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AIA

Online software review: Validis. By Nigel Harris

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2nd Oct 2007
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Validis is a unique online accounts validation service that looks sure to make a big impact with both accountants and business owners.

It is the first of a number of software as a service (SaaS) solutions planned by developer Future Route, which has already put three years' work into the algorithms and technology behind Validis.

Validis: Key points
Hosted service for checking the quality and accuracy of accounts data using artificial intelligence algorithms.

Strengths

  • Easy-to-use, no-frills online service
  • Graphical dashboard presents results in clear, digestible format
  • Materiality control can filter minor errors from results report
  • Analytical Review tab includes options for comparing P&L reports from different months; data can also be downloaded to Excel for further analysis.

Weaknesses

  • Small client program required to interrogate different accounts databases
  • Use currently restricted to Sage, QuickBooks and MYOB. More data links are being developed.

Pricing

  • From £15 for a one-off basic report (£35 with review facilities and ratio analysis)
  • £595 for 26 full reports with team working and reporting (and £12 per report for additional reports after 26) - check with vendor for further bulk pricing arrangements.

Online delivery mechansim
I tested the Validis service using Sage Line 50 data. As a subscriber you can upload data for any client installed on your PC. Once you download a small utility from Validis and install on your PC, the system searches the default Sage data folders and gives you a list of available clients. The data set you select is then encypted and uploaded onto a secure web server, so security should not be an issue.

Validis examines the entire accounting data set to identify incomplete, inconsistent, inaccurate or invalid entries. It includes all years in the data file, so the analysis may cover a number of years all at once.

Results dashboard
In my case, it analysed 29,158 lines of data in six seconds and produced an informative summary which is displayed in a dashboard format. It revealed that I had:

  • 32 breaches of “Accounting Rules”, of which 11 were rated as high severity. The breaches included anomalies such as debit postings to share capital accounts, and other accounts where postings or balances appear to be "the wrong way round".
  • 48 breaches of “Trend Rules”, including 22 rated high. The software identifies the typical range of transaction values in any account and highlights instances of transactions outside that range. These are displayed graphically with the facility to view individual accounts and postings.
  • 3.12% (or 910 rows) of the total transactions were considered to be exceptional, and
  • A number of “Unusual Combinations” of transactions under eight headings – for example, journal postings to control accounts, VAT postings to wages accounts, non-VAT postings to sales and the like.

Clicking through each of the four sections reveals a breakdown of the dashboard summary and enables you to drill down to the original transaction detail. When an apparent anomaly is resolved you can mark it as cleared, which is useful when using the service on a team basis, as a client can be assigned to a team member for detailed examination and then the results can be reviewed by a manager or supervisor.

I didn’t have time to see this in practice, but the software is designed to ‘learn’ as you resolve items so that similar queries are not raised in future.

Materiality controls
I had disabled the Materiality feature so that all results were reported, irrespective of value. However, you can set a filter based on a percentage of sales, net profit, total assets or your own selected monetary amount. Using 10% of pre-tax profit as a materiality level cut the number of anomalies reported by half, which is something you would have to try with much larger data sets in order to make the results manageable.

Analytical reports
In addition to the Dashboard there is an effective Analytical Review tab which displays two profit and loss accounts and balance sheets with variances both in value and percentage terms. Interestingly, the two periods can be any two months, quarters or years within the data set, not necessarily consecutive or this year/last year. So if a comparison of say October 2006 and July 2004 would be useful to you, you can get it here.

The great thing about this report is that you get the whole thing on one easy-to-read screen, but you can expand the headings down to individual nominal account level (showing Sage account numbers), so it provides a very easy to use management reporting tool – certainly a better one than is available in the original software.

The whole report and the accompanying ratio analysis can then be downloaded as an Excel file, although a better way to communicate these results might be to issue the client or business owner with a password-restricted access to the Validis service which would enable them just to view the results themselves, ideal if you need to report time-sensitive data remotely.

Validis has two target markets: accountants who want to help clients improve the efficiency and quality of their accounting system and data, and end users who want a financial health check for their business. Accountants are clearly in a strong position to offer this service to their clients, or to package it as part of their own advisory services. For smaller firms it represents a very cost-effective tool to enable less-experienced staff to evaluate a client’s accounting data and quickly identify problem areas.

You may well be a QuickBooks or Sage expert, but what about MYOB? If you take on your first MYOB client you could use Validis to carry out the sort of detailed analysis that you may feel comfortable to do yourself on more familiar packages.

On the other hand, how much detailed checking could you do for the £15 entry-level price? I can see many firms adopting Validis as a cheap initial analytical review tool for audit and corporate work generally.

