In the last few years, we’ve seen audit errors cause serious consequences. These aren’t simple fines for late accounts: it’s been impossible to ignore a string of names from the worlds of fashion (Superdry) and advertising (M&C Saatchi) having shares suspended by stock exchanges after missing auditing deadlines. This bigger-picture impact – coupled with the reputational damage of being seen as a business that can’t keep on top of its finances – heaps pressure on accounting professionals who are already well aware of the underlying damage auditing problems can cause.

This ever-increasing pressure is leading some accounting professionals to question whether it’s time to explore a different career path. Indeed, the US Bureau of Labor Statistics says the number of accountants was down 17% between 2019 and 2021, with 25-34 year olds and 45-54 year olds leaving the profession. Many of their UK peers will be considering following suit. Clearly something needs to change, as the industry cannot afford a ‘brain drain’ – so exactly why are so many businesses struggling to compete audits on time?

Persisting with paper

People with no working knowledge of accounting and audits would be surprised by how much activity is still carried out manually, using physical documents. Even with the best filing system in the world, paper invoices, POs and receipts will always leave room for mistakes to creep in. Papers could be lost, human error may inadvertently disrupt a set system, or somebody with irreplaceable understanding of how the system works and where everything is located may suddenly leave the business. One of the biggest drains of time in an audit is having to hunt high and low for an elusive document. Very often, the information on one invoice could make or break an entire audit – meaning teams must hunt deep into filing systems and offices to uncover the right piece of paper. This puts increasing demands on already-stretched finance teams’ time, as well as increasing the risk of failing to provide everything an auditor needs.

This persistence with using pieces of paper in accounting can sometimes stem from an ‘if it ain’t broke, don’t fix it’ attitude from the wider business. We’ve all heard about businesses ‘digitally transforming’ themselves in recent years, with Garter predicting global IT spending will almost hit $5 billion across the course of 2023. However, accounting teams can sometimes find other departments take precedence and consume these digital budgets – assuming that they can just leave accounting teams and processes as they are. And even when digital transformation investment flows finance’s way, it might not be spent as effectively as possible.

Reaping the rewards

Things can’t go on like this – finance teams cannot afford to be overlooked anymore. Now is the time to leave manual processes behind and move accounts to the digital world.

This can’t be a simple lift and shift, however – teams must guard against the risk of replicating existing problems in a new digital format. A lost digital document will prove just as disastrous to an audit as a physical one. Any transformation needs to include a single, clear, intelligent approach to collecting, recording and sharing data across the finance team. This will make it easy for staff to access relevant information, and to demonstrate consistent processes to auditors.

Any approach also needs to ensure overarching visibility – giving a real-time snapshot across the entire finance team. This will have a revolutionary impact during audits, allowing the organisation to present the exact state of the accounts on any particular day, instead of rifling through document filing systems to reconstruct the state of play. There are longer-term benefits to this as well, as teams can gain this real-time understanding whenever they have a query about their own finances.

Digital, automated processing also reduces risk – empowering teams to be confident that what they’re reading is accurate, with human error kept to a minimum. A seemingly small mistake like a mis-spelled name or a decimal point in the wrong place can have serious consequences – whether that’s delaying an audit or causing an extremely costly invoicing mistake.

On the flip side, if auditors are confident that they won’t find mistakes, the relationship will become stronger, and processes can run smoother. If the business’s accounting system makes everything as easy as possible for auditors, allowing them to directly log in and view the relevant information, then auditors can ideally do more work in less time – increasingly important when you consider skills shortages and rising costs. The same goes for internal teams – putting an end to the days when a big report to share or an audit to prepare for can cancel teams’ entire weekends.

Enough is enough

Now is the time for accounting teams to say that ‘enough is enough’, and stop accepting the status quo of being left out of wider digital transformations. They need to leave the days of manual documents behind and become more confident they can meet auditing requirements on time. Over the longer term, this greater visibility will enable them to look beyond audits and quarterly reports, meaning issues or opportunities will be identified further in advance. This will put them in a strong position to ensure audits are no longer a painful experience, and instead are another way to demonstrate their accuracy, efficiency and competence.