicated, and an audit log of custody, signoff, and review was maintained automatically.

Clients would be impressed when they looked over our shoulders and saw the functionality. I heard many “I wonder if we could use something like this?” comments. But truthfully, most Internal Audit departments don’t need all those features to run an effective shop. That said, they do need something.

When I left public practice and pivoted to Internal Audit at a large credit union, I was surprised to learn that all of our work was documented on physical paper. Just like at the firm, we would type memos in Word, or prepare testing matrices in Excel. But then these documents were printed out and organized in accordion files. Signoff was a literal signature, as was evidence of review. Closing an audit meant the files were stored in fire-proof locked cabinets.

This was archaic and inefficient. The work was hard to follow, and important issues could be overlooked. Travel further complicated our paper-reliant department, as the review phase would have to wait until the preparer and reviewer were in the same physical location. So, we went about searching for an electronic workpaper solution that would be easy to use, sophisticated enough to facilitate our work, and accomodate our tight budget… Credit union auditors know this struggle all too well!

We ended up purchasing a software solution that no longer exists, and which I won’t name. We had difficulties coordinating with our IT department, who had too many irons in the fire already. And when it was finally up and running, the software didn’t do a lot of what we were promised. Today, I find many clients struggle with workpaper solutions that don’t solve anything, and it’s disappointing to all concerned.

We also know many clients who have realized paper is insufficient, but have chosen to “make do” with what they have on hand. They might save files to secured shared drives or cloud-based applications such as Google Drive. This solves some problems, and is better than nothing, but is far from adequate.

A Solution for Credit Unions

The Audit Library has been approached by several audit software companies. We have had meetings with most of the companies you are likely familiar with as a working auditor. For a while, we worked with a large workpaper solution we thought had potential for credit unions. And again, I won’t name it. We realized the complexity of the software and constant turnover at such a large organization did not meet the needs of our clients.

So, we decided to partner with the company Redboard, the only software solution built exclusively for credit unions. Redboard has helped countless auditors in the industry to overcome the unique challenges they face. Auditors who use Redboard and subscribe to The Audit Library can download document suites from a dedicated library page on our site, upload them directly into Redboard, and get to work with minimal training.

Redboard also offers features that make life easier for auditors and auditees alike. Audit requests can be automated and the documents received are uploaded directly into the program. This functionality puts an end to emails back and forth, constant reminders, and questions about who can access shared files where audit requests are often held. Completed workpapers can be marked as ready for review, the reviewer can leave notes and instructions, and approved workpapers are clearly marked. On the other end of the audit cycle, the software can facilitate creating and tracking audit issues, which has shown to save time and improve audit issue closure rates.

The Audit Library uses Redboard for our consulting work, and we have been impressed by how much time and effort it has saved us over the years. Clients often comment on how easy it is to send us document requests securely, without any training on the software. It is intuitive and lives securely on the cloud, making it hands off for your IT department. We can’t recommend it enough.

Check out Redboard’s website to book a demo and learn more.

Benefits of Going Electronic

As much as we love using Redboard, it may not be the right fit for everyone. Internal Audit tools and software have come a long way in the years since I left my job at the credit union. Whatever solution you use, there are benefits to be gained. First and foremost, uploading audit workpapers in their original form is easy and practical. Maintaining an original spreadsheet is inherently better than maintaining a printed copy, because you can see the formulas and trace dependents. The time allocated to formatting documents for printing, such as checking font size and margins, could be used for actual testing.

I already hinted at the ease of review using the cloud, for the simple fact that preparers and reviewers are usually not in the same physical place. Another great feature of this technology is the ability to control and lock down workpapers. During preparation, only one user will be able to access each document at a time, and an audit log of custody is maintained. At the end of the project, each electronic audit binder should be “closed” or “finalized,” meaning the documents can’t be altered or changed and will live permanently on your cloud-based server.

Finally, there are environmental benefits, though they are hard to quantify. The energy used to house documents on a server does not eliminate your carbon footprint, but I’ll take it over using endless reams of printed papers! Computers and servers are becoming more energy-efficient, but paper will always be made of trees, so reducing paper consumption is something we can always feel good about.

What is the Cost?

One of the reasons we partnered with Redboard is their open and transparent pricing based on your credit union’s asset size. Click here for pricing details. Prices for other software solutions vary across the market, and there are options for every size and type of company.

Implementation Tips

Successful implementation will require working with your IT department. Early on, bring IT into the fold and include them in your calls with sales representatives. They will see and hear things that you won’t, and can provide valuable advice.

If you are going from paper to electronic, you need a plan. Set aside time to complete training modules. Consider designating hours in your budget to scanning old workpapers into the new system. This is a great project to take on during slow times, or as a mental break between difficult projects. If you have the budget for a summer intern, this is work that a business school student would happily take on. Be sure to set a date range and order of priorities, oversee the process and make sure the papers are shredded when scanning is complete.

Other than that, you may be surprised how easily and quickly Redboard or one of its competitors can be implemented at your company.

Now I want to hear from you! Is your firm or department using paper or electronic workpapers? How does it work for you, what provider do you use and what tips can you offer other readers? Leave a comment!

4 Responses

  1. We decided last year to use Redboard as we created our internal audit department from scratch for our nearly $500 million federal credit union. Along with The Audit Library this has worked well for our two-person department.

    Your article rightly describes the challenges we face. For us, using the well-crafted programs and templates of The Audit Library along with Redboard’s simple and effective design flow has made an excellent collaboration. Now if you can get my department heads to LOVE audits, that would be great! 🙂

  2. We are paperless but use protected folders in File Explorer for each audit. This works pretty well for us, but we know at some point we’d like something that’s suited to internal audit. Redboard will be on our list to evaluate when we reach that point.

    1. A lot of our colleagues do this, and it works up to a point. The job is only getting harder, and auditors are expected to do more every day. Going fully electronic pushes many audit departments from “good” to “great”!

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