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Audit Data Standard calls for organizational cooperation

Rochester Business Journal
June 28, 2013

They say the good news about standards is that there are so many of them.
You could say the same thing about standards organizations. If you have a role in your organization that touches in some way on the financial audit information supply chain, an understanding of how these organizations work, and of some vital efforts underway, may be important for you.
The word "standards" may evoke a positive or a negative feeling for you, perhaps both. It may mean familiarity and predictability; it may mean constraint and lack of flexibility. It may mean easier entry into a market or a new situation; alternatively, it may hold a perceived threat to an established position.
I once pulled out of a car rental agency, on a dark and rainy night, in a brand new PT Cruiser. My thrill at trying this new model quickly turned to frustration as I groped the door for the button, switch or crank to open the window at a toll booth, to no avail. I had to open the door in a downpour to throw in my change. The next morning, I found my problem: The window switches are in the center console; that's where ventilation and radio belong, no?
More recently, my non-standard car experiences include spring-loaded fuel caps (you have to press it in for it to open) and my first keyless ignition vehicle.
Misery loves company. According to a June 11 USA Today column, "Curing Rental Car Confusion," ever-increasing technology (and related buttons) in rental cars and disappearing owners' manuals are just two barriers for even the most frequent travelers to coping with differences between vehicles.
Fortunately, many owner's manuals are online now. Headlights come on automatically and fuel gauges offer hints to where the gas cap is. The U.S. Department of Transportation has a 2005 standard (No. 102) standardizing transmission layouts (for example: Park, Reverse, Neutral, Drive, Low or PRNDL). Numerous other challenges to frequent travelers have likewise been resolving themselves. Standards have been asserting themselves over the last decade to help compensate for variation in design, region, culture and technology.
The euro reduced to a handful the number of currencies needed when traveling in continental Europe. The standardization on ethernet and WiFi for laptops made online communication easier. "World phones" and voice over Internet protocol mean you can make calls virtually everywhere.
Variations among power adaptors are still an issue. Language barriers still exist as well; as happy as I am that English language skills abroad are fairly widespread, there is so much more that could be agreed upon.

Ripe for standardization
One area ripe for standardization is the audit information supply chain. Whether we are talking about the audit trail used by internal auditors or communication between an organization and an external tax, financial or regulatory audit, streamlining the information request and response process has a long way to go.
The information exchanged between an organization and its auditor has been at least partially standardized in a few countries already. The Dutch XML Auditfile Financieel and the Swedish Standard Import Export format streamline the exchange of accounting information in their respective countries.
In the very near future, the U.S. will prepare to get benefits from a similar standard. The American Institute of Certified Public Accountants is soon to publish its first official release of its Audit Data Standard. This provides a specification for a consistent exchange of enterprise resource planning data, starting with the general ledger and accounts receivable modules, from an organization's accounting system to share with its auditor.
The Audit Data Standard can usher in a time of streamlined data requests, simpler exchange and standardized applications to assist both the organization and the auditor in their responsibilities. It may also serve as a showcase for XBRL.
The XBRL community, best known for its role in developing the technical understanding underlying the current mandate of the Securities and Exchange Commission for filings of financial statements by companies, has also been working on providing a technical foundation for a seamless audit trail process. That foundation is called XBRL's Global Ledger Taxonomy Framework, or XBRL GL.

Local or global?
The Audit Data Standard and its global counterparts may work together, or fight among themselves, as other potential areas of audit communication and execution might be explored. But can the stakeholders-the U.S. and global audit professional organizations, regulators and others that make up the audit information supply chain and the potential standard-setting organizations-possibly be brought together to work things out?
Getting standards organizations to work together is a challenging task. There is so much passion for "their" standard. And when you get domain standards and technical standards and try to bring them together, the challenges increase all the more.
One such attempt seems to have just fallen short. The International Organization for Standardization (perhaps better known as the ISO, the home of more than 19,500 common standards) was deliberating a new, long-term project. The project would have standardized the terminology, classifications, data definitions and processes related to audit data used by auditors globally. This effort, known as ISO/TS/P 237, had the potential to standardize all aspects of collaboration between an organization and its auditors.
While I am still waiting for the details, the effort for now has come to a halt.
So our lessons today: First, find the window, headlight, windshield wiper, defrost and turn-signal switches before starting the car, and, second, encourage and take part in developing and leveraging emerging standards for overseeing your organization's audit information supply chain.
Take a look at the Audit Data Standard, and find out when your ERP vendor will support it. And use your influence-professional, technical and organizational- to encourage collaboration to streamline the audit information supply chain.
Eric E. Cohen, CPA, of PwC is spending his time reinventing how accounting information is shared, with

6/28/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email

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