How can the cloud turbocharge the audit process?

How can the cloud turbocharge the audit process?

The audit process remains a critical compliance task for any finance department and CFO. How can you ensure that the process is as effective as possible?

The audit process remains a critical compliance task for any finance department and CFO. But, whether internal or external, it can also be onerous, costly and time-consuming. The risk is that audits then become mere tick-box exercises that add little value to the business.

Inefficiencies in finance systems often complicate the audit process too. For many organisations a hairball of disparate and incompatible systems and processes can hinder the ability to answer those important audit questions easily or quickly.

In fact, a survey of more than 1,200 chief audit executives (CAEs) in 29 countries by Deloitte found that internal audit teams lack the influence, skills and tools needed to develop critical forward-looking capabilities that boards expect, such as anticipating and responding to risk. Fewer than a third (28%) of CAEs said they believe internal audit has a strong impact and influence on the organisation. Perhaps not surprising when just over half (55%) of CAEs said they had only basic internal audit analytical capabilities, such as spreadsheets, while 11% said they had no analytics at all.

The reality is that there is little excuse for this state of affairs. Modern cloud-based financial systems and tools are available today and don’t require the vast capital expenditure associated with traditional legacy IT systems. It is now possible to automate much of the audit process to flag up issues and filter information effectively.

Analyst Gartner says finance departments are now embracing the cloud much faster than expected, with organisations of all sizes moving to cloud solutions for core financial applications. Gartner’s survey of senior financial executives found that 36% of enterprises will use the cloud to support more than half of their transactional systems of record by 2020.

One benefit of cloud-based systems and automation is the improved efficiency and accuracy of the audit process. With a consistent centralised data repository, auditors will be able to access and analyse the information better and faster.

Another factor driving this need for more modern finance systems is that the frequency of auditing is moving towards ”real-time” while the scope is expanding. Tax administrations are pushing for greater access to organisations’ financial records. Standard audit tax files (SAF-T), enabling the audit of VAT filings, are being introduced across Europe. Governments are moving towards an approach whereby they receive sales and purchase data, audit that data, and then complete the returns on behalf of businesses.

Expanding and growing businesses pose another challenge for the audit process. For any organisation expanding into new markets overseas this can lead to multiple local accounting systems, each with different internal controls that auditors would need to document and audit. And if the organisation trebles in size over the next two years then the cost of the audit could treble as well. Scalable finance technology is a path to preventing those costs rising in line with business growth. Auditors can also work with HQ staff more directly when there’s a global cloud ERP system, reducing the need to travel to other locations to deal with local staff and local systems.

A global cloud-based finance and ERP system, such as NetSuite, across the whole business will provide auditors with the insight and reassurance they require, keeping audit costs to a minimum.

However, it’s not just about reducing the cost and complexity of the audit process. The primary compliance purpose of an audit is to check the accuracy of financial records and ensure there are no fraudulent transactions. And there are legal obligations to file accurate company records and pay the correct tax.

And if that compliance process is working accurately and efficiently then the audit becomes far more than an irrelevant tick-box exercise. By pulling together accurate and real-time information the finance team and CFO can support business growth and also provide confidence in the integrity and direction of the business to external stakeholders and investors.

Ultimately, having a strong handle on the finances means that information can be used to more accurately gauge the business’ current performance, and better plan its future.

Are you at the forefront of digital transformation? Find out how you can elevate your finance team’s value and drive better performance management and business outcomes by registering for this webinar on reinventing the finance function, taking place on 12 October at 9.30am

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