An audit feels like the acid test for a business’ finance function – if you pardon the accounting pun.
For a growing business, one that is changing rapidly and where the finance team is working hard to manage cash, the audit often feels painful. Nascent, or evolving, systems and processes mean that the tough questions asked by auditors aren’t always answered easily or quickly.
So, shortening the audit process can help to drive improved data transparency and comparability. Auditors will bill fewer hours because the information they receive can be better analysed and discrepancies or outlying patterns or figures addressed.
Systems that can take questions and provide the answers are not the future, they are available today. If you’re growing fast, you should prioritise investing in a modern finance system that will enable a more efficient audit.
Note that the auditors themselves are gearing up to change. They are working hard to streamline how they undertake audits, using automation and artificial intelligence (AI) tools to delve through complete datasets faster.
And, if they are spending less time undertaking an audit, then you and your finance team members will have more time to concentrate on doing your day job.
In other words, there are savings to be made from both a financial and people perspective.
But business have to deal with more than financial reporting compliance. Tax administrations are pushing for more access to organisations’ financial records. Standard audit tax files (SAF-T), enabling the audit of VAT filings, are being introduced across Europe. Governments seem to be moving towards an approach whereby they receive sales and purchase data, audit that data and then complete the returns on behalf of the businesses.
In other words, the frequency of auditing is moving towards ‘real-time’ and the scope is expanding. Again, your finance system needs to be able to cope as auditing develops.
And, talking about development, think about your organisation expanding. Perhaps it will treble in size and move into new jurisdictions over the next 24 months. Do you want the ‘cost’ of audit to treble as well? Scaleable finance technology is a path to stopping those costs rising in line with your business’ growth.
Going back to the start of this conversation; if an audit is an ‘acid test’, what is it a test of? Well, it’s looking to check whether your financial records are accurate and free of fraudulent transactions.
A key aspect of the finance function is to be able to provide the rest of the business with accurate and timely information to make the best strategic and operational decisions as possible. We mustn’t forget that there are legal drivers as well: to file accurate company records and pay the right tax.
An audit seeks assurance that your business is fulfilling its legal duties correctly – and if that process is working well, then you’re more likely to also be supporting the business’ needs for accurate, timely information.
If you pull that all together, then finance is supporting the business growth. This then gives confidence to external stakeholders, including potential lenders and equity holders, that the business knows where it is and how it achieves that.
So in summary, a high-growth business needs a modern finance system that doesn’t just work well for the audit process; it needs to be tracking and flagging issues as they arise. You can’t really do one without the other.
Learn more about NetSuite financial management.