By now, finance and accounting managers know the extra stress that the COVID-19 pandemic is bringing to business operations all too well. They also know that much of that stress is stemming from the now-remote audit process, which is so critical to maintaining business integrity.
“Audits are more challenging than ever, for two primary reasons,” says David Brightman, BlackLine’s director of product marketing. “Remote audits are incredibly difficult for accounting teams that are still using manual processes. Secondly, recent scandals are bringing added attention—by governments and shareholders—to corporate behavior.”
Brightman notes that all companies should be performing vigorous reviews of their control environments, since proper periodical review of control activities demonstrates the reliability, relevance, and effectiveness of internal controls for all business areas in an organization.
“For that reason, audit materials should be complete and integral, and companies should strive for the highest possible integrity in the materials they give to their auditors,” he says.
Getting Binders Ready
“Finance people used to think that being audit-ready meant getting PBC binders ready for the auditors. But that doesn’t go far enough. Rather than allowing auditors to uncover weaknesses or deficiencies, accountants should strive to find the areas that need improvement before they get to the auditors.”
Once an error gets to the auditors, Brightman notes, it can cause a delay in the audit, and that can cause shareholders to question the organization’s management.
“The overall control environment is as much about monitoring what’s going on as it is about preventing what could happen,” he says. “Transparency is key, as are integrated systems to execute activities in accordance with the control framework, to prevent any questions about the reliability of your accounts.
“Now, more than ever before, there should be a renewed focus for finance executives on financial controls to ensure mistakes and abuses do not go unnoticed.”
A Unified Control Environment
The best way to do that is with a control environment that’s both robust and flexible. Such an environment should feature end-to-end visibility of accounting and process data, as well as controls that can be adjusted during, rather than after, the accounting cycle.
Accounting best practices require an automation environment that keeps processes consistent and informed with an up-to-date unified data pool. This way, accountants and administrators can apply rules and controls consistently across all processes. If an error occurs in a reconciliation task, for instance, that error will likely be spotted at the next step in the workflow.
“With a unified data pool, there’s a clear audit trail that takes you from the source of the error to its resolution,” says Brightman. “And visibility of data and documentation is absolutely necessary for a robust control environment.”
Accounting Under Stress
“This is especially important because Finance and Accounting—and business managers in general—are under tremendous stress, particularly in high-growth companies.
They are trying to distribute their work across remote teams and accommodate new regulations, all in the face of tremendous uncertainty. The more they can bring certainty and cohesion to their accounting processes, the better.”
Read our new issue of BlackLine Quarterly for more stories like this, including:
- Accounting with a Distributed Workforce: How to Make it Work
- How BlackLine’s Intercompany Hub is Helping Companies Go Digital