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The Financial Web, Continuous Certification and Banking

Posted 8 years ago in Advisors by
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I sat down with Sholto Macpherson at Xerocon last week to discuss The Financial Web, the Assurance Dashboard, Continuous Certification and how we plan to help small businesses get access to lending and capital.

In this video we are introducing a number of new concepts:

The Financial Web

The Financial Web is the growing electronic connectivity between small business, accountants and Financial Institutions. If we can make it easier for small business to get capital or funding they will grow. But for banks, the small business market is fragmented, expensive and risky.

Cloud accounting coupled with electronic connectivity aggregates small business, provides almost real time information and reduces transactions costs. As we connect Financial Institutions with small businesses we believe there will be a myriad of opportunities to help grow small business including lending, insurance, factoring, currency services and much more.

Assurance Dashboard

Desktop accounting requires a lot of manual intervention. In contrast cloud accounting has secure electronic connections from trusted or secured parties. This includes banks and other Financial Institutions as well as bills and invoices from customers and suppliers. Well designed accounting software includes controls that also assist with integrity. The Assurance Dashboard is a collection of tools that allow an  an accountant, bookkeeper or financial advisor to gain confidence in the integrity of financial information as well as a a number of audit tools.

Continuous Certification

Continuous Certification is a new concept Xero is championing. Not a full audit, Continuous Certification would be a new status of reporting where Accountants are comfortable saying the numbers are accurate to a level that banks are happy with. This is enabled by well designed accounting with good controls, alerts and assurance tools. We’re just at the beginning of this journey and welcome feedback.


Denis Breen
August 27, 2015 at 1.56 am

Why not just jump ahead of third party banks and create a Xero bank – set your own parameters for continuous certification, credit approval etc.

Rod Drury
August 27, 2015 at 8.08 am

Hey Denis,

Plenty of people ask us that actually.

We think that small businesses will have multiple banks and the prize is getting capital and lending to small business. Banks are incredibly complex and very regulated. We believe we can more of a positive impact working with them to create services that we can consume and extend.

We also like the financial controls of Xero doing money workflows but final money movement being done securely by banks.

We do follow closely new banking entrants. While small they are driving innovation.

Our view is making banking better is a tide that raises all boats, but that is for others. We are pushing banks hard to open up these new services though.

Jordan S Zoot
September 10, 2015 at 11.56 pm

Continuous Certification is a new concept Xero is championing…..IT IS RUBBISH!!! Does anyone within the Xero Ecosystem understand what an adit entails when it is performed pursuant to something called GAAS – GENERALLY ACCEPTED AUDITING STANDARDS? In the United States, the only professional permitted to perform an examination of financial statements [or a review for that matter is a CPA], in most of the Commonwealth countries it would be an FCA or and ACA….keeping in mind that from my perspective as a US CPA, the AICPA doesn’t recognize CPAA – CPA Australia or the ACCA in the UK.

Succinctly, GAAS states

The auditor must maintain independence in mental attitude in all matters related to the audit.
The auditor must have adequate technical training & proficiency to perform the audit.
The auditor must exercise due professional care during the performance of the audit and the preparation of the report.
Standards of Field Work[edit]
The auditor must adequately plan the work and must properly supervise any assistants.
The auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures.
The auditor must obtain sufficient appropriate audit evidence by performing audit procedures to afford a reasonable basis for an opinion regarding the financial statements under audit.
The auditor must assign qualified personnel to the engagement.
Standards of Reporting[edit]
The auditor must state in the auditor’s report whether the financial statements are presented in accordance with generally accepted accounting principles.
The auditor must identify in the auditor’s report those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period.
When the auditor determines that informative disclosures are not reasonably adequate, the auditor must so state in the auditor’s report.
The auditor must either express an opinion regarding the financial statements, taken as a whole, or state that an opinion cannot be expressed, in the auditor’s report. When the auditor cannot express an overall opinion, the auditor should state the reasons therefore in the auditor’s report. In all cases where an auditor’s name is associated with financial statements, the auditor should clearly indicate the character of the auditor’s work, if any, and the degree of responsibility the auditor is taking, in the auditor’s report.

If a firm of CPA’s [CAs] is not independent [e.g. they undertake accounting work or virtual accounting and can not perform any type of attest work.

Mr. Drury….addressing the question specifically to you, has Xero embraced a philosiphy of seeking to countermand and disregard the entire body of professional standards and literature with regard to CPA’s, CA and the attest process around the world??

That is a very serious question as at undermines one of the basic tenets that protect the integrity of the US banking system and our capital markets.

Rod Drury
September 11, 2015 at 12.16 am

Hi Jordan,

Thank you for the thoughtful email but it appears you misunderstand what we are exploring. Did you watch the video?

We are not replacing audit, we are looking to establish a new type of confidence in management reports by surfacing the internal controls to help professionals establish confidence. It does not replace an audit. It is designed to be a lessor standard but sufficient to unlock small business funding.

So far our consultation with professional bodies is going very well and they are understanding the concept and providing excellent feedback as we refine the idea.

This concept is only possible because of the high integrity engine we have developed and we are now surfacing those internal controls to allow professionals to form a view on the quality of the numbers.

Hope that helps and puts your mind at ease.

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