A common question that I see asked by many clients is where do I go to find information about a new accounting system and who will implement the new system? 

An interesting but disturbing trend that I see is smaller audit firms recommending and implementing accounting software for their audit clients.  This brings up an interesting question of independance by the audit firm.  The potential conflict lies in the fact that the audit firm is in essence auditing their own work.  The revenue generated from selling accounting software and the related audit fee's frequently exceed the fee's generated for the Independant financial audit.

For those of you that do not have a short memory, many of you can remember the Enron debacle.  This is an example of an audit firm generating large consulting engagements and also performing the financial audit.  

Here is what the AICPA says about conflicts of interest.

GAO Yellow Book: Auditor Independence

In 2003, the GAO enacted significant changes to the auditor independence requirements under Government Auditing Standards . Commonly referred to as the Yellow Book, this guide covers federal entities and those organizations receiving federal funds. Various laws require compliance with the comptroller general's auditing standards in connection with audits of federal entities and funds. Furthermore, many states, local governments, and other entities, both domestically and internationally, have voluntarily adopted these standards.

Although the standard deals with a range of auditor independence issues, the most significant change relates to the rules associated with nonaudit, or consulting, services. Auditors have the capability of performing a range of services for their clients. However, in some circumstances, it is not appropriate for them to perform both audit and certain nonaudit services for the same client. In these circumstances, the auditor, their client, or both will have to make a choice about which of these services they will provide.

The focus of the changes to the auditor independence standard is to better serve the public interest and to maintain a high degree of integrity, objectivity, and independence for audits of government entities. The standard includes a principle-based approach to addressing this issue, supplemented with certain safeguards. The new independence standard for nonaudit services is based on two overarching principles:

1. Auditors should not perform management functions or make management decisions.
   
2. Auditors should not audit their own work or provide nonaudit services in situations where the amounts or services involved are significant or material to the subject matter of the audit.

For nonaudit services that do not violate these above principles, certain supplemental safeguards have to be met, for example: (1) personnel who perform nonaudit services are precluded from performing any related audit work, (2) the auditor's work cannot be reduced beyond the level that would be appropriate if the nonaudit work was performed by another unrelated party; and (3) certain documentation and quality assurance requirements must be met.

The standard includes an express prohibition regarding auditors providing certain bookkeeping and recordkeeping services, and limits payroll processing and certain other services, all of which are presently permitted under AICPA auditing standards. At the same time, the standard recognizes that auditors can provide routine advice and answer technical questions without violating these two principles or having to comply with the supplemental safeguards. The standard also provides examples of how certain services are treated under the rules.

Here is a link to there site.  http://www.aicpa.org/audcommctr/toolkitsnpo/Independence_and_Related_Topics.htm

Here is what the Journal of Accountancy says about GAO standards.

Essential Compliance Precepts
Two overarching principles are critical to understanding the new nonaudit services rules:

Audit organizations (referred to in this article as “firms”) should not provide nonaudit services that involve performing management functions or making management decisions.
Firms should neither audit their own work nor provide nonaudit services in situations where the nonaudit services are significant or material to the subject matter of audits.

Here is a link to there site. 
http://www.journalofaccountancy.com/Issues/2002/Nov/TheNewGaoIndependenceStandardWhatAuditorsNeedToKnow.htm

 

We are frequently asked the question on what should we do to make sure that we are properly backing up our FundWare or Financial Edge data?  It is important to make sure that you backup solution takes into account the ability to properly backup your SQL tables.  Many third party backup software solutions sell an add-on product to achieve this task.  For example,  Symantec Backup Exec sells an additional software module called Symantec Backup Exec 2010 Agent for Microsoft SQL License.  It allows you to have point in time restores.  It allows you to make backups of SQL while the database is running.  Also, restoring data is made quite a bit easier with the agent. 

It is also important to make sure that you are backing up all of the required components for FundWare.  If you do not have the additional FW proprietary databases backed up, you will not be able to restore your data. 

Last of all, many people setup their backup system but not review their logs for errors, skipped files, etc.  It can be a costly assumption to make that if the tape is popped out of the tape drive that it must contain all of your required data.  I think that the most important step that is rarely ever completed is to test your restore procedures.  If you had a catastrophic event, do you have all of the pieces required to get back up and running?  Some things to consider are:

Do you know where you software CD's are located?
Do you know where the license key's are located?
Do you have an inventory of all other applications that are residing on the server?
Do you have all of the data required to restore?
Do you know where you would get replacement hardware and how long it would take to procure?

At the end of the day, how do you know it will work until you test out your process?

For those clients that are still using a version FundWare that is utilizing Microsoft Server or SQL Server 2000, it is time to start thinking about upgrading your underlying technology.

For many of our clients that are utilizing these older platforms, their servers are 5+ years old.  Servers in this age category will see an increase in hardware related failures grow exponentially every month.  Due to the fact that we are talking about servers that "house" an organizations financial and payroll information, it is scary to think of the possibilities of extended down time or worse yet, lost data.  

Not only do you have to think about the hardware aspect of running your accounting system but the operating system and database is coming to their end of life.  Please see the above link to the Microsoft Blog about end of support dates.   

Most organizations typically tie all 3 components together in a refresh.  They typically purchase a new server with the latest versions of Microsoft Server and Database software.  The last consideration is upgrading your accounting application to make sure that your FundWare version is compatible with the operating system and database.

An alternate option would be to have someone host your accounting system for you.  Some of the benefits of having your application hosted is that you do not have to worry about all of the upgrade headaches.  Hosting companies will typically have layers of redundancy in their network.  For example, they should have redundant power, internet, hardware, cooling systems, and real time monitoring of the hardware and software.  A vast majority of our clients do not have this type of expertise or infrastructure in place to provide this level of redundancy.  In addition, you get the benefit of spreading out your expenditure over months and years.