Take Me to Your Ledger

Auditbots could free up external auditors to look for problems beyond routine transactions.
Joseph McCaffertyJuly 1, 2002

The key to catching accounting improprieties may lie in your computer — via automated auditing processes called “auditbots.”

“The ERP [enterprise resource planning] systems put in place at many companies have made it possible for outside auditors to embed software in the systems to audit transactions,” says Robert Jensen, an accounting professor at Trinity University in San Antonio.

He says that automating the audit process could free up auditors to look for other problems beyond routine transactions, like under-the-table dealing. The auditbots would also be able to audit every transaction instead of just sampling them, thereby eliminating sampling error. “It would limit some of the suspicion that auditors aren’t doing a good job,” explains Jensen.

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Auditbots are starting up at AT&T and HCA Healthcare, and about 15 other companies are experimenting with the technique, says Rutgers University accounting professor Miklos Vasarhelyi. The biggest hurdle so far is how to make the systems secure, even to the companies where they are installed. “It’s coming,” says Vasarhelyi. “It’s just a matter of when.”