Experienced accountants are hard-wired to remain audit-ready. But for small and medium-sized businesses (SMBs), are their financial team really prepared to provide detailed financial recordings, having their time monopolized and day-to-day responsibilities disrupted?
The consequences of being unprepared for an audit can be severe, ranging from financial penalties and legal liabilities to reputation damage and loss of stakeholder trust. Plus, many businesses are now more likely to be audited.
The good news is that today, AI and automation can eliminate most manual audit prep. These technologies streamline audit readiness and ensure compliance with greater efficiency and accuracy. They’re powerful, proven alternatives to manual audit preparation. Plus, AI and automation also enable finance teams to focus on strategic initiatives instead of getting bogged down in repetitive, time-consuming tasks.
Ready to elevate your finance team’s processes, performance, and preparedness? These 10 tips are perfect starting points.
Checklist: How to power audit readiness with AI and automation
Adopting AI and automation isn’t about jumping on a bandwagon. Both technologies have become genuine game-changers for SMBs and their accounting firms, boosting audit preparedness and streamlining formerly labor-intensive processes. Use this 10-point checklist to assess your current processes and identify areas where AI and automation can help you simplify compliance.
1) Automate account reconciliation
If you’re on the fence about automation, consider this: 96% of accountants say it’s essential for the profession. Start by using payment software to automate account reconciliation. This will not only ensure the accuracy and consistency of your financial data; it’ll help you identify and address discrepancies quickly, saving time and reducing the risk of errors during an audit.
2. Maintain comprehensive digital audit trails
Not many finance pros think of the time they spent manually maintaining audit trails as the good old days. Payment software automatically generates and maintains digital audit trails, keeping all relevant financial documents and data accessible and organized — while simplifying the auditing process for your team and external auditors.
3. Establish and enforce consistent financial policies
Once you’ve documented your organization's financial policies and procedures, automation can consistently apply them across all transactions. There’s no easier way to maintain compliance, reduce errors, and demonstrate a commitment to financial integrity during an audit. Also, automation can run 24/7, allowing employees to focus on retrieving data, reviewing it, and taking action where needed.
4. Implement AI-powered error detection
Accountants are known for their attention to detail. But AI can find potential errors and inconsistencies in financial data faster and more effectively than even the sharpest financial teams. By regularly reviewing and addressing flagged issues, your team can proactively manage risks and ensure the accuracy of your financial records.
5. Rely on AI for fraud detection and prevention
Much like its unrivaled ability to pinpoint errors and anomalies, AI can spot signs of fraud through always-on anomaly detection. Payment automation software with multi-factor authentication and encryption can also help prevent fraud.
6. Prioritize data security and privacy
Even though cloud-based accounting is safer than local software, you should implement robust data security measures to protect sensitive financial information. Regularly train your team on data privacy and security best practices, and use AI and automation to monitor for potential breaches and ensure prompt response.
7. Maintain accurate and up-to-date financial records
Implement regular data backups to prevent loss and ensure the availability of critical information during an audit. For peace of mind that your financial records are accurate and up-to-date across all platforms, choose automated payment software that seamlessly integrates with popular accounting software like QuickBooks and Xero.
8. Conduct periodic self-audits
Even if you’ve checked off items 1-7 on this list, schedule regular self-audits to identify and address potential issues before external auditors come knocking. AI streamlines data collection, aggregation, and analysis of automatically reconciled data, making it easy for your team to perform periodic spot checks to make sure you’re on track.
9. Foster open communication with auditors
Working with an auditor is no time for surprises. Establish collaborative relationships with yours, informing them of any changes in your business or financial processes and performance. Be transparent and responsive to their inquiries to facilitate a smooth and efficient audit process.
10. Stay current on regulatory changes
Be proactive in knowing the latest in regulatory requirements. Sign up for email alerts or RSS feeds from government websites (like the SEC or FINRA in the US and the CSA in Canada), industry associations, and publications. Encourage your team to network with other financial professionals. Then regularly review and adapt your policies and procedures to maintain compliance, using AI and automation to monitor for regulatory changes.
Embracing AI and automation will also empower your finance team to work smarter, faster, and more strategically.
Beyond audits: The impact of AI and Automation on finance teams
By following this 10-point checklist and integrating AI and automation into your audit preparation process, your team can shore up readiness and streamline compliance efforts. Embracing these technologies will also empower your finance team to work smarter, faster, and more strategically:
- Elevated efficiency: Automate repetitive tasks like reconciliation and data entry, freeing your team to focus on high-value activities like analysis and decision-making.
- Unparalleled accuracy: Minimize the risk of human error and benefit from real-time monitoring of financial data to quickly identify and resolve discrepancies.
- Proactive risk management: Gain deeper, more timely insights into your business's financial health, enabling you to anticipate and mitigate potential risks before they escalate.
- Scalability and agility: As your business grows and evolves, AI and automation make it easier to adapt to changing requirements and effortlessly maintain compliance.
- Competitive edge: By harnessing the power of these cutting-edge technologies, you'll position your finance team — and your business — to thrive in an increasingly digital and data-driven landscape.
Ready to unlock the full potential of AI and automation for your finance team? Read our comprehensive guide to discover more ways these technologies can help you establish efficient workflows and free up valuable time.
