How API delivered bank data can improve auditing

Imagine if you could streamline the auditing process with automation, eliminating inefficiencies and ensuring seamless data management. How to collaborate with your business, clients, or bank to tackle this data challenge and unlock the full potential of reliable financial accountability?

In this blog, you can read how audit firm KPMG receives complete transactional data of their audit client, using Circit’s Verified Transactions, powered by the Business Account Insight API of ABN AMRO. 

Every business transaction, whether it's purchasing, sales or payroll, ultimately results in a corresponding bank transaction. These bank transactions serve as crucial, independent evidence that links various financial activities. Most organizations are required to provide financial accountability every year, ensuring that their financial statements are accurate and transparent. This accountability is key to maintaining trust with stakeholders, regulatory bodies and investors.

However, the management and linking of this data is not always well organized. When bank transactions are poorly handled or not properly aligned with business activities, auditors struggle to verify financial data. This creates inefficiencies in the audit process and undermines the reliability of audit evidence, jeopardizing financial accountability. The preparation and approval of the annual report is both an intensive and meticulous job, all for the purpose of producing a fair view of the company’s financial position.

Auditor KPMG is always looking to maximize the use of data in their data-driven audit strategy to improve and innovate their processes. KPMG was an early adopter in using payments through Circit, and the payment details that were collected from this were used as external audit evidence. Initially, this was through Circit’s PSD2-based API connections. However, with the extensive usage of batch payments in the Netherlands, another challenge arose, as the PSD2 transaction data payments are only shown on aggregated amounts, without the details of the individual payments. This led to manual work for the auditor and the organization being audited in order to obtain the required insight into the batch details.

The KPMG Audit team wanted to automate the retrieval of bank transactions, including batch transactions, without the need for any manual data cleanup, aiming for an efficient process for the auditor and the organization being audited.

Circit, in their mission to support audit firms in being able to ‘trust every transaction’, was determined to solve the batch detail issue for auditors in the Netherlands and leverage their banking relationships.

KPMG’s audit client, having its main bank accounts at ABN AMRO and being a leader in Data Services, directly experienced how innovative technology can save time and improve the process of the audit.

In the field of commercial APIs, ABN AMRO has a leading position in the Netherlands. One of the APIs in its portfolio, the Business Account Insight API, supports transaction data, including batch details. As this API was originally designed for business clients to connect directly, ABN AMRO aimed to innovate the API and to make the exchange of data available for more use cases. To that end, ABN AMRO recently  launched the ‘Bank Connectivity’ capability. This means that (trusted) third parties can connect with their commercial APIs. 

Circit facilitated KPMG Netherlands to receive complete transactional payment data for their audit client by using ABN AMRO’s Bank Connectivity. Circit connects to the Business Account Insight API, including the Batch Transaction Details add-on, and with the explicit approval of the audit client, Circit is able to retrieve the data and make it available in real time to KPMG.

Circit's ‘Verified Transactions’ was extended to allow ABN AMRO's detailed data to be included in the same standardized format as all other Circit bank connections, making it seamless for KPMG to also ingest the additional batch payment details with built-in reconciliation.

This automated approach results in the following benefits for the auditor and auditee:

• Data-driven audit strategy with full access to all payment transactions, including detailed batch payments.
• The standardized data format eliminates the need for manual cleanup, ensuring immediate high-quality datasets.
• Comprehensive availability of relevant payment details for auditing purposes.
• Time savings throughout the entire financial audit process.

In addition to data analytics, KPMG was able to innovate the audit strategy from a sample-based approach to procedures that test all payment transactions, reducing the time required and increasing the audit coverage by enabling full population testing.

This collaborative initiative by KPMG, ABN AMRO, and Circit has successfully streamlined the process, which resulted in a true win-win-win project to successfully streamline the process of providing comprehensive bank data, benefiting all parties involved.