The looming prospect of an audit is enough to send a shiver down the spine of any CFO. With external regulators trawling through reems of transactions and statements, comparing internal and external records, reviewing accounting systems and processes, and evaluating data storage procedures, all to ensure that company information presented to the public and stakeholders is correct, and the risk of fraud is prevented.

Audit reform proposals announced by the UK government are set to bring more change to the audit industry after a series of scandals have reared their heads in recent years. Café chain, Patisserie Valerie, is just one stark reminder of the impact of inaccurate financial reports. Extensive misstatements of its accounts, manipulation of balance sheets, thousands of false entries in its ledgers and overstated profits and cashflow were just some of the accounting irregularities revealed, leading to a number of store closures and mass redundancies; not to mention a £20 million pound handout in order to survive.

According to The FT, these failures are a result of a long list of problems within the auditing process including confusion over auditing powers, regulators lacking necessary statutory powers and insufficient competition within the industry – 97% of FTSE 350 audits are conducted by just four firms. Tougher rules and regulations to bring visibility to accountancy ‘black holes’, will mean business leaders are held to account and will bring new powers to regulators. While it’s expected that there is still some way to go before these reforms are implemented effectively, there are immediate measures that organisations can put in place to ensure their data is ready for inspection. There’s no reason to wait.

With ever-increasing amounts of data to capture, coupled with the limitations of ERP and accounting systems, it’s clear that late and inaccurate reporting remains an issue for enterprises, especially since the markets are likely be unstable for the foreseeable future due to the impacts of the pandemic. In 2017, 73% of finance teams were still collecting and processing all this complex information using manually intensive, spreadsheet-based systems, making it difficult for them to run an efficient and effective operation. This slow and laborious process consumes precious time that finance executives just don’t have when working to an imminent deadline, causing a huge 87% of them to work overtime. With strategic, business-critical data rising exponentially and manual processes impacting productivity levels, the risks from data errors are increasing in severity, leaving many businesses susceptible to failed audits.
To remedy the challenges associated with poor data quality, while improving compliance, and reducing business risk, a good place to start is by investing in automation software with inbuilt centralised data stewardship capabilities and process management. These combined features help ensure that audits are passed, and penalties can be avoided. Automation systems, such as these, deliver governance and process compliance so that files, like Excel spreadsheets, are not only managed centrally but workflows are tracked across the entire financial process, increasing visibility, and eliminating the risk of errors.
This level of compliance is particularly important for organisations that are now operating with a fragmented workforce because of Covid-19, as it enables employees to seamlessly access files with little disruption. To ensure this is implemented effectively, finance and accounting professionals need to be mindful of the accuracy of the data being processed.  In our experience companies that started their automation journey without re-engineering the processes that were creating poor data have subsequently struggled with quality issues at a later stage. Instead, a combination of data cleansing and automation will help ready companies for inspection.