Jan 4, 2024
5 minutes

Financial controllers: How to meet four of the biggest audit trail requirements

Top Tips for Financial Controllers: How To Meet Audit Trail Requirements
Quick summary

As a financial controller, you’ll already understand the importance of an accurate, timely, and complete audit trail. It will give you a clear understanding of how transactions in your company are running and let you detect and prevent expenditure fraud faster. Read this guide to learn how to demonstrate audit trail compliance in line with accounting and tax regulations and speed up your company’s audit process.

Table of Contents

    Proper audit trail compliance procedures will help you get an approved auditor's report more quickly and easily. This vital report lets you wrap up the financial statement process faster, meet all necessary rules and regs, and return to looking to the future instead of the past.

    But how do you set up a proper, timely, and complete audit trail? What are the things you absolutely must pay attention to? And is there software to help with this?

    How to set up an effective audit trail process: Four steps to success

    Audits are complex and stressful, but creating your audit trail doesn't need to be. Here are four top steps to develop an accurate, timely, and complete audit trail and why this will make your life as a financial controller easier. (In addition, we'll also show you how Payhawk can help comply with audit trail requirements and thereby set up a good audit trail — all to make your job as easy as possible and free you up to spend time on things that matter).

    CFO tips and tricks: How to manage month-end close like a pro

    Step 1 - Make it as easy and user-friendly as possible for employees to submit claims and process invoices.

    What is the first step in setting up a good audit trail? Implement a user-friendly expense management system, enabling employees to submit business expenses efficiently. Take control of expense claims, such as business dinners, travel expenses, and equipment purchases, with a complete spend management solution that includes a user-friendly app and OCR technology.

    Here's how intelligent expense management, including OCR tech, can help your finance and non-finance colleagues track and control expenses without data entry, receipt chasing, and more.

    1. An employee takes a picture of a receipt when they make an out-of-pocket expense or use a corporate card to make a payment
    2. The employee uploads or scans the receipt using OCR directly through the Payhawk app (and selects the appropriate cost centre, project, or budget based on custom fields set up by the finance team)
    3. The finance team can then see the expense in real-time, getting complete visibility and control over spend

    Alessandro Lupo, Finance Director at Club Freelance, says:

    The team loves the Payhawk App! It's straightforward for everyone to use. We've also seen fewer mistakes now that the built-in OCR tech captures all the receipt data once someone uploads a receipt. So, all they need to do is choose the right category, etc.

    In addition to helping your colleagues, this feature enables you to save time chasing receipts. At Payhawk, our automation-supporting features automatically chase any missing receipts or receipt info, so you don't have to. The smart OCR also supports seamless integration between your expense management system and the ERP/accounting applications you use.

    Besides making it as easy as possible for reimbursements to be processed and paid out again, you also want your flow of purchase invoices to be entered promptly and accurately.

    Using the same OCR technology, we can retrieve a purchase invoice directly from the mailbox in which your company receives purchase invoices. Similarly, the system would read all relevant data from the invoice inbox and automatically assign it to the correct cost center.

    User-friendly tools and time-saving tech also encourage compliance. With the Payhawk solution, you can implement spend policies like card freezes, spend approval workflows, and more. And because the solution is so easy to use, adoption and compliance are high.

    Step 2 - Digitise your entire audit trail to reduce errors and cut costs

    In modern finance, there's simply no excuse for anyone having to do more manual tasks than they have to.

    By digitally setting up your expense management process, you immediately have the data you need to trace where certain costs come from. This digitization (and lack of mysterious piles of paper receipts and invoices) also helps reduce expense fraud risks as you and your employees can track everything digitally.

    Furthermore, the accountant or auditor can easily see what an item in the financial statements is made up of. After all, everything can be traced directly, in one system, to the item's source.

    By digitizing the audit trail, you can track the entire transaction in real-time and reduce overhead costs, speeding up and simplifying the annual accounting process.

    Step 3 - Establish a unified, cross-departmental audit trail process

    Scaleups and fast-growing businesses often have a problem in common: they don't have time to prioritize or organize their processes.

