General Information
Do you have a video guide of the Cash Proof Module?
Yes, you can watch a step by step here.
What is the Cash Proof Module?
The Cash Proof module is designed to automate the reconciliation of how GAAP (i.e., Reported) Revenue or Expense balances are reconciled to Cash Inflows and Cash Outflows per the bank. This module is typically used in transaction advisory engagements and audit engagements.
How Does It Work?
Audit Sight has built a rules-based engine that analyzes each journal entry recorded by the company to identify unusual transactions in the revenue and expense cycle. Additionally, the solution matches transactions between the bank and ledger to identify reconciling items, timing differences, and potentially unrecorded transactions. For each reconciling item, a tab is generated to document the identified item.
What Data Required to Run Cash Proof?
To run the Cash Proof module, you need to provide both Accounting Data and Banking Data.
Accounting Data:
General Ledger Report: The module needs detailed transactional data from your accounting system.
Comparative Trial Balance: This includes the balances from the prior period for comparison to the current period.
Note: Some general ledgers include starting and ending balances. If this is included, a trial balance is not needed.
The comparative trial balance is used to perform a completeness check over the accounting data.
Banking Data:
Bank Statements: You can upload PDF versions of your client’s bank statements.
Banking Transactions Listing: Alternatively, you can provide an Excel or CSV file that lists individual bank transactions.
If you have already connected your client or target’s accounting system and banks through our platform, you’re all set! The Cash Proof module will automatically pull this data for you. If not, you can manually upload the required files to proceed.
General FAQs
Can I run a Cash Proof over Revenue or Expenses?
Yes, a Cash Proof can be run over revenue, expenses, or both.
What are expected accrual accounts?
Expected accrual accounts are used to convert GAAP financials to cash. To calculate the reconciling items, the month-over-month change from the balance sheet is used.
For a Revenue Cash Proof, the expected accrual accounts are Accounts Receivable, Undeposited Funds, and Deferred Revenue.
For an Expense Cash Proof, the expected accrual accounts are Inventory, Prepaid Expenses, Accounts Payable, and Accrued Liabilities.
How do I know if I have complete data?
Audit Sight runs a completeness test over the accounting population by comparing the total activity in the general ledger to the balance provided. Any accounts that do not roll indicate that the detail is incomplete. Audit Sight also reviews the date ranges on uploaded bank statements to identify any potential gaps.
What reports are generated in the Cash Proof?
The cash proof workbook generates several reports, including:
Financial reports such as the Balance Sheet, Income Statement, and Chart of Accounts.
Bank account to GL account matching analysis including monthly activity summaries, listings of matched and unmatched transactions, and a listing of bank transactions.
High-level summary of all unique JE combinations for revenue, accrual accounts, expense accounts, and cash.
Every journal entry for the period and how it relates to the cash proof (i.e. reconciling items, accrual accounts, etc.).
What if I want to change the mapping of the chart of accounts?
Mapping of the chart of accounts can be altered at any time. Log in to Audit Sight, select your client, and navigate to the mapping header. Once the mapping is updated, a new cash proof will need to be requested. No additional fees are incurred when changing the mapping of the chart of accounts.
What is the Audit Sight clearing account?
The Audit Sight clearing account is a fictions account added to the chart of accounts automatically added during the Audit Sight data healing process. Specifically, this account is used to balance unbalanced journal entries. In some accounting systems, a journal entry may span multiple days. To address this constraint, the Audit Sight clearing account is used to create two separate balancing journal entries. This ensures that the data is properly allocated to the correct period while maintaining the integrity of the records.
Note: If your client has clean accurate books, this account will not appear in your cash proof.
What is the Audit Sight historical variance account?
The Audit Sight historical variance account is created when the beginning trial balance provided does not balance. During our data healing exercise, this account is automatically added to the chart of accounts to represent the net amount by which the beginning trial balance was off. This ensures that the data remains accurate and reconciled for analysis.
Note: If your client has clean accurate books, this account will not appear in your cash proof.
Banking Data-Related Questions
How does Audit Sight handle foreign currencies?
