Having a company’s financial statements audited by independent external auditors is a best practice that ensures confidence.
An audit is key in establishing trust between management and stakeholders. Well-managed audit trails are key indicators of good internal business control, but the trail can become fairly complex in various situations. Therefore, a lot of organizations use audit trail software to streamline their audit trail accounting process.
An audit trail or audit log is a history of every transaction and includes all of the documents involved in the purchasing and payment process, including messages between employees, invoices, purchase orders, and more. It is a record of all the steps involved in the transaction.
You can think of an audit trail as an insurance. You pay it no heed or need it unless something goes wrong. It’s the same for an audit trail. You don’t need it until you really need it. But if you don’t have one, the consequences can be catastrophic.
The benefits of having a software audit trail with audit automation in place include:
Fraud Prevention
Once employees realize that everything is being tracked by audit trail software, they will think twice about attempting something they shouldn’t. A good AP automation platform will record each and every transaction and auditing is usually the default setting.
Reduction of Manual Errors
How many times have people in accounting or finance spent hours searching for all the documents related to one transaction? A software audit trail can access all records instantly. The audit trail will also show corrections or other changes made to a transaction and provide visibility into who made them and when.
Reduction of Stress Levels
Tax audits can be painful and expose the business to tax penalty risk any time it happens. Audit fees are based on the time involved and paper processes will take up a considerable amount of it.
Showing a lack of an audit trail, or having missing documents and transactions raises red flags for auditors, so it’s wise to ensure everything is available for review, and quickly.
Ensuring Compliance Regulations and Investor Concerns
Companies in every industry, whether they are regulated by the government or other regulatory body, need to show that they are compliant with policies and procedures. As well, lenders and investors need to be assured that the organization is transparent and accountable for all the transactions it undertakes.
Comprehensive AP automation software is engineered to provide an audit trail complete with all of the documents and messages involved in each and every transaction.
For more information about Palette AP Automation with Archive & Audit, visit our solution page here.
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Palette Software was founded in 1993 in Stockholm and has offices in the United States and the Nordics. Palette solutions are available through a growing network of partners in some 50 countries in North America, Europe, and Australia.