Processes and Controls to Help You Be Audit-Ready

Intro (00:00)

Today we’re going to cover a few things. For those of you who are completely new to Auxilius, we’ll give you a bit of an overview of the problem that Auxilius aims to solve and how we solve that problem, specifically through the lens of audit readiness. We’ll go into the features and functionalities built into the platform, how we help our customers and their auditors become familiar with the platform, and how we support you throughout the onboarding process. Finally, we’ll wrap up with a product demo, giving you a deeper dive into some of those features.

Please note that this session is tailored toward an audience interested in accounting governance and audit readiness. There’s a lot more in the product that we won’t cover today, by design, but if you have any questions about other features or functionalities, feel free to reach out afterward.

Challenges in Clinical Trial Financial Management (03:09)

Clinical trial financial management today, if you’re not leveraging a software solution, typically involves Excel. And when I say Excel, I’m talking about 50-tab Excel trackers as the norm. The challenge isn’t necessarily Excel itself; the challenge is the data inputs, the time crunch, and the complexity that make the process unsustainable and really tough to audit.

There are several key issues that come up repeatedly. One is inaccurate or incomplete data coming in from CROs at the end of the month or quarter. This isn’t necessarily malicious, but it causes challenges nonetheless. Another is the lack of timely information. Even if the data is accurate, many customers struggle with the turnaround time. If you’re getting that vendor confirmation file on the last day of close, it’s really hard to take a proper look at that data in context and exercise the judgment needed to estimate an accrual.

Another issue we see is reliance on business partners who speak clinical. These folks are smart and responsible for running the trial, but they don’t always provide the financial information you need in a timely manner. This creates a perfect storm of challenges, and that’s why we created Auxilius.

Purpose of Auxilius (04:49)

Auxilius was built to solve the specific problems faced by biopharma companies in managing clinical trials. We help answer three main questions.

First, what do I expect to happen in my study? This is the classic FP&A, forward-looking question, which you might think doesn’t affect the accounting side, but in our view, it’s critical. Having an internal forecast grounded in clinical evidence helps corroborate the data you’re receiving from vendors.

Second, what is actually happening in my study? This is our bread and butter, and it’s why we’re on the call today. We focus on tracking accruals and prepaid positions across all of your vendors in the outsourced ecosystem. This isn’t hard to do in theory, but in this category of spend, with its high materiality and reliance on external vendors, it’s a complex challenge.

Third, what is driving the variance between what we expected and what is actually happening? This is a vendor accountability question, but it also drives further accuracy in your accrual calculations. By understanding where these variances are coming from, you can improve your overall expense estimation.

Within the system, we also focus on investigator spending, which can account for 30-50% of your overall study budget and is typically the most volatile cost. We built a proprietary Investigator Intelligence Module to handle this specific issue, leveraging key data sources like site CTAs and the schedule of assessments, and marrying those with your actual clinical data to provide real-time insights into investigator costs.

Process and Controls to Support Audit-Readiness (07:57)

The Auxilius system was designed with process and controls in mind. During my career, I have reviewed many financial systems, some great, some not so great. So it was definitely a prerequisite for me to join Auxilius to have confidence in the auditability and the robust controls built into the Auxilius system.

Six controls built in to the Auxilius system to support audit-readiness:

1. Feature-level permissioning: The first thing that I'll call out is our feature-level permissioning that allows for proper segregation of duties. So, each feature within Auxilius, you are able to assign specific permissions to any user in the system. That way, you can allow for their preparer and reviewer workflows within your close process.
2. Comprehensive close checklist: Along with that, we have a comprehensive close checklist with automated document reminders. This helps ensure the completeness of the inputs going into your accrual calculation, as well as helps facilitate review for accuracy of your final journal entry.
3. Documented approval workflows: And then within that close checklist and within other features and product, we do have documented approval workflows. So you're able to sign off on your review of those different inputs into the model, into your journal entry, and that all will flow into your monthly audit package.
4. Monthly audit package: When you close a month, the system will auto-generate a zip file that has all the inputs into your final journal entry for the month, as well as the source documentation that was used to calculate your journal entry.
5. Journal entry traceabiliy and reproducibility: So not only are we able to see all of the inputs and the numbers that go into your accrual for the month, but all the source documentation from your vendor or those change orders or your site contracts—those will pull into the audit package each month. So, from an audit perspective, all the information that you need to test that clinical accrual is packaged up into a nice little file for you on a monthly basis.
6. Direct integrations for data completeness. So we're able to integrate directly with your ERP system. As you all know with clinical accruals, invoices are a major input into the accrual calculation. So, being able to connect directly with your ERP and pull in that data to our system helps ensure completeness from an invoice standpoint.

