CFOs need to automate to have control of their finance processes

To create control, CFOs must standardise their finance processes, reveals CA Southern Africa’s Michael Brink.

Read more: How CFOs are successfully using finance automation to achieve tangible results (Part 1)

As noted in my first article on financial close automation, it is crucial that financial processing needs are standardised across groups. Standardising across multiple operating units and subsidiaries ensures the business is consistent in operation and remains in control of its finance processes, while it scales and adjusts to change.

The critical capabilities needed to achieve this standardisation are:

  • Models that provide reusable process flows, making it fast and easy to standardise financial processes for all subsidiaries and operating units.
  • The ability to determine that a subsidiary or operating unit is active and ready to execute the close or other financial accounting processes.
  • A process that dynamically determines when an organisation has been added or removed and adjusts the accounting processes, as necessary.
  • The ability to model variance for the likes of tax jurisdiction and accounting standards to enable a single model to be maintained across geographies.

Flag data errors and notify responsible parties
Accuracy in financial reporting has always been essential. New regulations, management and customer demands for real-time information, as well as the need for agility in your company, have made timely and accurate financial reporting increasingly difficult.

Financial processes can often show a successful completion, even when there are data and reconciliation issues – for example if the system rejects one or more general ledger postings. To combat this, organisations frequently dedicate a significant amount of time and resources to check the success of application processes for business-level issues.

As with all manual processes, errors will occur. Also, to compound the issue – as a system scales, the steps in the close process increase, causing in many cases, both an increase and even an acceleration, in the rate of errors.

Any automation of financial processes needs to check for the business-level issues regardless of where they may occur. Extensive automated error-checking capabilities are required to ‘error proof’ financial processes to ensure the accuracy of results. To achieve this, it is necessary to have:

  • Validation capabilities so that input parameters and data issues are detected before a process executes.
  • Verification of completion status and data produced by preceding steps with flexible dependency checking.
  • Multiple ways to scan process outputs for issues including file scanning, database queries, and data integrity checks.
  • Automatic notification delivery, allowing responsible personnel to proactively take action to fix errors or potential issues and remove the need for them to expend time in detecting the issue in the first instance.

Track and ensure compliance with corporate and regulatory requirements
Manual tasks and hand-offs between people, processes and systems, limited control and visibility, and inadequate audit traceability are all potential compliance and regulatory problems. Comprehensive audit reporting and control procedures are required to ensure your financial processes execute accurately.

A comprehensive audit trail that documents changes to procedures and tracks problems ensures that your accounting procedures satisfy governance and compliance regulations. The following critical capabilities are needed to achieve this:

  • Role-based access controls that ensure individuals only have access to
    the systems and data needed to perform their role. Data security issues
    are thus eliminated through minimising the risk of error being introduced
    into the process.
  • Process definitions must be fully auditable with details of who made the
    change, when it was made, and how the values were changed.
  • Submissions, operational changes, and restarts of processes or steps in
    the process must be capable of being fully auditable. Details of who made the change,
    when it was made, and what the values were changed to must also be tracked.
  • All aspects of process executions should be fully auditable, including parameter values, execution times and outputs.

Accounting close – pulling it all together
Every CFO is cognisant of the importance of being in control of their finance processes. To create that control, it is necessary to automate processes and establish a holistic, end-to-end, view of everything. Through automation, the office of finance can quickly and easily create, execute, and monitor finance application processing – from financial close and payment batches, to dunning, reconciliations and financial planning.

As a result, you gain agility and are back in control – at significantly lower cost to the business too. Automation is the key – it delivers competitive advantage across the spectrum of financial close and accounting processes.