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Before AI can populate a current-year lead schedule using the TB and prior-year lead, what does it need to understand?
The chart of accounts and how current-year GL accounts map to the prior-year lead schedule.
The balance sheet reports debt of $25.4M and the debt footnote also reports $25.4M. What has AI confirmed?
The debt balance on the face of the financial statements agrees to the related footnote.
Copilot notices that Selection #7 has testing documented but no conclusion. What should it identify?
Missing or incomplete audit documentation.
Account 61005 was called “Professional Fees” in PY but “Consulting Expense” in CY. The underlying activity is unchanged. Should AI automatically identify this as a new account?
No. AI should recognize that the account may have simply been renamed and confirm the underlying account mapping.
The PPE footnote reports depreciation expense of $3.7M, while the statement of cash flows shows a $3.5M depreciation add-back. What should AI do?
Flag the $200K inconsistency for investigation.
An EGA includes supporting evidence for a $500K selection but doesn't explain what was inspected or which attributes were tested. What's missing?
Documentation of the procedures performed and attributes tested.
Three PY accounts were consolidated into one CY GL account. AI identifies a $2M variance because the new account doesn't individually match any PY account. What went wrong?
AI failed to account for the change in the chart of accounts and properly map the consolidated accounts.
Note 8 says “See Note 12,” but the related disclosure is actually contained in Note 11. What should AI identify?
An incorrect financial statement cross-reference.
The EGA concludes that revenue was appropriately recognized, but the only documented procedure agrees the invoice amount to the GL. What's the issue?
The documented audit evidence does not support the conclusion reached.
Travel expense increased by $800K, but $750K relates to costs reclassified from another GL account. How much of the apparent increase represents a true YoY variance?
Approximately $50K. The remaining $750K is a classification change rather than a true economic variance.
PPE per the balance sheet agrees to the PPE footnote, and depreciation per the footnote agrees to the cash flow statement. However, depreciation per the audit EGA is $300K lower. What should AI flag?
The $300K difference between the supporting audit documentation and the draft financial statements.
Copilot identifies an unexplained difference between the testing population documented in the EGA and the underlying supporting file. What should the auditor do?
Investigate and resolve the difference rather than automatically accepting Copilot's conclusion.
AI automatically maps the TB into your lead schedules and identifies all significant YoY fluctuations. What should the auditor do before relying on the completed lead?
Validate the account mapping, completeness and accuracy of the TB, and whether the identified fluctuations represent true variances.
AI completes the entire FS tie-out and reports zero exceptions. What still needs to happen?
The engagement team must review and validate the AI's work and determine that the financial statements were appropriately tied out.
Copilot reviews an EGA and finds no issues. Can the preparer mark the workpaper complete solely based on Copilot's review?
No. The preparer and reviewer remain responsible for determining whether the EGA contains sufficient appropriate documentation and supports the audit conclusion.