Auxilius also has its SOC 1 Type 2 and SOC 2 Type 2 reports, which is huge from an audit perspective. Also, on the SOC 2 front, we have configured single-tenant environments that are fully encrypted with secure, robust information security programs, and we also enable SSO configuration for that added security benefit.

Configuration and Data Models (10:44)

Now we’re going to walk through the core functionality of the system so you can see the inputs into the system and what’s coming out. The key is that we’re configuring at the trial level, and the data models are specific to each sponsor’s trial.

One thing I want to note is that this is surface-level configuration. There’s no forking of the code base, no code-based customization for any of our customers. We configure based on the design of the system.

You’re going to create a budget data model that incorporates all the vendors supporting the trial, so you have a comprehensive view of what’s happening on the budget side. We incorporate change orders, change notification forms, vendor confirmation files, your upfront work orders, and any change orders that are coming in.

On the other side of the budget data model, data comes directly from the ERP. We need those invoices; we need those POs.

On the clinical data model side, we’re configuring by leveraging your site CTAs and specific schedule of assessments to build the longitudinal patient visit schedule. We’re also coding in all the invoicables. We marry those with the EDC information that’s coming in, and we have a very standard pull of data that we require. This gives us the view of what’s happening and enables us to translate what’s happening on the clinical side into the financial.

All of that information then flows into the actual workflow. We have that expense estimate side of the equation, and then we’re getting the invoice side of the equation. This results in your journal entry and then results in your accrued or prepaid position across your entire GL or the permanent part of your GL that we configure to reflect your specific GL structure. You’ll get that journal entry export file, and that can be uploaded directly into your ERP.

Now, this is one of those places where we can integrate with a third party to automate that upload into the ERP. However, generally speaking, our customers prefer to have the journal entry export as a control around that final check, and then upload it into their ERP.

Auditor Engagement and Support (13:05)

It is important to highlight that we have an auditor engagement roadmap in place. There are many steps that we support our customers on in terms of driving auditor engagement and awareness throughout the implementation and hypercare periods.

We have a lot of off-the-shelf documentation and other standard engagement practices when it comes to supporting auditors:

• We give you a governance overview, certainly in the sales process if required, and then it’s part of our implementation onboarding materials. You’ll get process flowcharts that give you a comprehensive sense of what’s required as inputs and what you get as an output from the system.
• As Christy mentioned earlier, we also have SOC 1 and SOC 2 reports available off the shelf.
• We have on-demand auditor video content—very similar to what you’re seeing today—that your auditors can access anytime.
• We’re also always willing to jump on the phone with your auditors to walk through the system, go over the design, walk through the features and functionalities, and answer any questions they might have.
• Other resources outlined in the table.

Generally speaking, we see that this is really successful for our customers, particularly in the hypercare period. So, our implementation consists of an onboarding period where we’re building out your clinical and budget data models, followed by a parallel close where you have access to our service team in what we call the hypercare period. During this period, you can actually see the variance between your current workflow and the Auxilius workflow. That’s a really great time to get your auditors into the system—or at least have them view the system, look at the outputs, and get comfortable with any variances between the old workflow and what they’re seeing in Auxilius. They’ll also get a good sense of the methodology behind the system.

Here are some examples of how Christy has supported auditors in the past:

The first example is where we did a full mapping of the Auxilius system to the customer’s internal controls around clinical accruals. We walked through with their advisory team a full risk control matrix. What we found during that process was that using the Auxilius system in the accrual process mitigated 90% of the risks around clinical accruals. The remaining key controls were around the actual import of the journal entry into the ERP system. We’re always happy to help with your internal controls and documenting the process of using Auxilius for clinical accruals.

I’ve also led auditor walkthroughs for customers. If auditors want to hop on a call, I’m happy to show them how the system works, where the numbers come from, and how everything is calculated into the final journal entry.

Additionally, I’ve supported customers with their final audit packages by helping explain where the inputs came from, how things are configured, and helping auditors get familiar with the structure of the evidence they’ll be reviewing as part of the audit process.

That concludes the overview section. The goal was to ensure you understand that Auxilius is not just solving the problems that the industry is facing when accounting for clinical trials but also how the platform’s features and functionalities support audit readiness and help you get comfortable with the journal entry preparation process. Additionally, we wanted to ensure you know there is ample support available in terms of governance programs and auditor engagement as you start relying on the system.

Product Demo (Not Included in Video)

We're going to jump into the product demo. This is geared towards giving auditors a better understanding of how the system is constructed and some of the core features and functionalities that will help you understand how the companies you’re auditing are using Auxilius.

Our main goal is to ensure that there’s no black box. What we’re doing with Auxilius is supporting the preparation of the workbook—the heavy-lift manual work required to prepare clinical accruals. We’re streamlining the process while ensuring that you, the end-user, retain ultimate control over the resulting journal entry.