Currently, the Audit Sight Cash Proof must be in a single currency (i.e., the currency in the bank statements must match the currency in the accounting data). For PDF bank statement conversion, we support any bank statement in USD and generally support most English-written statements. It’s a best practice to upload a single statement to ensure it can be processed. For non-English statements, we recommend obtaining a listing of transactions in Excel or CSV format for upload into the software.
What can I do if I only have banking data?
If you only have banking data (e.g., PDF bank statements or Excel listings of banking transactions), you can still use Audit Sight to start your Cash Proof. Once the transactions or statements are uploaded, they will be sorted into cash inflows and outflows. Additionally, using our machine learning algorithm, the transactions will be grouped based on the bank transaction description. These groups can help identify non-revenue and non-expense banking transactions.
What can I do if I only have the trial balance and banking data?
In some rare situations, the client may only provide monthly trial balances. If you only have the trial balance, the module can prepare a base cash proof using the GAAP-reported numbers, calculate the change in expected accrual accounts, and still identify sources and uses of cash. However, this cash proof will lack the ability to identify non-cash and non-expense reconciling items, as well as bank transactions not recorded in the general ledger.
While this limitation prevents a fully reconciled cash proof, many teams find that it eliminates 80% of the required work to prepare one.
How does Audit Sight handle monthly timing differences (i.e., outstanding checks and deposits in transit)?
Audit Sight’s Cash Proof module identifies and flags timing differences that occur when transactions are recorded in one month in the general ledger but don’t appear on the bank statement until the following (or preceding) month. To see how these are calculated, refer to the standard timing differences calculation in the cash proof.
Note: The matching algorithm is limited to a 30-day window. Any timing differences greater than 30 days will not be identified. If you expect material differences beyond 30 days, we recommend obtaining bank reconciliations from the client and updating the data.
What happens if I can't provide all bank statements or I can only get statements from a certain account?
When no banking data is available for a certain account, a standard reconciling item is created called "Bank Account Statement not provided." This reconciling item can appear in multiple places depending on how the debits and credits are recorded for the company. If a specific month is missing, this will appear as a reconciling item called "Missing Bank Statement."
Other
What is the typical threshold for investigation?
A 1% threshold over the entire period is used in the cash proof for further investigation. If the cash proof variance exceeds 1%, the Audit Sight team will review it as part of our internal quality control. Monthly variances over 1% are often caused by timing differences.
Can I run interim testing with the Cash Proof module?
Yes! The Cash Proof module is perfect for interim testing. It helps streamline the process by reconciling cash balances at key points during the audit, allowing you to address issues before year-end.
How does pricing work?
Our pricing is simple and flexible, designed to meet your specific needs.
📋 Pricing Structure
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Per Section, Per Entity, Per 12-Month Period:
- Pricing is based on the section(s) you choose:
- Revenue 📈
- Expenses 💳
- Each section is priced individually for each entity, covering a 12-month engagement period.
- Pricing is based on the section(s) you choose:
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Additional Fees:
- Reports exceeding 12 months may incur additional fees to account for the increased complexity and workload.
Why This Pricing Model? 🤔
This structure ensures flexibility and fairness by scaling fees based on the complexity of the engagement:
- Small Engagements: Lower fees for simpler scopes where we eliminate less work.
- Larger Engagements: Higher fees for more complex cases where Audit Sight eliminates significant amounts manual work for your team.
This model allows us to provide value at all levels of complexity, ensuring a fair cost for every client.
What if I need my cash proof updated because my time period changes?
We offer a complementary refresh for the Cash Proof module within 90 days (3 months) from the initial request for active engagements where the accounting system is connected. During this refresh the module fee is waived, however you will be charged for any necessary data conversion and consulting charges that may apply. This option accommodates situations such as a TAS deal that may pause for a month or two, new banking data received, or other normal adjustments. If you are outside of the 3 month window, you will be charged for a prorated cash proof.
*Please note that this complementary refresh policy is subject to change.
💡 Need Specific Pricing?
For your account’s detailed pricing based on your selected sections and needs, reach out to your Account Manager for a personalized quote.
What if I need help troubleshooting an issue with Cash Proof?
If you encounter any issues or need assistance, our support team is here to help. You can contact your account manager directly or reach us through our support portal or via email at support@auditsight.com.
