Does Implementing Auxilius Ever Result in Materially Different Accrual Estimates?
by Erin Warner Guill on Aug 29, 2024 9:03:04 AM
We at Auxilius talk a lot about accuracy as a key benefit of the Auxilius platform. After all, ~70% of new customers do find cost discrepancies!
With that in mind, it is reasonable for potential customers to wonder if their numbers will be drastically different after implementing Auxilius, and what that means for their audit process.
We thought it’d be helpful to clarify some key aspects of implementing Auxilius, and what it means (and doesn’t mean) for your key processes and results.
The answer breaks down into three points:
Auxilius is designed to support your existing processes and methodologies, and does not require specific methodologies- To-date across our 60 customers, we have never had a customer need to restate their financials because of switching to Auxilius
- Auxilius can support a methodology switchover when and how it's appropriate
- Auxilius supports methodology switchover if, when, and however it's appropriate
See below for a full explanation across these points:
1. Auxilius is designed to support your existing processes and methodologies that you and your auditor are already comfortable with.
The system does not mandate or require any specific methodology, and instead is built to automate and scale whatever methodology you choose – including your current methodology. Our goal is to streamline that whole effort around the fifty-tab Excel preparation versus coming up with an entirely new number. On day 1 post-implementation, the Auxilius system could exactly mirror what you have in your Excel workbook.
We’ve built the features and functionalities to support the following methodologies including:
- Taking vendor confirmation as source of truth
- Using an internally derived forecast
- Using a vendor provided forecast
- Amortizing contract value across contract period
- Historical context as the basis for in-period expense estimate
- Investigator specific: Using EDC and/or other clinical data sources to determine expense to date
In sum: Because we typically adopt an organization’s existing methodologies, any difference in expense estimates tend to be immaterial and due factors other than large methodology changes.
2. Across our 60 customers to-date, we have never had a customer need to restate their financials because of using Auxilius.
With that said, we generally DO encourage customers to look at their vendor confirmation files. By onboarding those vendor confirmation files into our system, we find that ~70% of vendor files have errors in their reporting. These errors can range from rounding errors to activities missing in budgets or evidence of double billing/double expensing.
Generally speaking, our customers will go back to their vendors requesting updated vendor confirmation files and we will true up the budgets in the system to reflect the accurate vendor reporting. We have not yet seen that any of the issues we’ve uncovered resulted in a financial restatement. If we did identify a material difference, we can provide the documentation that supports the variance between the Auxilius derived estimate and the vendor reporting to give auditors transparency into the delta. We’re increasingly hearing from auditors that scrutiny of vendor confirmation files is important.
As one of our customers recently said, “It’s not the CRO’s priority to project expense numbers. That’s not their main job.” Inherently, this customer recognizes what we all know to be true: The vendors are focused on their own revenue recognition requirements while trying to give their customers detailed information in a time crunch.
3. Auxilius does support methodology switchover when and how it's appropriate.
We understand that teams may want to evolve their methodologies over time, and Auxilius is designed to support those changes seamlessly. For instance, if you decide to switch from a straight-line amortization model to vendor confirmation files as your basis for expense estimates, Auxilius makes it easy to compare the outcomes of both methods before making the transition. This transparency ensures that your auditors stay comfortable with the process, and that you have all the necessary documentation to explain any differences.
Ultimately, Auxilius empowers you to make these transitions while maintaining accuracy and transparency, helping to streamline the process without any surprises.
Conclusion
Auxilius is designed to support and streamline existing methodologies that you and your auditors are already comfortable with. Thus, it is highly unlikely that switching to Auxilius would result in material discrepancies in accrual estimates. In fact, we have never had a customer need to restate their financials as a result of switching to Auxilius. While the integrated platform often detects errors from vendor reporting, these discrepancies can be resolved without restating financials.
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