This article originally appeared in the September/October 2019 issue of NACD Magazine.
When it comes to the audit, it’s not uncommon for both clients and auditors to accept the audit process as inevitably painful. There’s a mindset that, unpleasant though it may be, the audit is a necessary fact of life. And so are the related activities throughout the year.
But why? Necessary as the audit may be, the stress and inefficiency that surrounds it are not. Minimizing the pain requires rethinking manual processes and embracing technology for finance automation.
As the appointed representatives of a company’s shareholders, the Board of Directors plays a key role in setting strategic goals and ensuring adequate, well-managed resources. When it comes to Accounting and Finance, modernizing traditionally manually processes with technology is paramount for both minimizing risk and instilling confidence.
By challenging their companies to embrace a modern way of closing the books, board members will issue a charter that also benefits the related audits. Not only will the audit processes be streamlined, but as collaboration and morale increase, costs will decline.
Strengthening Client-Auditor Relationships
Independent auditors are tasked with verifying, validating, and forming their own opinions—regardless of how trustworthy and cooperative a client may be.
But despite a naturally adversarial component, the auditor-client relationship doesn’t have to be a strain. In fact, both sides would prefer to collaborate. This starts with a foundation of mutual respect and transparency.
With a single finance automation solution that both Accounting and auditors can access, transparency and trust can extend across all levels, from staff to executive. With critical processes performed and documents stored in a single repository, auditors are not only more confident they’re receiving the right information, but they can also access it themselves. This takes the process from reactive to proactive.
It’s a win-win that pays dividends because the auditor can spend less time chasing requests and more time as a strategic advisor, partnering with the organization through complex Accounting considerations.
Streamlining Audit Processes
Despite manual accounting and audit processes, many client-auditor relationships are solid. Still, both parties agree that there’s room for process improvement.
Between ongoing SOX procedures, quarterly reviews, year-end audits, and other process audits, it’s no wonder companies feel like the auditors never leave. And while there are plenty of important reasons to have another set of eyes on things, everyone agrees that audits usually take more effort than they’d prefer.
Financial close technology enables more efficient audits in several ways.
Easy “Prepared by Client List” (PBC) Management
With everything stored and accessible in a cloud solution, both staff and auditors have a unified platform for requesting and providing PBC items, as well as monitoring status. Rather than recurring meetings and emails to hash through a list, both parties can readily see where things stand.
Less Prep Time
Staff no longer needs to spend days manually pulling, copying, and aggregating spreadsheets and paper files. Instead, auditors are given read-only access to the same platform where activities are performed.
With everything in the cloud, auditors can sample and review the records they need, anywhere and anytime.
Limited Risk & Less Confusion
With a single version of the truth, clients eliminate version control issues entirely. Additionally, preparers and reviewers can leave notes that are useful to auditors—things like key considerations or assumptions that might support or clarify their own conclusions.
While there may not be a specified audit fee discount for embracing technology, there are several ways technology helps minimize costs. This includes reduced travel expenses.
With anywhere, anytime access to centralized information in BlackLine, auditors can work remotely. Onsite time is limited to certain times or procedures, and the need to visit subsidiary or satellite locations is minimal.
Less Sampling & Testing
Technology limits the risk of error and provides best practices and segregation of duties. This strengthened process governance means auditors may rely on configurable business rules rather than extensive sampling and detailed testing of transactions.
A Win-Win for Clients & Auditors
When core close activities are streamlined, your accounting and finance team is better positioned to focus on what matters—delivering accurate and transparent financial information.
At the same time, a more efficient audit means newfound time for strategic collaboration, which benefits the Board, management, and the auditor.
Read this white paper to learn more about how your organization can improve the client-auditor relationship, streamline audit processes, and reduce both cost and time.