Part 3 of our Accounting in Challenging Times blog series. You can view the full series here.
In the second blog of this series, we explored the five pains F&A organizations are experiencing while working remotely. In this blog, we’re diving into the impact that closing virtually with a distributed workforce is having on accounting management.
Lack of Ownership & Control
One of the greatest issues facing accounting management today is a lack of ownership and control.
We’ve previously mentioned that a shortage of cross-training is common in F&A, as teams operate very lean. This means that when a team member is unavailable, there’s an impact on the overall control environment.
As a result, management may need to document mitigating controls, it may slow down processes, and it may introduce unnecessary risk.
Many leaders during this time are looking for a way to better unify their processes and better document policies, procedures, and critical steps that are necessary to maintain an accurate and complete close process.
Risk of Inaccuracy
The risk of inaccuracy is another concern. When accounting teams are performing the majority of their work in detailed spreadsheets involving complex formulas, VLOOKUPS, or other heavy data inputs, this puts an incredible amount of strain on the organization and increases the risk of error.
During this time of disruption, many accounting teams are working from home and dealing with distractions and other complexities during the close. As a result, the risk of inaccuracy has multiplied.
This is a key concern for management as the close must go on, and reporting deadlines have not changed significantly despite the ongoing pandemic. If anything, management is expected to provide even more transparency.
New Close Considerations
In the current environment, there are new complexities and considerations for Accounting. Financial reporting processes are impacted by updated disclosure recommendations, and results may be impacted by tax incentives, changes, and revised assumptions for key judgments and estimates.
Adapting to these complexities requires expertise and effort, which means the already chaotic close cycle just got even busier.
IT & Security Infrastructure
One key challenge we discussed in the previous post is the difficulty accounting staff has with accessing data. This comes down to how well-equipped an organization’s IT infrastructure is to accommodate those that are working from home.
Some organizations aren’t built or weren’t ready for this virtual environment, which can lead to an increase in risky behavior.
A recent survey by Cisco and OpenVPN found that 73% of VP and C-suite IT leaders believe that remote employees pose a higher security risk than those onsite. Additionally, 46% of employees have talked about or reported moving files like spreadsheets between work and personal computers, and one in ten employees use personal email to send business emails to coworkers or customers.
This creates a new term that we’re seeing in the market called “remote sec,” or information security for remote work. While some organizations have accommodated remote work for employees in the past, this has become a greater challenge as more people are forced to work from home—resulting in potential risks for financial data as files are passed through unsecure channels.
Ensuring that this data is kept private and secure is now a new pain, priority, and responsibility facing those in accounting management positions. You can no longer do it all in person, and sharing information virtually is requiring new ways that were perhaps unexpected in the past.
Watch for the second blog in this series, where we’ll dive into the steps you can begin taking to alleviate these pains and set your F&A organization up for success in this new environment.
In the meantime, read this white paper to learn how to empower the virtual accounting function, including strategies for mitigating the heightened cybersecurity risks.