With audit season in the rear view for financial reporting and audit teams, it’s easy to lose momentum. But now’s the time to strategically debrief, optimize processes, and lay the foundation for a successful, efficient audit in the coming year.
By making the most of this valuable opportunity, the post-audit debrief can be a productive, transformative exercise for the future, rather than just a review of past results.
Today’s Audit Progress Is Tomorrow’s Audit Efficiency
Even the most meticulous audits can benefit from a debrief. The best debriefs happen soon after the audit is completed, when pain points and ideas for future efficiencies are top of mind for everyone. Plus, a timely debrief allows financial reporting and audit teams to make investments over the traditionally slower summer months.
This time of reflection, ideally conducted between both internal management and your external audit team, allows you to identify areas for improvement and implement the types of technology and workflows needed to proactively avoid and address audit issues.
Using this time wisely can look differently for every organization. In addition to working through audit findings and implementing remediations, management teams should do the following:
- Gather feedback from all levels involved in the audit. Create an open and honest environment that allows everyone involved in the audit to provide their point of view. What worked? What didn’t? Take extensive notes and ask questions to understand the root cause of the issues.
- Identify themes. Inefficiencies in an audit can typically be narrowed down to a few key themes. Are there communication issues that would benefit from a clearly defined schedule or standing status calls? Do certain processes or departments need dedicated attention?
- Develop an action plan. What are some of the top change priorities in the next several months? Who should own specific responsibilities and tasks moving forward? What are some benchmarks and milestones you’d like to achieve ahead of the next audit cycle? Make a plan with clear ownership, and then hold all parties accountable.
In our experience, here are three highly effective ways to capitalize on this phase of the audit journey:
1. Focus on Technology-Enabled Data Enhancements
As audit firms look to improve audit quality and efficiency amid rising regulatory scrutiny, there’s immense opportunity for management teams to proactively implement a modern data architecture to help achieve those very goals.
While there’s obvious appetite for better use of technology in the audit process, it all starts with the quality of data. Adding more cloud-based systems or automation tools without addressing data concerns will add more IT bloat and potentially create more challenges.
Featured Insight
To start, consider the source systems and flows of data. Tools like Snowflake can simplify data architectures and create a clean foundation for automating inefficient audit workflows and data compilation while maintaining traceability. Other platforms, like AuditBoard and Workiva, can help automate, visualize, and manage audit processes and enable decision-makers to surface risks before they reach the level of a deficiency.
By reducing reporting timelines now and going through several test runs of new technology-enabled reporting or audit workflows, the audit process at year-end can be less siloed, more flexible, and more enjoyable. Plus, the labor and time savings can help ease bandwidth and burnout concerns.
2. Implement a Control Rationalization Program
It’s often the case that, over time, auditors may recommend additional controls to be implemented. Sometimes, it’s healthy to step back and reassess the entire control environment to ensure the continual addition of controls isn’t causing more problems than it’s solving.
Control rationalization streamlines and validates controls to remove redundancies, overhead, and outdated frameworks. Building a rationalized control structure is a one-time investment that can save time in perpetuity for every future audit cycle – and the post-audit filing period is a prime opportunity to execute on this investment since tangible rewards will become evident in a matter of months and there’s more bandwidth to work on a project like this sooner versus later.
Rationalizing controls isn’t just a matter of adding or subtracting controls where necessary. It’s critical to deeply understand the process and risks of material misstatement, and then consider the types of controls necessary and how they can be organized more effectively and with less effort. For example, increasing your reliance on IT controls can reduce reliance on a number of manual controls; however, close attention must be paid to IT general controls.
Control rationalization will ultimately save labor and time in the long run but necessitates an investment today, along with proper implementation, training, and change management for maximum effect.
3. Conduct Interim Testing
In an audit, when you do the work matters. If aspirational audit projects from the summer are backlogged indefinitely, these tasks will only add to the mounting pile of work to complete during the end of the year. When optimizing the audit experience, the work should start months in advance of crunch time. While this may be standard for public companies with robust audit support, private companies may need to place added emphasis on a fast start, especially if this is their first time working this way.
Interim testing is a good practice for every firm to adopt. By evaluating and testing the company’s controls in advance, teams gain early insights into the effectiveness of the control environment.
This allows internal staff to potentially detect early control deficiencies and take corrective action before the actual audit. It also means, ideally, that auditors can spend less time doing detailed transaction testing at a later date, further reducing the risk of misstatements and improving the audit experience.
As David Moore, Co-Founder and CFO of MidCap Financial, noted in the video, it’s important to work with a strategic audit advisor on key projects to understand the latest thinking in the accounting industry, which can enhance audit process efficiency internally and when approaching external audit partners at a later date.
Interim testing requires both management and the audit team to plan in advance, which may
include acceleration of certain processes and reallocating resources on both sides.
Dedicated resources and accountability are key to making interim testing worthwhile –
and additional external resources may be required to alleviate any internal workload
concerns.
Maintaining Audit Agility
By making some of these enhancements in the coming months, it’s possible to execute every future audit more efficiently and with greater confidence in the outcome. Additionally, as evolving risks and regulations emerge, the tools and processes you put into place today should be adaptable.
Biovell ’s unique position as a technology-enabled audit advisor means our accounting advisory, risk advisory, and business transformation teams work cross-functionally to design, build, and deploy leading technologies that meet the objectives of auditors and management. Our audit specialists speak the language of auditors and take the burden off management teams by driving value at all points in the process before, during, or after an audit – wherever support is needed, we plug in.
To maximize your audit debrief period, contact Biovell .