Shift in Workbook Preparation

The goal is to shift from spending 40 hours on Excel workbook preparation—ingesting data and mapping vendor estimates—over to actually exercising judgment around expense estimation. That time can be spent reviewing the data and asking, “Does this make sense? Is this the best source of evidence for my expense estimate?” That’s the value Auxilius aims to provide.

We’re going to focus today on that end-to-end period close workflow. You’ll see the recurring themes of vendor accountability and internally-driven expense estimation throughout this workflow.

Closing Checklist

We’ll start by walking through the closing checklist, which outlines all the steps required to complete the close in our system. All the relevant information is reviewed, signed off, and locked down by the appropriate people within the organization to ensure the completeness and accuracy of the downstream journal entries.

The key report covered in our SOC 1 is the resulting journal entries, and that’s by design because the journal entry captures all the upstream inputs. Everything we’re walking through today is covered by definition in the resulting journal entry report, which is why it’s deemed the key report.

Document Provisioning

We’re starting with the gathering of documents step in the checklist. The system prompts you to ensure you’re signing off on all documents required to prepare the journal entry. This includes things like change orders, purchase orders, new vendors, or budgets. The goal is to always have the most up-to-date view of what you’re contractually obligated to at any given period.

New Document Gathering Feature

One new feature that I’m excited about, which is rolling out next week, is related to document completeness and accuracy. You’ll see in your checklist a new capability where you can input the control language for each step in the process. 

If you click into the review invoices step, you’ll see that we’ve implemented two types of comments within the checklist. On the left-hand side, we have comments and instructions that persist month over month, allowing you to input your specific control language around each step of the process and provide instructions on how to complete the control.

On the right-hand side, there’s a space to document findings during your review. This allows auditors to see what you reviewed, your findings, and any back-and-forth comments within the checklist. This is a super helpful feature for tracking different levels of approval over each step in the checklist. I’m really excited for this feature to roll out next week.

Notes and Documentation

Anyone with access to the checklist can come into that step and add their notes. This will also help enable some of the other documentation you need to do, like your balance sheet fluctuations and things like that. You can pull this into the additional documentation you need for your audit as well.

One key thing to note here is the persistence of those notes, particularly for controls documentation. The cool thing about the checklist is that it’s always longitudinally available for historical periods. So, I can go back into historical periods and see not only that the task was completed, but also the notes associated with that task.

You’ll see here, I can go back to any historical period and see who locked each item in the checklist. All right, we’ve covered that document gathering component and the new feature that enables note-taking and documentation.

Integration with ERP

Now, let’s talk about the next part of the process: integrating with your ERP. Our goal is to directly integrate with your ERP system. We have live integrations with most of the ERPs in the ecosystem: NetSuite, QuickBooks, SAP, Coupa, Bill.com, and more. We ensure that the data completeness is covered on the invoice side by pulling in all the relevant information from your ERP.

The key here is that all of these features are permissioned. So, I have the permission to unlock invoices, but there’s also a locking and unlocking mechanism that’s stored in our audit history. If I have the permission to lock something, I can lock it, preventing any more edits to the invoices. This is all stored in the audit log for transparency.

This is a one-way integration from the invoice standpoint. We’re not overwriting anything in the ERP, but we do allow for that flexibility of Excel. You can come in here, pull your invoices across periods, and adjust the accrual period within the system, which is noted in the audit log as a change within the system. This way, an auditor can see what’s happening and trace the changes made in the system.

Invoice Upload and Completeness

On the invoice side, we know that many customers generate a report out of their ERP and upload that report as a flat file into the Auxilius system. We guide our customers to integrate directly for completeness. However, we do support both bulk and single invoice uploads for those who prefer to use that method.

Flat File Upload and Control

As Christy mentioned earlier, we provide the flexibility to apply controls for invoice review if you’re still generating reports out of your ERP and ingesting them into Excel. That way, we can ensure that all invoices are accounted for and properly integrated into the system.

All right, we’ve talked through the document gathering and invoices steps.

Investigator Intelligence Module

Now I want to briefly touch on the Investigator Intelligence Module. This cost category is 30-50% of your overall study budget, depending on your trial size and P&L structure. Investigator costs are volatile and variable, making them hard to estimate and manage. Auxilius addresses this issue through proprietary technology that pulls in clinical data to give real-time insights into investigator costs.

We integrate your site CTAs and schedule of assessments to build a longitudinal patient visit schedule. We pull in contracted costs across the visits, as well as invoicables that tend to drive volatility, such as annual pharmacy fees and investigator salaries.

