Corporate iXBRL drives CaseWare Growth
UK managing director Simon Warren said the need to file iXBRL format accounts with their Corporation Tax returns from April 2011 triggered serious corporate interest in accounts production that the company was well positioned to serve.
"People were really nervous about iXBRL. We identified the prospects and made a point of giving them a clear explanation of what it is. That went down well," he said.
CaseWare's core business is still in the practice market, but for the moment corporates represent 40% of new business, Warren said. "Many organisations made quick decisions to deal with iXBRL in the first year, and will look at software solutions more seriously when they have more time."
The corporate iXBRL surge was confirmed by Vipul Seth whose AdvanceTrack outfit has been serving the sector directly and as an outsourcing partner with accounting firms using a variety of accounts and tax tools.
"People either bought a year by filing early or outsourced (to a manual provider) and we picked up a lot of that work. "But it's a limited market," Seth explained.
"Although 90% of clients went the tagging route in year one, large corporates worked out that they can't afford tagging, whether direct or via accounting firms. It's a two-year market at the most."
But the market for iXBRL-compatible accounts production software is nowhere near finished said CaseWare sales and marketing director Shez Hammill.
"When people replace Excel and Word, because of the savings they realise it's something they should have done 10 years ago. We're seeing pent-up demand spreading through companies and audit networks across Europe.
Apart from being ready with a viable system early, CaseWare had an advantage in the corporate market because of its presence within many of the audit networks. "It's almost a warm recommendation," Hammill claimed.
"From the auditor's point of view, fees are under significant pressure, so there's an advantage for an auditor who uses CaseWare to recommend it. They can say to clients, 'If you do more of the work and make it simpler, we can hold our fees down.' The software allows corporates to improve internal controls and mitigate audit costs."
According to Hammill, "Everything is going paperless" as it becomes less competitive to retain paper-based systems.
Audit will never be fully automated, he admitted, "Because that would undermine the whole basis of audit - which is judgement.
But increasingly complex financial reporting standards and demands for efficiency are intensifying the pressure for automation. The result, he said, was "Shorter, more risk-focused audits are becoming more prevalent. Paperless methods can trim out unnecessary work so auditors can focus on what they need to focus on.