What Is Parallel Simulation in Accounting?

Parallel simulation in accounting is a computing safeguard used to check the validity of data gathered from a financial firm's clients; an auditor uses general accounting software to process data and then checks it against the data from the clients software, as defined by VentureLine. If the results match, it is proof that the clients computing methods are reliable.

A variation of parallel simulation is controlled reprocessing; when an accounting firm used the same software as the client to process the data in order to see if there are any discrepancies.

Drawbacks to parallel simulation are that there are often gaps between the two different systems, the differences between the two sets of data and the two different software systems are difficult to distinguish apart and that processing large amounts of data from a large corporation takes an extended amount of time, as determined by Accounting Financial & Tax.

Auditors use a variety of methods to test a client's software and the accuracy of its data. Some use dummy data developed by an auditing team that includes built in errors to test how the system handles the mistakes, taking into account what controls are in place. As computer programs are capable of providing false data if faulty, these safety checks are valuable tools when verifying that the information provided by a company is correct.