Clinical Data Model

We split investigator invoicables into two buckets: those observable in clinical evidence and those not observable, like an annual pharmacy fee or investigator salary. For the unobservable costs, we enable you to schedule those expenses, amortizing them over the study period.

All of this is pre-configured during implementation and can be updated on demand.

Life-to-Date View of Study Costs

With this clinical data model, you’re getting a life-to-date, transaction-by-transaction view of what’s happening across your study. We focus only on de-identified patient data and clinical evidence of visits and procedures, avoiding sensitive data like safety and efficacy information. The key is to give you the evidence that an event has occurred so you can accurately track the associated costs.

Our goal is for your auditors to be able to trace every dollar back to the site contract and clinical data. The Auxilius system ensures that all this work is automated and traceable, saving you from manually tracking and calculating costs.

Ingestion and Mapping of Data

The ingestion, mapping, and translation of the data into the investigator transaction screen are automated and covered under SOC 1. The system pulls in all the relevant clinical data and automatically maps it to the financial data. We ask customers to sign off on this data as an input to ensure completeness and accuracy. This acknowledgment is part of our user entity controls under SOC 1.

By signing off, you confirm that everything is correct, giving your finance team and auditors confidence in the accuracy of the data.

Expense Estimation and Comparison

Next, let’s talk about expense estimation. Auxilius allows you to compare various sources of evidence, such as vendor estimates, internal forecasts, and vendor confirmation files, to determine the most accurate expense for the prior period.

You can also adjust for out-of-scope units and amounts. If you have additional activities that weren’t in the original contract, we allow you to create adjustments or treat them as out-of-scope vendors.

Accounting for Out-of-Scope Units and Accruals

If an activity is outside the original contract, you can either account for it within the line item or create a separate out-of-scope vendor. This allows you to isolate those out-of-scope activities and ensure they’re accounted for without double counting.

We also enable you to upload supporting documentation for these adjustments, which is automatically included in your end-of-month audit package.

Confirmation and Adjustments by ClinOps

One of the strengths of our system is the ability to have Clinical Operations (ClinOps) come in and confirm their part of the process. ClinOps can adjust the data based on their knowledge of the clinical activities, and we require that they document those adjustments for the auditors.

Summary Page and Attributes Configuration

We have a summary page that shows your life-to-date expense, invoice, and resulting accrued or prepaid position across all your vendors. These are tagged to specific attributes, enabling us to configure the system to your GL and integrate with other systems in the ecosystem.

When you close the period, the system ensures that you’ve completed all the checklist activities before generating the final journal entry report.

Monthly Audit Package and Journal Entry Report

Once you close the month, the system generates an audit package. This package includes:

• The period close checklist, documenting who reviewed and signed off on each step.

• A full in-month adjustments table, showing the inputs and outputs for each vendor.

• All supporting documentation, such as vendor estimates and invoices.

• The investigator transactions table, showing the detailed breakdown of costs by visit and procedure.

• The forecast methodology, explaining the logic behind your forecast and the associated clinical data.

The system locks the audit package into a zip file, preventing any modifications after the month is closed. All files are stored in the document library for easy access during audits.

User Permissioning and IT Control Requirements

We provide customizable user permissioning, allowing you to define roles and access levels for each team member. For example, you can restrict IT admins from accessing sensitive financial data while still enabling them to manage the system’s infrastructure.

These roles and permissions are set during implementation, and you can export the permission settings as supporting documentation for audits.

Audit History

The system maintains a longitudinal audit history, capturing every change made within the environment. This ensures that any adjustments, permissions changes, or data updates are fully traceable, providing complete transparency for your auditors.

The audit log is available for review at any time, giving you and your auditors confidence that everything is properly documented.

Closing Remarks (17:04)

My big goal is that our customers and auditors understand there is no black box. What we're doing is supporting the preparation of the workbook, streamlining that preparation process while ensuring ultimate control over the resulting journal entry.

Our goal is to shift the forty hours of Excel workbook preparation, the ingestion of data, and the mapping in of those vendor estimates, which can be bad from the CROs, to actually exercising judgment around that expense estimation. Taking the time to ask, does this make sense? Is this the best source of evidence for my expense estimate? Hopefully, that's what you'll see coming out of the system.

If you're one of our customers or potential customers and want your auditor in the system, maybe not in your environment, but we can show them a demo environment and give them some exposure.

One final plug, since we have so many of our current customers on the call: let us know if these sessions are helpful or if there are specific content sessions we could provide, and we're happy to do that.

With that, we’ll wrap up. If there are any questions or if you’d like to get your auditors into the system for a more detailed review, we’re happy to assist. Please take us up on the offer if you’re one of our current customers or a potential customer and want to get your auditor in the system for a demo or deeper dive.