    For instance, in administration, one person might handle expenses and invoices one way (let's call it X), while another uses a different method (let's call it Y). This mismatch messes up the accounting and reporting. Knowing where your company spends money should be straightforward. But if your processes aren't organized, it'll create problems later, dragging out the audit process.

    With Payhawk, you can standardize processes via our expense management software to counteract the above. You can create custom workflows with multiple steps and approvers and modify these as you wish. Plus, you can leverage custom limits, introduce purchase orders more, and set robust but custom rules around each.

    Data is vital for audit trails (and financial decision-making overall). Besides making it easy to trace the origin of an expense, by using Payhawk, you can ensure your data is always structured in the same way. This makes your analysis a lot easier and means no more endless hours going over all kinds of entries, adjusting Excel files to how the data is structured and cutting costs in the right cost center at month-end.

    Carolina Einarsson, Finance Director at Essentia Analytics, shared the following about how Payhawk has helped her company:

    Saving time with Payhawk has really been a game changer; we've even been able to assign colleagues to teams that impact profitability partially — one of our finance staff now spends 50% of her time supporting the sales team.

    Step 4 - Create your entire audit trail in one system.

    The final item on the checklist? Keep your entire audit trail in one system. Once you digitize all your financial processes, it should become simple and easy for your employees to handle reimbursable expenses, subscriptions, card payments, etc, in one place. But sometimes, companies still use multiple systems for these things, which really complicates the audit trail.

    For example, you can find invoice booking in a system designed to scan invoices and maintain a digital archive. But to retrieve the payment, you must return it to your accounting package or ERP system. Not very efficient.

    Thankfully, there’s an easier way: by scanning, booking, and paying invoices and expenses all under ‘one hood.’ With a spend management solution, you can do all of this and get a complete overview of all corporate expenses at a glance, making it easier to analyze, identify, and respond to emerging fintech trends and pinpoint cost-saving opportunities faster.

    Giancarlo Bruni, CFO of Heroes, says the following about why he uses Payhawk to automate and integrate processes:

    The fintech solution landscape is huge. Most focus on one area, for example, expense management, payments or invoice management, and are disconnected. With Payhawk, we have an all-in-one solution that covers all areas, supported by a super strong product team. This allows us to focus on what is really important to us as a fast-growing scaleup instead of wasting time on administrative issues.

    Most businesses rely on accounting software or an ERP solution to handle various accounting and provide a unified view of their performance and operations. With capabilities spanning accounting, customer relationship management (CRM), financials, project management, and e-commerce, comprehensive ERPs empower even the most complex businesses to maintain agility.

    At Payhawk, our direct ERP and accounting integrations help you keep track of all your expenses across the two vital systems. All this data is transferred in real-time between our solution and your chosen accounting system via smart ERP integrations.

    Andrew Jacobi, VP of US Finance, State of Play hospitality, says

    We get complete spend visibility thanks to Payhawk's integration with NetSuite. That flow of spend data means we can understand our P&L very quickly after we produce it, with no headaches.

    Automate the audit trail processes and get back to doing things that matter

    In short, having an accurate, timely, and complete audit trail of all transactions is hugely important. You can ensure transparency and easily hold employees accountable for a specific budget. You'll reduce spending fraud and make the accounting process much faster, allowing you to focus on the year ahead.

    To set up a complete audit trail, you want it to be as easy for your company's employees to submit claims and process invoices. It’s also essential to set up all processes digitally, in a uniform way and in one system so that you can track transactions in real-time and focus on what’s important during month-end close.

    How Payhawk makes audit trail management a breeze

    With a comprehensive solution like Payhawk, you can easily, quickly, and accurately track expenses and always be audit-ready. Book a demo to learn more.

    Nerissa Goedhart - Content Manager (Dutch) at Payhawk's expense management solution
    Nerissa Goedhart
    Content Manager
    LinkedIn

    In her role as Content Manager, Nerissa Goedhart harbors her passion for sharing valuable insights and solutions through engaging content. This, with a clear mission to assist and empower businesses in the region by elevating their expense management.

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