If you're like me, you're 'fortunate' enough to experience an annual visit from auditors who will without fail ask the same questions as the previous year. However, while their questions remain unchanged, their demands for higher levels of audit evidence seem to grow each year. Specifically, I've noticed an increasing trend for proof not only of approval but also of detailed review, focusing on what was reviewed, by whom, when, and what the review process covered.
Most of the review work that occurs in a finance team is likely to revolve around the month-end close process, as it covers the majority of the routine process that auditors will test. While I cannot give you a comprehensive list of how to document all your team's work to ensure a successful audit, I can give you some high-level themes that your team should consider that will make the audit process easier for your team.
When it comes to reviewing work, you know that your team does a good job. You understand the business you work in, so you intuitively know which areas need to be thoroughly examined and which areas only require a light touch review. However, conveying this intuitive knowledge to auditors is nigh on impossible. To get around this some teams (myself in the past included) will document for the sake of documentation. By this I mean the classic sending of an email every time work is completed or reviewed just to prove that you have reviewed it. You may have even added in a throwaway comment like "Looks good, no review points from me" just to demonstrate that you reviewed it and have no comments. All this unnecessary work is time-consuming and adds no value to your team.
Most of you reading this probably have a team Excel or Sheets checklist that each team member will mark as done once completed and reviewed. This however is an increasingly hard sell to auditors as sufficient evidence of review as anyone can simply sign off on someone else’s behalf. Dates of review can also be easily changed as there is no unchangeable date stamp leaving room for more unwanted audit questions.
Now, I don’t want to just outline a number of issues and then leave you thinking that there is no solution. In fact, the solution to all of your audit evidence (when it comes to review) is actually very simple. The solution lies in having the right tools for your team. Your team needs software that can capture all of your audit requirements in one place. The easiest way to achieve this is not by continually bolting on more software solutions that one performs one role, but by having your month-end close process documented in software that can record all your audit evidence. It should have the ability to track the review process, capture comments, provide feedback, attach files, and timestamp every action.
This system-based approach should not be limited to just the month-end close process but should be applied to all your finance team workflows. Email should not be used by your team to document the preparer and reviewer, or to transfer files internally.
This may seem like an overly simplistic solution to capturing robust audit evidence. However, month-end close is universal to us all, and by doing it correctly and capturing all your audit evidence seamlessly as you do the process, you will easily cover the majority of your audit evidence.
If you would like to learn more about a month-end close and workflow management tool specifically designed for finance teams that meets all your audit evidence requirements, reach out to us at Easy Month End.
Pete Archer
Pete Archer