The very concept of an “audit” has existed since the times of the Roman Emperors. It’s no surprise that the examination of a financial report on behalf of an organisation, has changed greatly over its existence.
In recent years, however, developments in technology, business practices, and changes within the field have seen financial audits change significantly. In this short article we will look at these changes and their causes, as well as what the Office of Finance can do to safeguard against these developments.
Lack of reassurance
The purpose of an audit is reassurance. Whether this is to investors who want to be sure capital is utilised in the most efficient way, or regulators that need to know how an organisation is ran, without fraud or mismanagement, the outcome is the same. Internal and external stakeholders need reassurance that what a company is saying about its finances is factual.
Unfortunately, the history of audit over the last 100 years is also the history of scandal, which leads to increased regulation. While by no means a guarantee, organisations should be anticipating more stringent audits and regulations over the coming years as the audit industry will be keen to correct its image.
Audit firms are not exempt from one of the biggest challenges facing Finance today: recruiting and retaining new talent. Judging by their recruitment videos online, audit firms want to emphasise the more interesting challenges of the profession – such as data analytics and trend analysis.
What they don’t emphasise are the manual elements of the role. Requesting binder files, chasing departments for spreadsheets, sitting on the end of desks while Finance works away. With new technologies, it’s easier to make everything available to auditors with minimal effort. This has the added benefit of minimising that manual work for your team members – a major driver in retaining staff over the long term.
2020 has shown that businesses (for the most part) are able to work in a completely dispersed manner for extended periods of time. As of November 2020, it remains unclear exactly when the world will return to “normal” working conditions.
However, despite this, audits have continued and those that have been the most successful were those firms already prepared to deliver relevant information to auditors in a structured and timely manner. At the very least, those who had taken the time to digitize and store every record found it a lot easier to get their audits completed quickly and in a structured to controlled manner.
What are the next steps?
Big questions arise as to how exactly audits will progress over the next few years and beyond. We’ve presented here some of the likely challenges, but the answers to each of them will be as unique as each business that faces them.
There are some steps that firms can take now to minimise their risk of negative and costly audits. Firstly, reviewing the existing Month-End process and making sure that every account on the Balance Sheet is reconciled each month is vital. Too often items are left open which during auditing can cause a real headache.
Secondly, businesses can look to build systems to specifically deal with managing Balance Sheet audits. Trintech’s Balancer centralises all substantiation of the Balance Sheet, while being able to automate slow moving and low-risk accounts. On top of this, Balancer gives management deep visibility over the status of the Close each month allowing for redistribution of tasks and a deeper financial analysis.
To learn more about how the Adra Suite can assist your audit, talk to one of our experts.