How a forward-thinking firm evolves audit methodologies and boosts operational efficiencies using MindBridge
For over 70 years, Cherry Bekaert has helped thousands of clients achieve their financial, operational, and strategic goals. With more than 1,250 professionals, Cherry Bekaert leverages proprietary knowledge and innovation to deliver tailored accounting, audit, tax, and advisory services. Though the team offers the resources and service opportunities typical of a national firm, what makes them truly stand out are the one-on-one relationships they cultivate, the value-based fee structure they offer, and the trust they have developed with local businesses. Today, Cherry Bekaert is ranked amongst the top 25 accounting firms in the United States.
How an innovation-first approach generates big ROI
Cherry Bekaert embraces innovation and recognizes there are two ways to approach it. According to Jonathan Kraftchick, Partner, Innovation at Cherry Bekaert, “The palatable innovation for an accounting firm is often problem-based innovation, where an issue or problem is identified – now let’s go solve it. We’re doing some workshops with our Audit and Assurance department following that model; find all the problems, prioritize them and solve the high priority ones. But then there is solution-based innovation which some may refer to as a solution in search of a problem. But I see that as a great opportunity! If you know what the problem is, most other firms are probably having the same problems so it’s hard to stand out. But, if you find a solution that no one else is using to its full capacity, the question becomes: how can I use this in a way that is unique?”
“We started working with MindBridge in 2017. At the time, we were really interested in AI technology but had to ask ourselves, ‘How can we use this? How can our audit teams take advantage of this?’”
Recognizing that there comes a point past piloting, Cherry Bekaert needed to clearly define the use case to achieve a measurable cost justification.
“We have found some use cases that are unique which I’m excited about for sure. It’s not just journal entry testing, which is where we started. Our understanding and use of the platform has evolved considerably over the years and today we have some great use cases in revenue that paired with our audit methodology enhancements can lead to significant time savings on our engagements,” states Kraftchick.
A Senior Audit Manager from their Atlanta office reinforced, “Performing revenue procedures in MindBridge has saved us a ton of time on revenue testing by helping to reduce our sample sizes. It’s also saved us time on journal entry testing when clients have large or complex GLs.”
With any automation effort, factoring in the changes to your internal processes or elections in audit methodology paired with the speed and quality of execution are key to deriving an ROI projection for any firm. One must also consider the critical time at which these efficiencies can occur.
“During busy season, these are premium time hours. It’s hard to come by a Senior Auditor throwing two hours towards a journal entry selection or testing 200 revenue items. Decompression of time spent is really good to think about,” added Kraftchick. “While our audit team is highly skilled at spotting risky transactions and bringing new financial insights to clients using standard auditing methodology, AI offered the potential to look at things differently and achieve high-value results faster. Solution-based innovation can require more preparation on behalf of the firm to adopt, but one of my real incentives for pushing tools like this is teaching our CPAs how they can rely on AI, conduct a full GL analysis and get to a non-sampling approach – skills that are vital for our firm.”
Taking a centralized approach to data increases success
Achieving these results didn’t happen overnight. At the very beginning of Cherry Bekaert’s journey with MindBridge, the team understood that getting the most value from the AI audit platform would require forethought and a solid implementation strategy.
“We initially started with journal entry testing on the general ledger. But step-by-step, we figured out that we had a lot of work to do in streamlining our processes so that we could fully take advantage of the MindBridge platform. What we learned from that was you can get very excited about technology, but you need to put in the time to figure out the adoption strategy and have the patience to see it through,” said Kraftchick.
When the Cherry Bekaert team started working with the general ledger module within MindBridge, they saw just how vast the differences were between the chart of accounts of various clients. They needed to figure out a way to standardize and format data so they could optimize the value of insights possible from the platform.
To streamline the data ingestion process, Cherry Bekaert created a centralized data team. Dubbed the ‘MindBridge Gurus,’ the group has become experts at setting up and optimizing data within the MindBridge platform and understanding the MindBridge analysis.
“Our centralized data group includes a lot of senior auditors who can do everything from mapping and ingestion to analysis. So they can take the MindBridge process from start to finish, and then our auditors who are working on the engagement can review everything. That’s created even more efficiency for us,” explained Kraftchick.
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Adapting AI audit methodologies to meet standards
At Cherry Bekaert, figuring out how to reconcile data was only one step towards success with the MindBridge platform. A big part of the equation was also confirming whether these AI-supported methodologies would align with today’s auditing standards.
Jessica Everage Helms is a CPA and Senior Manager at Cherry Bekaert and manages a variety of unique innovation centric projects, including MindBridge. According to Helms, “Getting valuable insights and asking our clients the right questions is great. But we needed to figure out how we could use MindBridge to enhance the quality and efficiency of our internal processes while still following the standards. It’s great to know that MindBridge can generate all this interesting information, but how does that fit into our system and methodology?”
The team knew that if they could find a way to standardize how they use the AI platform to support them on tasks such as journal entry testing, and later revenue, they would be one step closer to seeing higher returns on their investment.
