# Financial Audit Prover MCP

> Financial Audit Prover forces your AI client to ground every financial conclusion in specific US GAAP codification, requiring traceable evidence from source documents, mathematical reconciliation across statements, and explicit identification of all required disclosures. It stops models from generating plausible-sounding but structurally unsound financial analysis.

## Overview
- **Category:** productivity
- **Price:** Free
- **Tags:** financial-audit, us-gaap, accounting, sec-compliance, structured-reasoning, decision-pivots, audit, sox

## Description

When you're dealing with complex finance—whether it’s quarterly reporting or a merger review—you can't rely on generic AI output. Most large language models generate numbers that look right but violate core accounting principles or lack an audit trail. This MCP fixes that. It forces your agent to adhere strictly to US GAAP, checking for issues like IFRS leakage and ensuring every material figure traces back to its source document. You don't just get a conclusion; you get proof: explicit ASC topics cited, GL account numbers referenced, and reconciliation checks passed across the balance sheet and cash flow statement. Connect this MCP through Vinkius, and your agent will operate with the same rigor as an internal audit team, validating everything from materiality thresholds (per SAB 99) to SOX compliance.


## Tools

### validate_financial_audit
Runs a complete structural audit on financial analysis, validating GAAP citations, tracing every number to source documents, checking internal statement reconciliation, assessing materiality thresholds, and identifying all mandated disclosures.

## Prompt Examples

**Prompt:** 
```
The company recognized $5M in revenue from a multi-year software licensing deal. Is this correct under GAAP?
```

**Response:** 
```
Verdict: GAAP_VIOLATED. 'Under GAAP' is not a citation. Revenue recognition for software requires ASC 606 five-step analysis: (1) identify the contract (ASC 606-10-25-1), (2) identify performance obligations (distinct software license vs. ongoing services? — ASC 606-10-25-19), (3) determine transaction price ($5M — is there variable consideration?), (4) allocate to performance obligations (standalone selling prices), (5) recognize when satisfied (point-in-time for license under ASC 606-10-25-27, or over-time for SaaS under ASC 606-10-25-31?). Which step supports full upfront recognition?
```

**Prompt:** 
```
Issue: Whether $2.8M goodwill impairment is required. GAAP: ASC 350-20-35-1, qualitative election per 35-3A. Five factors assessed — stable industry, no customer loss, share price above book, no regulatory changes, CFO replaced in 60 days. Conclusion: fair value exceeds carrying. Audit: GL 1800, $2.8M from 2022 DataVault acquisition (WP-805-22). Cross-check: rollforward reconciles. Materiality: 7.2% of $38.9M pre-tax. Disclosures: ASC 350-20-50-1/50-2, Reg S-K Item 303.
```

**Response:** 
```
Verdict: AUDIT_PROVEN. GAAP compliant — ASC 350-20-35-1 through 35-19 correctly cited with qualitative election per 35-3A. Audit trail complete — GL 1800 traced to 2022 acquisition, work paper WP-805-22 referenced. Cross-check passed — intangible rollforward reconciles ($2.8M beginning = $2.8M ending). Materiality assessed — both quantitative (7.2% > 5% threshold) and qualitative (strategic acquisition signaling). Disclosures identified — ASC 350-20-50-1/50-2 footnotes, Reg S-K Item 303 MD&A discussion. This analysis meets audit memo standard.
```

**Prompt:** 
```
The company has approximately $1.2M in accounts receivable. Based on financial data, this seems reasonable. Required disclosures have been made. The amount is immaterial.
```

**Response:** 
```
Multiple rejections. (1) TRAIL_BROKEN — 'approximately $1.2M' is hedged language suggesting fabricated precision. What is the exact GL balance? Which invoices? What aging bucket? What confirmation results? (2) 'Based on financial data' is not an audit trail — name the source documents. (3) MATERIALITY_IGNORED — 'immaterial' without a threshold is not an assessment. What is 5% of pre-tax income? How does $1.2M compare? (4) DISCLOSURE_MISSING — 'required disclosures have been made' names zero specific ASC topics. ASC 310-10-50 (receivables), ASC 326-20 (CECL allowance), ASC 820-10-50 (fair value hierarchy if measured at FV)? Which disclosures specifically?
```

## Capabilities

### Verify GAAP Compliance
It checks if the analysis correctly cites specific US GAAP sections and avoids applying foreign accounting standards.

### Establish Full Audit Trails
It demands that every number is linked to a source document, like an invoice or GL journal entry, proving where the data came from.

### Enforce Financial Reconciliation
It confirms that all financial statements tie together—for example, making sure net income flows correctly into retained earnings and assets balance liabilities plus equity.

### Assess Materiality Requirements
It requires both a quantitative threshold (like 5% of pre-tax income) and a qualitative assessment to determine if an issue is significant.

### Identify Missing Disclosures
It lists specific required ASC footnote topics or SEC regulations that must be addressed in the final report.

