Statistical Audit Automation: Applying Artificial Intelligence Techniques

Auditmetrics software has the ability to plugin data from QuickBooks® standard reports.

All business can profit from conducting internal statistical audits of their accounts and customers. It is always wise to monitor the life blood of a business in more depth than can be derived from general accounting reports. The new wrinkle in the business world is that the Supreme Court decision means web sales can be subject to audits potentially from 47 different states. There are also around 300 local sales tax authorities. The old law upended was that internet sales were exempt if you did not have a physical presence in particular state. 

The Auditmetrics software included with this book is a product of the trend of states to use statistical methods in auditing for sales tax. Auditmetrics originally wrote the software to audit medical insurance claims and assess health care data. It has a natural fit with sales tax audits. Auditmetrics had an advantage in implementing its software for the Massachusetts Department of Revenue Audit Division. The Commonwealth has no specific law for the statistical audit other than a simple statement that statistical audits must conform to IRS standards. This gave Auditmetrics the leeway to build a streamlined audit process which is now in use by Mass DOR auditors.

Auditmetrics wrote the software to help prepare small business in doing their own internal audits before the state comes in, draws a random sample and hands out a bill for taxes due. Many large corporations have the resources to conform to the new rules but for many small business it can be a potential barrier to entering internet commerce. An analytic view of accounts can help keep managers aware of current cost and revenue dynamics in light of potential external factors such as state and local audits.

Many states have their nuance for the statistical audit but Auditmetrics adheres to IRS and American Institute of Certified Public Accountants standards. Auditmetrics book and software are designed for individuals who have minimal knowledge of statistical theory. It is user friendly such that one can traverse the complexity of statistical sample selection in a three step process. Each step has a series of analytic checks that are documented using Excel spreadsheets. If one of the checks is not met, the user is alerted to make proper adjustments. There is an AI design feature the user can employ for obtaining a final random sample but with ample opportunity to fine tune the final product.

AUDITMETRICS MUST BE CONTACTED FOR SOFTWARE INSTALLATION NOT AMAZON.

The included software is the small business version with no license fees. It has the same 
functionality as Professional v6.2. THE ONLY DIFFERENCE IS FILE SIZE LIMITATIONS AND FORENSIC ACCOUNTING FEATURES. MS Windows and Office is a requirement.

The book is ideal for business academic programs with the first half (Part I) being a discussion of the statistical principles that apply to the audit. If selected by an academic institution the instructor will be provided slides that can be downloaded. They have been used by Auditmetrics for auditor in-service training. The instructor must have an e-mail address with the appropriate academic designation. A chamber of commerce continuing education program can also obtain the education resources. 

Part II of the book is written with the view that the world does not need just another book about statistics and accounting. Many practitioner guides and statistics made easy type texts do help inform but the practitioner also needs a quick and easy path to actual workplace implementation. Auditmetrics has always had the goal to develop specifically tailored software and education materials so a student can quickly go from class to real world implementation.