May 17, 2024

Energy companies: the future of audits is now


Technology eases financial statement preparation for energy clients

Saving time in tracking data and providing information to auditors is one of the biggest benefits clients are seeing from automating the audit process. Heap gave the example of Grant Thornton's oilfield services clients who are benefiting from analytics measuring revenue volatility.

The client does not experience many price changes and has uniform contracts, so revenue is expected to remain constant over different periods. Auditors use volatility measures that provide detailed analysis of revenue trends in the client's financial statements to quickly identify anomalies in the data that may require further investigation or testing.

In this automated analysis,

Identify revenue anomalies faster than manual processes and eliminate false positives that manual evaluations can uncover.
Identify anomalies that may be missed by manual evaluation.

Automated analysis reduces the situations in which auditors request more information, primarily by eliminating false positives.

“There's been a 50% reduction in revenue items to test as part of the audit, and there's also been a 50% reduction in revenue items that management pulls for testing,” Heap said.

This means a huge time saving for everyone involved, when there are typically hundreds of items that need to be followed up on.

Meanwhile, oil and gas producers can benefit from the company's reversal tool, which removes offsetting entries that result in zero, allowing auditors to focus only on entries that represent actual activity. This is especially useful for high-volume accounts that contain JIB transactions. This data cleansing activity, which previously took a half-day of manual auditor work for a typical mid-to-large oil and gas client, now takes only about 30 minutes with an automated data purge.

“The use of this automation technology has had a huge impact on several of my clients in past audit cycles, making previously time-consuming tasks really efficient for them,” said Thea Prihoda, audit manager at Grant Thornton.

As with revenue analysis, reversal tools eliminate false positives and reduce the effort energy clients have to expend to gather additional data for their audit teams. Automated analysis also eliminates the risk of red flags being missed in manual assessments.


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