Universal Ways to Ensure an Audit Disaster
- By Liz Briggson
- May 26th, 2023
Internal and external audits can quickly turn into disasters and lead to dire consequences if organizations are not prepared. Too often, finance teams think that they will ace their audits, but then significant issues arise that lead to unwelcome surprises.
In a recent webinar, Nancy Wu with SkyStem walked through: How to Ensure an Audit Failure. With a background in auditing, Nancy has seen up close many of the fatal mistakes organizations make which can lead to unmitigated disasters in their audits.
Nancy pointed out that if two key objectives cannot be achieved, an audit disaster is all but guaranteed. Organizations should aim for:
- Meeting expectations from internal and external auditors.
- Increasing process maturity through improving operational efficiency & effectiveness, and/or becoming more competitive through benchmarking or experimentation with leading practices.
When organizations miss one or both of these two key objectives it usually comes as a result of the following work habits that universally lead to an audit disaster:
- Being clueless
- Skipping documentation
- Missing deadlines
- TMI. Or too little support
- Perception of impropriety
Each of these habits can lead to dire consequences in the audit process. As Nancy pointed out, organizations can overcome these pitfalls by following the Capability Maturity Model. This model seeks to define processes by transitioning from ad hoc practices to formally defined steps. By continually improving processes and performance, organizations can tap into innovation and automation in their workflows.
Utilizing a tool such as SkyStem’s ART enables teams to standardize their reconciliation and close processes. A good solution will provide visibility to help the team stay informed, complete the requisite documentation, and achieve key deadlines. This is an area where auditors focus a lot of their attention because it’s an area where errors and significant issues are often discovered. To see SkyStem in action you can schedule a demo HERE.
- Process documentation
- capability maturity model
- audit disaster
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