Audit Analytics delivers timely, in-depth audit and compliance research on over 20,000 public companies and 1,500 accounting firms. Mark Cheffers, CPA, ABV, CEO & Founder of Audit Analytics, spoke to Alacra regarding their services and the unique depth and breadth of experience of their staff.
Tell me about Audit Analytics.
We provide detailed research on over 20,000 public companies and 1,500 auditing firms. We read, analyze, and extract key information from public company filings that many analysts find tedious and sometimes uninformative. By focusing on qualitative reporting areas related to audit, internal control, compliance, restatements, and litigation, our reports save the reader substantial amounts of time by focusing on the issues that matter. Our data form a standard part of any due diligence process.
What are some typical uses for Audit Analytics?
Readers of our reports get up-to-date access to over 15 different qualitative risk metrics. Our dashboard and drill-down approach allow the reader to quickly “connect-the-dots.” For example, a company may have a cash flow restatement, auditor dismissal, CFO resignation, and an accounting-related class-action lawsuit occur seriatim within 3 months of each other. In some cases, an analyst can see at a glance that a company has disclosed problematic audit, compliance, and legal issues.
What makes your content unique?
No one else tracks the data we collect. Our taxonomy tags are deep. Readers see the real issues related to a particular event. For example, our restatement dataset contains more than 50 taxonomy items (revenue recognition, FAS 109, FAS 95, etc.). Most importantly, all of our taxonomy tags are categorized by human analysts. We do not waste time with false positives, text search results, or improper categorizations. We provide links to the applicable disclosures, so the reader can gain additional insight.
How would you describe your coverage?
We cover every public registrant required to file with the SEC, large or small, active company or blank check, operating company or fund. Our taxonomy tags cover all of our datasets, with an average size of more than 50 categories.
What do customers like best about Audit Analytics?
Our customers like our dashboard approach that instantly delivers a summary of qualitative events and reporting issues that matter to any due diligence review. Drill down data is also important. In addition, we provide a red flag format for extracting and highlighting unusual and non-standard information.
What business trends are you spotting among your customers?
Most analysts and professionals have a very low tolerance for inaccurate or false positive data. No automated system can deliver what we can. Our system combines the best of automation with the judgment of a qualified analyst. Our customers almost always renew, indicating that once a customer starts incorporating our datasets into their analytical flow, they come to rely on it.
How has your business changed in recent years? What changes do you expect in the coming years?
We grow by adding new datasets, most of which have been requested by our customers. We have several new datasets coming soon. For example, SEC Comment Letters, restatement quantitative information, and related-party activities. We expect to grow as SEC disclosures become more complex.
Tell me about your editorial staff. What types of backgrounds do they have?
Our Research Director came to our organization five years ago after spending ten years as a certified engineer and ten years as a lawyer. His expertise and attention to detail and legal background have allowed us to enhance our research process. I personally am intimately involved in the design and development of all of our datasets. My background as a CPA at PwC, as a forensic accountant, and as a public company CFO has enhanced my perspective on how and what information should be extracted for due diligence purposes.
How has the credit crunch impacted your market?
During times of economic turmoil, analysts and risk assessors tend to move away from standard due diligence activities and look for new and better ways to accomplish their goals. We benefit from this type of fresh outlook.
What sorts of interesting or unexpected uses of your content have you seen?
We have been surprised by the extent to which our data and research have been used to address public policy issues associated with corporate disclosures and financial reporting.
What might surprise your customers to learn about Audit Analytics?
We have become one of the foremost experts in the area of accounting ethics. We are fortunate to have a Harvard PhD in philosophy on staff. As a result, we have been able to promote a greater understanding about the critical role that “truth” plays in all accounting decisions. This extends to questions in accounting about the role of rules and principles, as well as character and virtue and public interest and policy.
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