“Though manually choosing samples for journal-entry testing is a norm, this method still leaves room for risks to go undetected. It’s almost a very unstandardized way of selecting samples. When using MindBridge, we wanted to see if we could firm up those standards.”
Having a core set of standard rules-based and statistical method control points provided comfort to the team that, at a minimum, the automated analysis would adhere to traditional tests applied by the industry. The machine learning control points provide further focus and contribute to an aggregated MindBridge score that highlights, at a transaction or entry level, those which are particularly worthy of further review.
“Based on professional judgment and other criteria, we asked ourselves ‘Do the MindBridge results appear reasonable?’ Eventually, our professional practices team got very comfortable with how the control points worked. Using MindBridge, we now have a standard way to do journal entry testing. And I feel a lot more confident about our selections now than almost any other method that we could come up with,” said Kraftchick.
According to a Senior Audit Manager from their Richmond office, “Using MindBridge also reduces the subjectivity in selecting journal entries and eliminates the ‘sample of a sample’ concern. It also frees up time of audit team members at all levels, both for the person completing the testing and for reviewers by reducing review time and review notes.”
During another exercise to retool their sampling methodology specifically for revenue testing, the Innovation team had been in contact with the Audit Practice regarding MindBridge, so it naturally became part of the conversation.
“There is a concept that we call residual inherent risk where if we were to do certain things, to focus on the pieces of revenue that were actually risky, could we then have a residual risk that we’re comfortable with and can do a smaller sample size? The problem then became, can we effectively identify in the revenue transactions for our clients the ones that are risky and test those. That’s when MindBridge came up. How can it help us look at just the risky revenue transactions? Then can we look at them by audit area? Can we look at them just by the relationship of each individual transaction to itself? And once we got there, that’s when things really came to light. And we found the solutions that we’re using today.” said Kraftchick.
Enhancing auditor confidence in each engagement
With the buy-in from the professional practices team, Cherry Bekaert auditors are embracing AI technology as they go into new engagements. Though Cherry Bekaert doesn’t mandate the use of MindBridge, they do offer auditors the option to apply the technology as an auditing tool and continue to advocate increased usage.
“We’re seeing a lot more interest from our auditors in using the platform. And while we thought we were getting a lot of value from revenue testing because of the time savings, our auditors use Ai Auditor quite regularly for journal entry testing too. They just find everything easier, especially since they can rely on our MindBridge Gurus to handle all the data and the control points are already set up. All of this ensures they are getting very defendable selections,” said Helms.
“We are using MindBridge to help make journal entry selections on as many of my jobs as possible. It gives me confidence that the entries that we are testing are truly the riskier or more unusual entries.” states an Audit Manager from the Raleigh office.
Clients also appreciate the efforts that the company is making to leverage AI auditing technology. “Every client that we’ve talked to about using AI auditing technology has either been really happy or intrigued about it. No one has expressed any fears or resistance. I think most clients appreciate that they’re getting an added-value service and a stronger audit with AI technology,” continued Helms.
Thinking long-term with MindBridge and Ai Auditor
As early technology adopters, Cherry Bekaert continues to lead the auditing industry forward. Armed with years of experience, the team advises other firms who are looking to adopt AI auditing technology to think long-term.
“MindBridge is the future of auditing,” states Kraftchick. He also cautions, “Without identifying your chosen data strategy and having those standard processes in place, you might have a hard time seeing really good ROI. Firms need to understand that the long game is really just a series of short games. And if you just focus on the three to five-year goal, without focusing on the six-month goal, you’ll never get there.”
Moving forward, Cherry Bekaert is looking at new ways to increase the use of the MindBridge platform. Particularly they want to use Ai Auditor to test expected revenue ranges using five years of client data. Analysis over multiple periods allows you to visualize trends of balances, flows of transactions and key ratios over time. By grounding the preliminary analytical procedures in a broader assessment of trends in the business and relevant key performance indicators (i.e., ratios), the result is a more operationally-relevant assessment of what’s changed in the financials.
“Right now, we’re using MindBridge to help identify highly justifiable samples. Where I hope we’re able to go is using the AI auditing platform to help us pinpoint highly defendable risks. And then the samples will come from that, but that’s where I see this technology heading. And I think MindBridge is one of the very few AI auditing providers that are moving in that direction. That’s why we’re happy to have partnered with such a forward-thinking organization.”
Partnership is an apt term to refer to the relationship established with Cherry Bekaert. From participating in MindBridge’s Product Management Sponsor User Program to attending the MindBridge customer centric annual Influence Conference, the firm’s feedback on holistic vision and features is not only heard but contributes to future iterations of the platform their teams gain value from. Helping our customers get where they want to go faster and easier are leading themes.
“We look forward to seeing how we can leverage new Ai Auditor capabilities to keep enhancing our audit methodologies and strategies, so our clients get even more value from our services,” concluded Kraftchick.
Jessica Everage Helms
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