What is Open Banking and how can it help the world of audit?
In 2021 open banking hit a UK high of 4.5 million users with 3.9 million of those being consumers and 600,000 small businesses, however despite the strong growth of open banking within the UK, many people still have never heard of the term. Open banking gives individuals and companies the ability to share current account information through third party providers to those provided with strict authority. Open banking is also safe and secure requiring your bank to check that the third party provider is regulated by the Financial Conduct Authority (FCA) before any data is shared.
So what data can you share through open banking? Open banking can be tailored however you like, allowing you to share as much or as little data as you wish. Third party providers have the ability to share all of the following data to the end user:
- Account information and balances
- Beneficiaries
- Direct debits and standing orders set up
- Data about transactions made
- Details of any products owned
Cash is a key area within an audit, hitting all areas of the process including risk assessments, controls testing, sampling, substantive testing, post year end testing and confirming the going concern status of your Scheme. The implementation of open banking within the world of audit will allow audit teams to access banking data in real time to review transactions, statements alongside verifying those transactions. Open banking will streamline tests and enhance the quality of testing completed, providing your auditor with direct reliable data and reducing your time answering multiple queries which arise as a result of review from bank statements.
Open banking can be tailored to your requirements as a client, providing access to banking data for a timeframe you only wish your auditor to see. Providing your auditor access to the date of signing will allow an in depth going concern evaluation to be performed.
Not only does open banking assist your auditor by providing a smooth audit process and reducing your time answering queries, but it also allows an in-depth review of your controls by matching transactions to cashbooks and identifying any issues. This will allow your auditor to provide you key findings and improvements to your controls and procedures.
What is your perspective on open banking, and would you be happy to provide your auditor direct access to allow a more automated process of auditing? Get in contact with us info@assureuk.co.uk to let us know your thoughts.