As we all look to navigate the “new normal” brought about by COVID-19, it’s clear that figuring out the complexities of working during a pandemic will continue for the foreseeable future. Though we’re adjusting in real time, the degree of disruption, coupled by a mostly remote workforce, has adversely impacted utilization and morale in many cases.
The Finance and Accounting Department is not immune to the difficulties presented by remote work. Despite the challenges, we must be able to continue to operate as usual: ledgers must be closed, financial information shared with internal and external stakeholders, and controls and procedures followed as originally designed.
In a recent webinar hosted by Cohen & Company, FloQast and Workiva, we explored ways in which the enterprise Finance and Accounting Department can use cloud-based tools to better prepare for the audit and streamline close procedures — all without ever having to set foot inside office. As employee safety will remain a chief concern for business leaders, using these cloud-based technologies can help mitigate risk posed by physically working side by side.
There were numerous takeaways throughout the webinar, but chief among them were the gaps in readiness for a 100% remote finance and accounting function. We polled attendees and identified the three biggest opportunities to enhance performance related to finance and accounting activities during a pandemic, or any work-from-home situation.
1. Update Antiquated Reporting Processes
One of the most compelling poll responses we collected shows that only 15% of business leaders are currently using cloud-based applications to manage their record-to-report process. That means 85% of respondents have an opportunity to streamline and optimize their processes by enabling cloud-based technologies for close management and related reporting.
Among other findings, organizations with antiquated reporting processes who use traditional tools alone to facilitate their close process indicate a greater likelihood for inefficiencies and errors. It’s clear that integrating cloud-based close management and reporting technologies can help achieve operational efficiencies and real-time analysis, without sacrificing accuracy. Most importantly, using cloud-based technologies helps companies ensure continuity during a crisis.
2. Execute Tasks Remotely
According to our survey polling question shown at right, nearly 40% of finance and accounting professionals responding are attempting to work remotely for the first time, a surprising figure to most of us on the panel. Prolonged periods of remote work will cause even greater business disruption to companies that are not prepared to work remotely in some capacity.
It has been particularly eye-opening for small and mid-size companies that lack the resources to work remotely. The capability to perform the financial close and produce all the reports needed internally and externally while working remotely may become a fundamental business requirement moving forward.
The key question companies should be asking is, “How will you prepare your workforce for the new normal?”
>> Read Workiva’s Handbook for the New Normal of Accounting, Finance and Risk
Also surprising, we found that 2% of Finance and Accounting Departments are forced to enter the office either because they are “essential” or because they simply lack remote work capabilities. We are hopeful the cause is due to being “essential” versus lack of preparation. Otherwise, a firm’s greatest asset (human capital) is unnecessarily being exposed to potential risk.
3. Preparing Close Process Documentation
Finally, we found that approximately 1/3 of respondents cite “lack of sufficient documentation to facilitate an on-time audit” as the primary driver to audit fee overruns. In our experience, we’ve found that processes relying primarily on collective wisdom — rather than documented close processes — result in inconsistent close procedures, difficulties in onboarding new employees and ultimately pose a business continuity risk.
We’ve also found that lack of up-to-date and actionable close documentation results in costly delays. This oversight can create headaches during the annual audit, leading to expensive overruns and inefficiencies that can impact productivity and your bottom line.
How to Take Control of Your Remote Close with Close Management Software and Connected Reporting
Relying on tools like Microsoft Word and Excel to facilitate your close and record-to-report processes is common, yet it can leave your company open to risk — leading to version control issues, lack of transparency and insufficient audit trails.
Conversely, close management software helps streamline your close process by housing month-end tasks, supporting documentation and reconciliation tie-outs all into one accessible platform. This allows you to increase data visibility, enhance data accuracy and expedite reporting processes.
When close management software is combined with a connected reporting platform, you can present your data with absolute assurance to stakeholders at every level because the data is linked to the source rather than copied and pasted from emails or desktop files. You can produce board reports, flash reports, filings and other disclosures using the same set of data.
A professional services partner can help prepare your finance and accounting staff for adopting digital technologies by:
- Assessing close management software and reporting platforms,
- Determining whether a close management or reporting platform can be developed in-house and
- Accelerating the implementation of the chosen platform.
Despite the changes our world is facing, annual audits and the monthly close process will still occur. When remote work is seemingly the only option for most finance and accounting professionals right now, there is an increased risk for error if relying solely on Microsoft Office products to handle sensitive data.
What Should Be on Your Checklist to Remain Audit Ready
A close checklist or controller checklist that includes an up-to-date list of steps required to perform the close is an effective tool in remaining audit ready. An effective close checklist should contain at least the following:
- Tasks included in a close (whether hard close or soft close)
- Resources responsible for those tasks
- A reviewer for each task
- The ability to track actual performance of each task
Furthermore, generating what is known as a close playbook is a great way to document the collective wisdom of the Finance and Accounting Department. Close playbooks generally include resourcing roles and responsibilities and detail the story underlying the close. The most complete playbooks describe scenarios that have played out in the past and give a post-mortem detailing the corrective actions taken to correct these scenarios, including data quality issues, new entity creation and solutions for common bottlenecks.
As we look to maximize remote working conditions, the remote close playbook is a new spin on the existing playbook some organizations already have. The remote playbook is designed to address the story of the close during the new normal. Unique items include:
- Roles and responsibilities while staff is working 100% remote
- Close meeting cadence (increasing or decreasing)
- The adoption of the “soft close” during non-quarter end months to meet the challenges faced during a crisis
The playbook could also include the increased usage of close management software for tracking close tasks in real time, or expanded usage of a reporting platform in areas such as management and board reporting.
Contact Jason Zeman at email@example.com to discuss streamlining your close processes.
Visit FloQast’s website for more on FloQast’s close management software or to schedule a demo.
Visit workiva’s website for more on the Workiva cloud reporting platform or to request a demo.
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Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.