## Use Cases

### Post-M&A Diligence
An analyst receives a target company's pro forma financials. Instead of accepting vague summaries, they run `validate_financial_audit` to ensure the goodwill impairment calculation is correctly cited under ASC 350 and that all transaction components reconcile with historical data.

### Quarterly SOX Reporting
A compliance officer needs to confirm internal controls documentation. They use `validate_financial_audit` to verify the narrative sections explicitly cite required SOX section numbers and that all control testing has a corresponding, traceable source document reference.

### Complex Revenue Recognition
The team is reviewing multi-element contracts. Running `validate_financial_audit` ensures the revenue recognition model cites the precise ASC 606 step (e.g., point-in-time vs. over-time) that justifies the timing of revenue booking.

## Benefits

- Eliminate 'per the records' errors. The `validate_financial_audit` tool forces every material number to link back to specific source documents, like GL accounts or invoice numbers.
- Stop IFRS leakage in US GAAP analysis. It requires your agent to cite the exact ASC topic and subtopic governing the accounting treatment, not just say 'per GAAP.'
- Guarantee internal consistency. The MCP verifies that core financial statements reconcile perfectly: total assets must equal total liabilities plus equity; net income must flow into retained earnings.
- Address materiality correctly. It forces your agent to state both a quantitative threshold (like 5% pre-tax) and perform a qualitative assessment, meeting SAB 99 standards.
- Ensure compliance depth. The tool identifies specific required footnotes (ASC topics) or SEC Item references that must be named in the report.

## How It Works

The bottom line is that your agent can't give you an answer until it has proven its work against authoritative US accounting and regulatory rules.

1. Provide your AI client with a financial analysis, audit memo, or reporting question that requires compliance checking.
2. The MCP runs the `validate_financial_audit` tool, which systematically checks for five critical failures: GAAP violations, broken trails, cross-check inconsistencies, ignored materiality assessments, and missing disclosures.
3. You receive a detailed verdict. It tells you exactly where the analysis fails—citing specific standards or required documents—and what needs to be corrected.

## Frequently Asked Questions

**Does Financial Audit Prover handle SOX compliance?**
Yes, it checks for necessary disclosures and certifications related to the Sarbanes-Oxley Act. It requires specific mention of ASC 302/404 sections and ensures internal controls are referenced.

**Can Financial Audit Prover reconcile different financial statements?**
It verifies cross-statement reconciliation. The tool confirms if the balance sheet equation balances (assets = liabilities + equity) and if cash flow statement movements tie directly to changes in the balance sheet's cash account.

**Is Financial Audit Prover better than a spreadsheet? **
It's not a replacement for an expert, but it enforces compliance checks that spreadsheets miss. It provides automated validation against codified standards (ASC), which is something no manual sheet can guarantee.

**What kind of evidence does Financial Audit Prover require?**
It requires hard links: GL account numbers, journal entry references, invoice IDs, and bank confirmation details. Simply saying 'per the records' won't pass its audit trail check.

**What data formats can I use when running `validate_financial_audit`?**
You must provide source documents in structured formats like CSV or JSON. The tool needs explicit entries detailing GL accounts, invoice numbers, and dates to trace a complete audit trail.

**Does the `validate_financial_audit` process handle international accounting standards?**
The primary focus is US GAAP compliance (FASB ASC Codification). However, the engine actively detects IFRS leakage and flags any terminology that violates U.S. requirements.

**If `validate_financial_audit` rejects an analysis, how detailed are the failure reports?**
The output is highly specific. It names the exact required standard (e.g., ASC 606-10-25-27) and pinpoints whether the failure was due to missing links, incorrect calculations, or insufficient disclosure.

**Are there limitations on the complexity of data I can input for `validate_financial_audit`?**
While designed for complex audits, providing all necessary inputs (e.g., full trial balance, cash flow statement, and source invoices) ensures accuracy. The more comprehensive your input set, the better the results.

**Does it perform calculations or generate financial statements?**
No. Financial Audit Prover generates zero content and performs zero calculations. It validates the REASONING behind financial conclusions — whether the correct GAAP standard is applied, whether numbers trace to source documents, whether statements reconcile, whether materiality is properly assessed, and whether required disclosures are identified. The agent does the financial analysis; the tool proves whether that analysis meets audit-grade standards.

**Does it support IFRS or only US GAAP?**
US GAAP only. The engine actively detects IFRS terminology leakage (IAS references, 'revaluation model', 'true and fair view') and rejects it. US GAAP and IFRS differ materially on inventory (LIFO), development costs, leases, and revenue recognition implementation. Mixing frameworks produces unreliable analysis. If you need IFRS validation, a separate tool would be required — this one validates ASC codification exclusively.

**What types of entities does it cover?**
Any US entity reporting under GAAP: SEC registrants (10-K/10-Q filers), private companies (including private company alternatives under ASC), nonprofits (ASC 958), and tax-reporting entities (IRC Title 26). The tool adapts — SEC registrants trigger Reg S-K and SOX validation; private companies focus on ASC compliance and footnote completeness; nonprofits require net asset classification checks. Specify the entity type in the 'regulatoryContext' field.