Case Study: Centralizing Audit Confirmations at Clark Nuber P.S.

How to boost productivity for your audit team and increase savings for your firm. A case study with Peter Henley, CPA/CITP, Senior Director, Clark Nuber P.S.

Challenge: Eliminating inefficiencies and reducing costs

Like at most firms performing audits, about 30 of Clark Nuber’s 68 auditors (one member from each of the firm’s audit teams) would divide up the often tedious, inefficient, paper-based task of processing audit confirmations on 500+ audits per year. Processing paper-based audit confirmations was disruptive to an auditor’s daily workflow. The auditors would forgo other billable activities to spend time on confirmation requests, which included time-consuming activities such as gathering letters from clients, mailing to banks and brokerage houses in a timely manner, and checking for, scanning, and posting received confirmations to working papers. Plus, sending out second requests when there was no response to the original request or following up on an incorrect address or account balance was a real headache and it swallowed up precious billable hours. In short, processing audit confirmations was tedious work that took up too much professional staff time during the audit.

Solution: Centralizing the audit confirmation process with Confirmation

 More than 10 years ago, the firm decided to centralize their audit confirmation process to make audit workflow more efficient and auditors more productive. To move most paper out of the process, the firm started using electronic confirmations through Confirmation in 2006 and, as a result, received quicker confirmation responses from banks, brokerage houses, and other financial institutions. Confirmation is a secure web-based service that can be used to confirm cash, term-loan balances, lines-of-credit balances, investment accounts, accounts receivable, accounts payable, and much more (more than 30 types of confirmation requests are supported).

Benefits: Reduced costs, increased productivity, improved morale

Centralizing the process and automating confirmation requests helped the firm’s auditors to:
• Increase personal productivity, efficiency and morale
• Save time, reduce human error, while providing a more secure process to confirm balances
• Reduce costs for the firm and its clients

Peter Henley, Clark Nuber’s senior director, has been with the firm for more than 17 years. He is a strong believer that centralizing and batching work processes can significantly improve workflow and generate efficiencies across the firm. Case in point: centralizing the audit confirmation process and automating the confirmation of cash and other account balances using Confirmation.

Confirmation streamlines the auditor’s work. When you take away a process that’s disjointed and inefficient — like processing paper confirmations that you have to pick up and put down multiple times — that makes a huge difference.

Peter Henley, CPA/CITP, Senior Director Clark Nuber P.S.

Centralizing workflow

When you look at the before and after of the audit confirmation process, it becomes immediately clear why centralizing and batch processing audit confirmation workflow is such a boost to the audit team’s efficiency and productivity. Before centralizing the process, no one was measuring the time/cost impact to the audit staff of processing paper-based confirmations. Peter noted that “before centralizing the process, three to five members of an audit team would select accounts” that needed confirmations. One person on each audit team would then take the selected accounts and handle the steps involved in preparing and processing the confirmation requests. In total, about 30 auditors would regularly interrupt their workflow to handle audit confirmations on approximately 500 audits each year – time and effort that could be better spent on the actual audit. Now one administrative person does it all. The admin is able to batch tasks for a more efficient process. “[Our admin] typically processes 20 to 30 confirmations in a sitting without distractions,” Henley says. “During the busy season, she spends 100 percent of her time processing confirmations. When not doing confirmations, she does other administrative work for the firm. In total, about 25 percent of her time is spent on audit confirmations, which comes to about 400 hours per year on this task.” Most importantly, “for auditors, the timekeeping mess of going in and out of audits and confirms is a thing of the past. The auditors can now devote their billable time to the work they were trained to do.”

For a professionally trained auditor to do audit support work that isn’t part of the actual audit, like checking the mail, that’s a waste of an auditor’s precious time. Now auditors can do what they were trained to do. 

Peter Henley, CPA/CITP, Senior Director Clark Nuber P.S.

Moving paper out of the process

Centralizing the confirmation process made workflow more efficient, but paper confirmations were still an issue for the firm. “Managing paper was an ongoing challenge, and second requests created duplicate work for the admin,” says Henley. Another issue involved the mailroom staff, who didn’t always know where confirmation responses should go. “Sometimes the mailroom would deliver responses to the wrong person, or to someone who was out of the office, which created delays,” says Henley. “And sometimes responses simply got lost internally.” In 2006, the firm began using Confirmation to automate the confirmation of cash and other account balances during the audit. As a result, confirmation responses can now bypass the mailroom, second requests are reduced, and paper and related paperwork is reduced or even eliminated by using Confirmation.

Improving employee morale

Henley recalls that training the admin on Confirmation was not difficult at all. The admin learned how to use Confirmation quickly and was productive in no time. Shifting the responsibility of this task to the admin had some unexpected benefits as well. For one thing, it improved morale. With auditors free to concentrate on their audit work, the mood in the office actually improved. The admin’s morale went up as well because she now saw herself as someone contributing to the success and growth of the firm by reducing costs for the firm and helping to increase the firm’s overall net profits. Henley adds, “Measuring one person is easier than measuring dozens.”

Clients are sensitive to technology, and if you are not using it, they will notice.

Peter Henley, CPA/CITP, Senior Director Clark Nuber P.S.

Another surprise benefit: With Confirmation, the firm’s clients see an efficient audit process from start to finish. And clients who are impressed with how your firm operates at all levels are more likely to recommend your firm to other clients. Henley summed it up, “When clients see an efficient audit, they’re going to recommend you.”

The bottom line

“The investment was a very small amount of training and no cash, so any savings is an immediate decrease in cost,” says Henley. “You don’t have to wait for a major overhaul with the audit process, you can do it now. The big deal here is that auditors are spending their time on higher value work.” Peter also had a message for other firms: “You need to take a look at this and go for it right away. Your auditors are going to have less to do from day one. The savings are obvious!”

If you talk to an auditor, it’s so clear! There’s no question of a significant time savings.

Peter Henley, CPA/CITP, Senior Director Clark Nuber P.S.

About Clark Nuber P.S.

Clark Nuber is a Washington-based, award-winning CPA and consulting firm. With a focus on tax and audit practices serving global clients, Clark Nuber has been in business for nearly six decades. A relatively large but nimble firm employing nearly 160 employees, Clark Nuber is also a registered investment adviser in the state of Washington, serving commercial businesses, not-for-profits, and high-net-worth individuals.

About Confirmation

Confirmation provides secure online confirmation services for auditors, banks, lawyers and their shared clients. Confirmation’s patented service minimizes fraud and brings efficiency to the audit confirmation process. In addition to its bank confirmation solution, the company provides solutions for more than 60 different types of audit confirmations, including employee benefit plan and legal confirmations. Several hundred validated responding companies, including all of the Top 10 banks in the U.S. and more than 12,000 accounting firms in more than 100 countries, trust Confirmation for their audit confirmation needs.