CFOs recognize that their role has been evolving beyond traditional finance operations to involve more strategy and analysis to support the business. This is in large part due to a rise in automation’s ability to complete basic, rule-based activities like transaction matching; today nearly half of all routine finance tasks are automated, up from 34% in 2018.
With less time required for repetitive tasks like transaction matching and reporting, finance teams have an opportunity to offer more value to their organization. However, visibility and control remain foundational, as both are essential to:
- Mitigating risk in the accounting process
- Providing CFOs with the data they need to prepare for future challenges
By mitigating risk at every step, finance teams can ensure faster, cleaner audits, whether internal or external. Follow these audit efficiency tips and best practices to ensure data integrity from the bottom up.
3 Audit Efficiency Tips to Better Mitigate Risk and Cut Costs
Audit Best Practices Tip #1: Apply Inherent Risk Assessment to Your Organization’s Routine Processes
The first step to mitigating risk and ensuring compliance is identifying the type of risk your team could incur. As both the scope and speed of business continue to increase, so too have the different types and severities of risk compounded. With such a complex minefield of risk to navigate, it’s essential to build an organized methodology for identifying and organizing risk.
An effective inherent risk assessment clearly defines different types of risk to better prepare your team. Understanding the potential impacts of various risks makes it easier to develop mitigation and response strategies. In general, risk can be organized into four broad impact categories:
- Legal: When your organization is out of compliance with state, federal, or global law, you could be faced with legal action ranging anywhere from fines to imprisonment
- Financial: Perhaps the most obvious form of risk, this is anything that can affect profitability, your bottom line, or the confidence of your investors
- Business: Also referred to as operational risk; this covers disruptions in your ability to conduct business, such as supply chain shortages or tariffs
- Reputation: While less tangible than other categories of inherent risk, bad press or negative social media trending can lead to customers losing trust and low employee morale
Once you’ve identified the primary drivers of risk for each category within your organization, you can set about developing responses to those risks. While finance teams are primarily responsible for inherent risk assessment, the entire business should be involved for maximum risk mitigation.
Audit Best Practices Tip #2: Secure Buy-in From the Entire Organization
The CFO and finance team may be best positioned to take on risk management, but the most robust programs are developed by a diverse team of subject-matter experts and deployed cross-departmentally into your routine processes.
Finance shouldn’t work in isolation. No matter how thorough your efforts, key elements will always be missed if you don’t include the owners of each risk category. Without the proper insights into specific functions and routines, any implementation of risk mitigation will be ineffective in its approach and poorly received by those meant to implement it. The CFO can plan for risk, but it’s up to each department to put those plans into practice for maximum efficiency.
Audit Best Practices Tip #3: Utilize a Reconciliation Tool to Simplify Accounting Processes
Managing risk across your organization is essential, and finance departments can start by focusing on any legal and financial risks related to the financial close process. Regular internal audits of bank reconciliation statements are a necessity in determining the overall health of a business.
Automated financial close & reconciliation software – such as the Adra Suite – can cut down on the number of hours needed to complete the process while adding visibility and a clear audit trail.
With the right technology, the close process becomes faster and better documented. This leads to a streamlined month end, as well as more confident (and less expensive) audits. Even better, the CFO can make use of the time saved to address other areas of risk by applying the same complex data analysis skills that finance professionals use regularly.
An Efficient Audit is About More Than Just the Numbers
As the speed of business continues to accelerate and the global market fluctuates, your business must be prepared to confront a wide variety of risks. An inherent risk assessment that is implemented across departments can identify and effectively cut down on those risks, no matter how tangible they are to your bottom line.
Automation is a major key to unlocking compliance success, as it gives the finance team time to mitigate risk while also creating clear audit documentation at every step of the process. For more audit efficiency tips, check out these best practices.
Written by: Nathan Stabenfeldt