What is an audit trial and why you should automate it?

In this day and age of hyper-digitization, relying on paper-based records is like starting a fire using stones when there is a perfectly good lighter right beside you. Paper-based records such as invoices, receipts, purchase orders, expense claims, etc are poor forms of audit trail data.

They are prone to human error and difficult to store properly with a high risk of getting lost. Even governments encourage digitizing your receipts, expense claims, and invoices. It is the most secure way to ensure that your audit trail is easily accessible and harder to lose, given that you store them properly and chronologically.

When employees make a substantial purchase using the company’s money and resources, they need their manager’s and even executive approval to carry it through. To get this kind of approval, employees commonly use email correspondence that although is digital and can be saved as documentary evidence, however, it is in itself a very tedious and time-consuming process.

Every single email has to be forwarded to the finance team to keep them in the communication loop. It is also extremely difficult to find them during an audit when you have to go through thousands of emails to find one specific correspondence. What you need is a form of approval workflow that’s weaved into your purchasing process to eliminate lengthy email chains.

Among the numerous issues that plague company credit cards, one of the most notorious problems is the fact that company credit cards are not designed to be shared among employees. Since there is no way to keep a tab on who purchased what while using a business credit card, it becomes a bigger nightmare during auditing season, when you have to explain every single credit card transaction.

Conversely, if you limit credit card usage to only specific office managers and finance teams, that would require only a handful of people to make all the purchases for every department in your business. This is a clear wastage of time and your employees’ efforts. While these issues are troublesome, know that you can simply eliminate them all by adopting an audit trail software that can effortlessly automate audit data for you so you have everything you need to prove your financial records at a moment’s notice.

Proving compliance is one of the most essential parts of the audit trail; it is also difficult to prove with traditional methods of bookkeeping. Due to its dynamic nature, satisfying compliance is undertaken as a separate task altogether.

However, by automating workflows through a centralized platform, you can not only capture information accurately but also know that it’s automatically audited in real-time since there is no room for error. Additionally, especially in approval workflows, since every approval carries full information about the approver along with the date and time of the approval, user accountability is also automatically enforced.

When business processes are saturated with paper documents, it can make your accounting audit trail and logs less transparent and efficient. Automating the database into a centralized portal for all receipts, invoices, approvals, and other documents aids with visibility and allow business owners to gain valuable insights to review their processes and optimize them for maximum productivity.

One of the biggest and most noticeable benefits of automating the audit process is the increased efficiency it brings to the organization. Manual, tedious activities are automated, freeing up thousands of working hours for your employees to delve into more meaningful high-value tasks.

This further decreases the need for additional employees to carry out mundane activities, thereby saving you time and money. Since every execution in an automated workflow is duly recorded along with the executor’s information, automation protects the business from fraudulent activities by notifying dubious activities in real-time, strengthening overall audit trail data security.

One of the most labor-intensive tasks during an audit trail is to compile fragmented information from multiple sources. Imagine compiling every paper-based purchase order with its invoice, receipt, and the respective approval email buried under thousands of similar emails - a nightmare indeed!

Automation allows businesses to integrate this audit trail data by storing it in one centralized location and predefined workflows, thereby accelerating the time taken to complete the auditing process. When the time comes, it is presented as a single audit trail in accounting software, containing the necessary information for a smoother auditing process.

One of the key components of an accounting audit trail and logs is your transaction history. However, with multiple payment methods in effect, it gets difficult to avail your entire payment history whenever you require it. Instead of perusing through hundreds of credit card statements, invoices, and expense reports, you ideally require audit trail data capture at the source to be made available at one centralized database.

That is why having an all-in-one spend management solution is your best bet to have everything from invoice management to employee reimbursements, and physical plus virtual card payments, all in one central repository. Every transaction is recorded and source and automatically compiled so you don’t have to.

Requests and approval go hand-in-hand, both during purchases and claiming employee expense reimbursements. When a request is made, it has to be approved, either through e-mail or in written format. With automation, you can create approval workflows within the payment system itself.

Whenever an employee wants to access funds, either by creating virtual cards, corporate expense cards, or employee reimbursements, it must be approved by the designated authority, who is notified the moment funds are requested or a claim is made. By automating approval workflows you have a detailed report regarding the transactions, persons requesting and approving it, date, time, and purpose of spending all in one centralized location.

The most frustrating portion of auditing for the finance team is the mind-numbing paper chasing, whether it is invoices or their corresponding receipts. Part of the problem is that employees do not submit these documents on time, since there is no hassle-free way for them. By automating invoice and expense reporting through a mobile or web application and submitting digitized invoices and receipts, whether it’s an image or a PDF, you can significantly lessen the length of trouble your employees have to go through to record these transactions.

When employees use easy-to-use tools, receipts and invoices are recorded on time, every time. When you have a platform that automatically captures all the records, requests, approvals, documents, and transaction history at the source, you are eliminating the excess burden on your finance team to enter any additional data from their side, ready for any surprise audit that comes your way.