Support for different accounts programs
Validis is currently available for Sage Line 50 v.8-13 and Instant Accounts v12, QuickBooks Pro and Accountant 2005 and 2006 and MYOB Accounting and Accounting Plus v.15 and 16.

While the selection is initially limited to the big three small business accounting programs, the company plans to add further accounting packages in due course, right up to Microsoft Dynamics, Oracle and SAP. From what the company has been saying about the organisations it has been meeting recently, it also looks like you may start encountering Validis from a lot of different directions.

Pricing
Pricing is flexible and extremely reasonable – from £15 for a one-off basic report (or £35 with review facilities and ratio analysis) up to £595 for 26 full reports with team working and reporting (and £12 per report for additional reports after 26). The company will also quote for custom packages to meet a firm’s requirements.

Validis looks like a winner to me. Couldn’t Sage or Intuit incorporate this sort of technology into their own products? Probably, but there’s no indication that they plan to do so imminently, and there’s no long-term commitment if you subscribe to Validis, so it remains the only such service at the moment. If you’re interested in enhancing client advisory services and adding value to accounts work this represents a very low cost tool to enable you to do so. I recommend that you take a closer look at www.validis.com.

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By AnonymousUser
04th Oct 2007 01:04

Anaylsis of Comples Complications
The Americans have a term for accountants "Bean Counters" and for the vast majority of businesses that is all that is required.
Count the beans coming in, count the beans going out.

Over complexity of the financial system such that it requires analysis to verify its integrity is an aberation of the focused objectives to produce accurate numbers to satisfy legal requirements with minimum analysis to drive the financial decisions to improve the "Bean Count".

The majority of small businesses don't need or understand such complex packages. What they most appreciate is a simple spreadsheet approach to their accounts with all transactions visible and simple statements of profitability.

The DIY Accounting products do just that. Templates written on excel spreadsheets, 100% transaction visibility. Totally impractical for plc companies of course. Not true but only due to the practically of recording volumes.
Example, Northern Rock Plc.
Brilliant technological treasury system - I should know since I spent 2 years as part of the team developing that developed the software just over 6 years ago but at the end of the day sophisticated software is no defence against the movement of beans coming in and flowing out.

Simple excel templates with accounting conventions installed is the highly desirable solution for 90% of the small business market.

Terry
www.diyaccounting.co.uk

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By User deleted
03rd Oct 2007 09:34

Is the EXE signed ... ?
Because of the way in which this application seems to work '.. download a small utility from Validis and install on your PC ..' it should be imperative for the .EXE to be signed.

Any system that installs its own EXE which '.. system searches the default Sage data folders and gives you a list of available clients. The data set you select is then encypted and uploaded onto a secure web server ..' is potentially a high risk.

How do you actually know what the EXE is doing - it could be anything including harvesting passwords, personal data and so on ...

The only way to mitigate this risk is to ensure that the download is signed before installing - basically if it isn't then 'caveat emptor' and increase your PI accordingly

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By neildeakin
04th Oct 2007 09:57

Yes the exe is signed
Hi JC

Thank you for your comments and we understand your concerns about internet security – that is why we have taken every step possible to ensure that the highest industry standards are adhered to in every part of the Validis system to give our users peace of mind.

To address the issue with the executable:

The executable we provide is signed by a Verisign certificate which is an industry standard for applications of this type. This:

Ensures the software came from the software publisher - Validis

Protects software from alteration after publication

As far as transferring data from the desktop to the application our software encrypts the data you upload on your PC, it then transfers them to a secure web account that cannot be accessed by any user other than the duly authorised owner of the account, at any time. Consequently it is protected and in a safe and secure environment at all times. For this we use secure sockets layer (SSL) technology. VeriSign is the leading secure sockets layer (SSL) Certificate Authority and we work with them. More information on our certificate can be found here:

https://seal.verisign.com/splash?form_file=fdf/splash.fdf&dn=WWW.VALIDIS...

Validis servers live in a state-of-the-art data centre in the United Kingdom, run by a leading provider of hosting services used by many top-tier commercial banks. Our hosting partner is fully SAS 70 compliant – the highest level of procedural and security audit available in the data hosting industry. In addition, we work closely with security specialists that regularly conduct controlled penetration tests against our network and systems.

The data that is uploaded from the accounting application is only a copy of the chart of accounts and the nominal ledger – no other data is taken from the users PC. We are building a business to assist people in the maintenance and production of good accounting records and so are not interested in any data that does not help in this goal.

In addition we are working very closely with leading trade bodies such as the Institute of Chartered Accountants in England and Wales to receive accreditation very shortly.

I hope this answers your questions but please feel free to contact me if you require more information. Contact details can be found at www.validis.com.

Thanks for your interest and for raising a very important discussion point

Kind regards

Neil Deakin
Product marketing manager
Validis

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