Throughout this last quarter, organizations have navigated through unprecedented territory with a sudden shift to a virtual workforce. The office of finance is no exception, especially now, with audits quickly approaching. Whether you’re a publicly-traded company handling your Q1 audits, a private company evaluating last year’s financials, or a company with any other type of reporting requirement, managing this upcoming remote audit might be more challenging than usual.
Trintech recently held a webinar comprised of representatives from KPMG where one of the topics discussed was the quickly approaching audit season. Based on that webinar, here are five new considerations of your remote audit that you must consider.
Work from Home Challenges
Because finance teams are functioning across virtual environments, there are many remote work challenges your staff will inevitably face. There are more distractions than ever before for many employees, such as the presence of children, spouses and significant others in their workspace. Finance and accounting teams may also be facing technological limitations, such as transitioning from the use of two screens in the office to only a laptop screen at home.
Because of these distractions and limitations, your team’s workflow will function much more like a year-end period, with hours more broken up. Tasks previously expected to be finished in a normal workday, where hours of productivity flow much more consecutively, will take longer to complete. To meet period deadlines, leadership needs to plan much more proactively and account for these changes.
Need for Granularity
In these unprecedented times, offices of finance are quickly pivoting to consider aspects of their close process they haven’t needed to consider previously, such as network speed differences across geographies. More than ever before, there is a demand for visibility into all your financials to wholly understand all the people, processes and tasks that are involved in different finance operations. As aspects of your virtual close processes change quickly, leadership needs to evaluate how, if at all, these considerations impact your organization’s audit profile.
Presence of Sensitive Data in Homes
Typically, organizations have been allowed the luxury of protecting sensitive financial data with securities such as card-access storage rooms. Since moving to a virtual close environment, organizations don’t have those comforts anymore. Certain employees still maintain the need to access sensitive data, but now from their homes. And, as companies shift to perform a remote audit, the safeguarding of this information must be considered.
Leadership needs to guarantee that the reports and information they supply to their auditors only contain the required information to complete the audit work, and not reveal any unnecessary, protected data. Additionally, CFOs need to engage with their Chief Data Officers to make sure that they only provide essential information to auditors, as well as accurate information, so organizations aren’t increasing their risk profiles.
Increased Communication with Auditors
Throughout your remote audit process, there is a higher expectation of communication with your company’s audit partners. Finance teams should be disclosing crucial information to their auditors, such as differences in their key controls, data operations and security processes. If your auditors will be working with different data than historically tested in their audit work, they need to know beforehand. Informing your auditors of even the slightest changes in your processes ensures the audit will flow as smoothly as possible.
Considering the SEC Grace Period
In March, the Securities and Exchange Commission (SEC) announced temporary relief to companies affected by the pandemic to file Exchange Act reports with a 45-day grace period. The differences in the needs to accept the SEC’s extension vary based on industry, but leaders agree that taking advantage of this time is important, if you can. Reporting accurate financial information exceeds the stigma of filing “late.” Use the grace period to evaluate if your system is as tightly integrated as possible and strategize how to lower your risk going forward. Taking advantage of this period will help make ensure your organization doesn’t have an inaccurate or delayed filing in the future.
As organizations continue to handle their close process remotely, they will undoubtedly find additional issues that were not considered at the start of this pandemic. And though the shift from a centralized, in-office finance environment to dispersed, virtual collaboration locations has been challenging, your financials can gain strength and resilience for the future, if properly coordinated.
To gain a deeper understanding of how the current crisis will impact your upcoming audit, watch our on-demand webinar with KPMG.
Written by: Ashton Mathai