For the last few months, your finance team might have been trying out new solutions to adapt to your current virtual accounting environment in order to successfully perform the month-end close remotely. It can often feel like this process is never-ending, and just when it seems like your team is getting the hang of it, you’re due for an audit.
An audit under normal circumstances is full of stress and anxiety, and this is only amplified by the current global environment.
In order to prepare yourself adequately for a remote audit, it’s important to first identify areas of weakness.
Here are some risks and challenges you may find relevant to your current situation:
It’s hard to feel prepared for an audit when you’re not confident that your close process has been running smoothly. There are most likely some nagging thoughts here and there that the information you are presenting was not collected and prepared in the most efficient way and is therefore in danger of being interpreted as fraudulent. What’s worse is that you may suspect some of the information is actually fraudulent, because you are not confident of the checks and balances you have in place to enforce proper segregation of duties in your workflows. This confidence is further decreased when the whole department is working remotely.
Lack of Visibility
Without visibility into your close and the process by which tasks are completed, you have every reason to be anxious. Lack of visibility during a close is like kayaking upstream without a paddle. It’s a never-ending battle. Without visibility, you cannot have confidence that task items are being completed consistently and with the proper diligence due to them.
No Task Ownership
Task ownership among team members is key to ensuring that tasks have been distributed appropriately so that no individual has more than they can handle. Improper distribution of workload can lead to severe bottlenecks, especially when individuals don’t speak up about it. It doesn’t take much for one area of your close to negatively impact the entire process, which, in turn, impacts the information you present for audit.
Too Many Emails
Even if you have a messaging platform of some kind, you more than likely still receive an excessive amount of emails regarding the status of tasks. You’ve no doubt gone days or weeks waiting on the substantiating document for a reconciliation before realizing it’s buried deep in your inbox somewhere. If you take even just a long weekend, good luck finding what you need in the hundreds of emails waiting for you.
Now it’s time for the audit itself and you might feel unprepared. Being audited while working remotely can certainly be a daunting experience. One of the main concerns is how to get the auditor everything they need. You might be used to the auditor arriving at your office, shacking up in a conference room for a few days with sky-high stacks of binders and a plethora of empty coffee cups, asking periodically for a specific document from who knows where and who knows when. If that is your usual experience, then a remote audit could be even more troublesome, as it demands even more efficiency from you and your team.
Are you feeling anxious thinking through all these risks and challenges? Take a deep breath! There is a better way!
What can you do to adequately prepare for a virtual close audit? Let’s talk about how an automated close solution, such as the Adra Suite, can assist your organization when it comes to an audit.
The best way to prepare for an audit is to be confident in the information you are presenting, which means cutting out risks early on. That means, finding a solution that gives you full visibility into your close process so that you can identify the status of any task at any given moment, whether it’s a reconciliation, a journal entry, or an ERP report, for example.
Encourage and Enable Ownership
You are most likely surrounded by a team that is willing and committed to helping produce an efficient close, so enable individuals to do so. Adopt a process that allows individuals to clearly identify their own responsibilities so there is never a moment a task is left incomplete because everyone thought that task belonged to someone else. The last thing you need right before an audit is an unreconciled key account because there was no owner attributed to it.
Remember that most of your team members entered finance and accounting because it genuinely interested and challenged them. They didn’t become accountants to be stuck at home during the days, nights, and weekends highlighting transactions in binders and stacks of paper. To help keep their attention and talent, you have to find ways to automate some of those mundane tasks so that they can spend more time working on higher-level, value-added tasks, like analyzing the data for improved efficiency. Your team members will feel more valued, and will also produce higher quality results for the department.
Centralize Your Process
Perhaps the most important aspect of a successful close is a centralized environment. This is what enables increased visibility, process completion tracking, and defined task ownership. A centralized process allows for accessing up-to-date information with confidence in the accuracy because there is only one source of truth. Centralizing your process also allows you to access all relevant information via one location, rather than digging through week-old emails just to find the outdated version.
Now it’s time for the audit and you feel prepared. You are confident that the information you are going to present is updated and accurate. You know exactly who prepared, approved, and reviewed each portion, as well as the time frame in which each action was completed. You have one centralized environment, giving your auditor secure, remote access to all the information they need in order to perform your audit.
Once you give an auditor access, they are able to easily enter each task, account, or reconciliation, and immediately find the information they need. In Adra Task Manager, auditors can easily sort and filter to locate relevant items and track workflows to identify the levels of preparation and approval for each task. Adra Balancer then provides a high-level overview of the status of an account based on factors such as the risk or classification. Your auditor can then deep-dive into any reconciliation, in order to review the line item details and possible balance variance, along with any relevant substantiating documents.
During a remote audit, having an environment in which you can fully enable the auditor, while being confident in your reporting is a huge weight off of the shoulders of the finance team, and allows them to give greater attention to those strategic initiatives that will help drive the business forward.
To learn more about how the Adra Suite can assist your audit, talk to one of our experts.
Written by: Peter Whisenant