Why the financial sector needs to prepare now

By Jack Skov, Financial director, Consolidator

After much speculation on whether or not the long-awaited Audit Reform Bill will be included in the government’s upcoming legislative program, an Audit Reform Bill has finally been included in the supporting documents. published alongside the recent Queen’s Speech. However, despite this, uncertainties remain over the timing and details of the bill, and whether it is still likely to make it into the 2022/23 parliamentary sessions.

While we can’t control when or how the bill is ultimately put together and implemented, there are some steps auditing and accounting firms can take to ensure they have a long life. forward to avoid unnecessary mistakes and failures. The series of accounting scandals at companies such as BHS, Carillion and Patisserie Valerie have highlighted how the audit industry could greatly improve the way it protects employees and investors from wrongdoing. Whether or not firms agree with the introduction of a reform bill aimed at reducing the likelihood of other situations like these, auditing and accounting firms have the power to improve process and to minimize the risks themselves.

Industry needs to start self-regulating now
Auditors must begin the process of “self-regulation” now to ensure that audit firms are not taken by surprise if the reforms are put in place. One of the ways audit firms can self-regulate is to introduce more automated processes to increase accuracy and reduce the risk of errors and miscalculations.

In the accounting and auditing industries, Excel remains a very popular program for managing data due to the fact that it is a well-known software and its widespread use in client businesses. However, no matter how careful or precise the user is, there is always a risk of error or miscalculation. A small slip in the math can cost companies dearly – like JPMorgan which lost $9 billion in 2013. Outside the financial sector, Public Health England is believed to have misplaced almost 16,000 Covid test results at the height of the pandemic, where thousands of potentially infectious people have not been contacted to self-isolate to stop the spread of the virus due to over reliance on Excel.

Automation as an alternative to Excel

For auditors and accounting firms, whose job is only to ensure that calculations are accurate and precise, a small mistake can have devastating consequences for a client and can also damage your credibility and reputation in the business. industry.

Over the past few years the industry has improved and we are seeing more and more automation of audit work. However, despite this, some complex tasks and processes are still kept in archaic and error-prone systems like Excel. In order to ensure efficiency, these can be easily automated and standardized through technology, which makes a huge difference in terms of timing. Also, because technology is hard to deceive, it creates less room for error and, more importantly, fraud.

By using technology that automates financial reporting and other financial processes, auditors can avoid the risk of errors and miscalculations. This type of software can also provide a full audit trail, tracing the source of every financial figure. These systems ensure reliability at every hurdle and ensure compliance and trust for employees and customers, especially companies that need strong finances to be able to effectively prepare for growth or investment.

Given the uncertainty of when audit reforms should be implemented, it is essential that auditors plan ahead, self-regulate and take control to minimize the risk of misstatements. Leveraging sophisticated technology can help auditors and accounting firms ensure that financial calculations are accurate and completely risk-free. Automation is set to be a game-changer in the future of the financial industry. Technology is synonymous with efficiency and can play an important role in creating lean and efficient processes.

Effective management of finances through automated technology software may well be an effective solution to help build this much needed trust in the auditing and accounting industries.

About the Author:

Jack Skov is Konsolidator’s Chief Financial Officer, with over 25 years of experience as a former auditor, having previously worked at Deloitte.

Konsolidator is a cloud-based tool that automates and standardizes financial consolidation and reporting processes.

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