The expectations on accounting and finance organizations continue to increase at an accelerated rate.
A heightened focus on regulations like Sarbanes-Oxley and the updated COSO framework are raising the bar on internal controls, governance, and reporting objectives. This is elevating the importance of sound business processes, including preventative and detective financial controls.
For accounting and finance organizations, transparency, accuracy, and risk mitigation are now more important than ever. Yet, many companies are still relying on manual, spreadsheet-based reconciliations, which are time-consuming, error-prone, and create risk, especially during the financial close.
The Risky Impact on The Close
The close process is particularly weighed down with repetitive tasks (think data entry and complex spreadsheet formulas) that absorb accountants’ valuable time while increasing the likelihood of errors.
Weaknesses in the reconciliation process often lead to misstatements and control deficiencies, which can result in penalties and fines, devaluation of stock price, damaged public image, litigation, and even bankruptcy.
Manual reconciliations create inefficiencies in many ways. Here are the four areas that open the door to the highest level of risk.
- Obstructed Visibility
Manual processes make it nearly impossible to consistently report on exceptions, and ownership of accounts and action items is always unclear. Additional spreadsheets are often required to track completion, adding complexity and confusion. This can result in multiple versions of the truth, and lead to write-offs and unwanted surprises.
- Inaccuracy & Errors
Formula errors, data entry mistakes, and broken cell references are all common causes of inaccuracies in account reconciliations. Additionally, if you’re working in Excel and your computer crashes, you may be dealing with lost work, wasted time, and a lot of frustration.
- Lack of Control
Reconciliation formats are inconsistent, and the use of shared drives and local PC files result in multiple versions of the same reconciliation. Printed copies differ from saved spreadsheets, and copies (hard or soft) of reconciliations can easily go missing.
- Barriers to Approval
The lack of integration between manual processes and your ERP requires multiple steps to validate the completeness and accuracy of your reconciliations. Specifically, spreadsheets will not alert users of changing balances or late entries, and as a result, the approval of an excel file becomes little more than a mere ‘point-in-time’ validation.
Mitigate Risk With Automation
If these are ringing true for your organization, there is a better way.
Process automation designed specifically for accounting and finance teams can automate any manual, repeatable process—including account reconciliations. And this is typically the first process that organizations improve, standardize, and automate.
The reconciliation platform connects the data and delivers timely, intelligent notifications of balance changes, laying the foundation for balance sheet integrity. This technology adds control and visibility to the entire financial close, acting as a centralized hub for general ledger data, sub-ledger data, and other relevant financial data from various systems and applications.
The benefits are immediate, and they increase over time as additional enhancements are realized.
Successfully navigating the ever-rising complexity of modern finance requires the kind of competitive advantage that can only be created through innovative technology solutions.
Read this ebook to begin a finance automation journey that will unlock real-time intelligence and mitigate risk.