3 Audit Efficiency Tips to Keep CFOs Prepared to Mitigate Risk
Today, CFOs are taking on a more advisory role, using strategy and analysis to have the best possible financial health within their organizations. They can juggle these additional responsibilities because of the ability to leverage automation to complete repetitive, rule-based activities within the Office of Finance. In fact, it’s estimated that up to 80% of all finance tasks would be improved by automation.
With less time needed for manual tasks like transaction matching and reporting, finance teams can help drive the business forward. With extra time and labor freed up by automation, organizations can focus on the key ways a finance team can best leverage data:
- Mitigating risk in the accounting process
- Providing CFOs with the data they need to prepare for future challenges
As the pace of business continues to advance and the global market ebbs and flows, your business needs to be adequately prepared to deal with a wide variety of risks. Follow these audit efficiency best practices to ensure data integrity from the bottom up and the highest quality of financial health.
3 Audit Efficiency Tips to Better Mitigate Risk and Cut
Audit Best Practices Tip #1: Apply Risk Assessment to Your Organization’s Routine Processes
The first step to mitigating risk and securing compliance is analyzing the type of risks your organization could incur. As an organization grows and evolves, so do the different types and severities of risk. It’s imperative that organizations build a coordinated game plan for identifying and mitigating risk.
An effective risk assessment clearly defines different types of risk to better prepare your team. Understanding the potential effects of various risks makes it clear how to develop mitigation and response strategies. In general, risk can be organized into four broad impact categories:
- Compliance: 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.
- Strategic: Perhaps the most obvious form of risk, this is anything that can affect profitability, such as basing decisions on incorrect financial statements.
- Operational: This covers disruptions in your ability to conduct business, such as supply chain shortages, tariffs, or time wasted on corrections.
- Reputational: While less tangible than other categories of inherent risk, bad press or negative social media trends can lead to customers losing trust and low employee morale.
“Between the different solutions we reviewed, Trintech was by far the strongest solution for matching our bank level transactions. Ultimately, we felt like Trintech could provide us with the controls we needed for our audits, and it could support our high-growth strategy.” – Torchy’s Tacos
Once you’ve established the key factors of risk within each category for your organization, you can begin to develop action plans for those risks. While finance teams are responsible for inherent risk assessments, the entire organization should be involved for optimal risk mitigation to preserve the organization’s financial health.
Audit Best Practices Tip #2: Secure Cooperation from the Entire Organization
Finance should not operate in isolation from the rest of the organization. No matter how thorough your efforts, key elements will always slip through the cracks if everyone in the organization isn’t involved in the process. 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 who implement it. The CFO can prepare for risk, but it’s up to each team within the organization to execute those plans for maximum efficiency and financial health.
The most thorough latent risk assessments and risk mitigation plans involve experts from all departments involved; finance shouldn’t work alone!
Audit Best Practices Tip #3: Utilize Automation to Simplify Accounting Processes
Mitigating risk across your organization is crucial, and finance departments can begin by focusing on any legal and financial risks related to the financial close process. Consistent internal audits of bank reconciliation statements are essential for determining the overall health of a business.
Automated financial close and reconciliation software can cut down on the total time needed to complete the process while adding visibility and a transparent audit trail. An easily trackable audit trail allows for the greatest possible financial health within the organization.
“We had optimized manual processes to the best of our ability but tracking risks and opportunities in the balance sheet via Excel had become far too time-consuming. Implementing Trintech’s Certification solution educated us about the best way to streamline our own processes and helped us to do just that.” – Keurig Dr. Pepper
With the right technology, the close process becomes quicker and clearly documented, leading to a streamlined month-end and more confident audits. As a plus, the CFO can then utilize the time saved to focus on other areas of risk within the organization. An inherent risk assessment implemented across departments can identify and effectively cut down on those risks, no matter how tangible they are to your bottom line . While risk is inevitable, taking the proper steps to anticipate and mitigate risk will push you ahead of your competitors and streamline your audit as well.
Written by: Nathan Stabenfeldt