July 11, 2023

Why document management is secret weapon for audit preparation

Why document management is secret weapon for audit preparation

Maintaining necessary audit documentation is always a challenge for any organization, especially for a large one. Without an effective document management solution, it will be difficult for you to find paper documents, electronic files, and emails stored in various ways while browsing.

Why document management is secret weapon for audit preparation

Failure to provide this information to auditors exposes your business to risk, including fines for non-compliance, loss of key industry certifications, and disruption to day-to-day operations. For example, if you are doing an in-depth financial audit, this action can take up to two to three weeks across your entire finance department, with accounts payable and receivable processes getting stuck.

Preparing for an audit

Audit comes in a variety of forms, depending on your industry and geographic location. For example, tax authorities in your country may check your compliance with financial laws. You may also be subject to social security audits, industry body audits, and parent company internal audits.

When you know an audit is coming up, you have a window to prepare information auditor wants to see. For a standard audit, it usually takes several months to prepare. If your documents are not very well organized yet, there is not much time. In other audits, there is a specific type of investigation and audit time may be limited.

Some companies turn to consultants to pull together right information, such as hiring a tax lawyer to help prepare accounting documents for a financial audit.

Here are some general steps to prepare for an audit:1. Prepare information: When using electronic files, you may need to place relevant documents on a DVD or external drive, collect and copy necessary paper documents.

The important thing here is not to provide too much or too little information. Voluntarily providing documents that are not requested (for example, giving auditor full access to your file system) can unnecessarily expand scope of audit. However, if you provide too little information, auditor may think that you are blocking review and ask you to grant full access. For example, in Germany, if auditors believe that you withheld information, they can sue.

2. Set up access to electronic systems. Depending on circumstances, you may also be required to provide access to IT systems. In this case, you need to prepare login credentials for auditors so that they can easily access what they need while restricting access to information outside scope of audit.

3. Prepare for needs of auditors. Finally, you need to assist auditors in audit process. If they plan to conduct a local audit, will they require you to provide a desktop or computer to access your systems? In case of a remote audit, how will you give them remote access to data?

One of your goals during these preparations is to create a positive work environment.udnichestvo. After all, auditors are people too, and simplifying their work is likely to have a positive impact on audit results.

Why is document management your secret weapon?

Preparing for an audit can be time consuming and stressful if you don't have a digital document management system in place. When your paper documents, electronic files, and e-mails are stored in separate vaults, finding information you need takes much longer and increases risk of losing important files.

These problems are multiplied if you don't have a standardized document stored procedure. Employees tend to create their own file systems based on what makes things easier in short term for their own devices. If you look at two people's computers and email accounts, you'll often find different file structures. There are countless information blocks in an organization, and any of them can contain information relevant to audit.

This is where digital document management can come in handy. A well-implemented system basically forces all employees to store documents in a single centralized repository in a single way. For example, whenever employees scan documents or drag emails into a document management system, they may be prompted to tag documents with metadata that identifies them as relevant for various types of review.

If you need to prepare information for auditors, simply create a filter for all audit-related documents. From there, it's easy to view results and export desired document to an external drive or DVD. Alternatively, you can simply provide auditors with a PC and login credentials, allowing them to access those specific files.

Finally, a digital document management system can easily prepare necessary information, set file permissions, and meet needs of auditors, thus greatly reducing business risk of audit failure. This helps to avoid disruption to your day to day operations as your finance department will not be busy for weeks during audit.

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