If you want two simple reasons to move away from auditing the consolidation in Excel, let’s quickly scale it down to Time and Money. But there is an additional reason: ensuring an error-free audit.
The role of audit in its purest form is to bring integrity and trust to the financial reporting and increase transparency across and between stakeholders. As we experience new and tighter legislation, we can agree on the significance of auditing and its compliance role in society. But why are so many auditors still using software known for spreadsheet errors to consolidate? As Anders Liu-Lindberg wrote in a recent article: “…audit really is paradoxical. By many considered THE most likely profession/process to be automated as it is rules-based yet perhaps the only paper process left in Finance.”
Reduced or increased risk of errors?
If there is one thing an external audit should not risk, it is to deliver an audit with errors. Imagine your audit firm is sitting across from a client. Your client is a well-known Group with subsidiaries in different countries and many intercompany reconciliations. You are auditing their Group’s financial statements, including the consolidation. And your team delivers the numbers in Excel. A process where too many steps are manual and no audit trail. If you can recognize this scenario, it is time to consider other alternatives. Alternatives that add time to other revenue-generating tasks instead of taking time from them and ensure that you deliver numbers with a reduced risk of errors. Today, there are many possibilities to automate your processes, audit trail, and ensure your deliverables bring integrity and trust to the financial reporting.
The question remains: why still a manual process?
55% uses excel today. 46% believe cloud software will digitalize their auditing. What do you think?
Most finance professionals will agree that we should look to audit firms to lead digitalization. But what if audit firms are not exploring the full potential of automation in every process it adds value to? One area where automation is easy is the consolidation process. This standardized process must live up to the governmental requirements. Most time spent on a group audit deals with various components that make up the Group. The complexity of this process varies enormously. With software, you import the trial balance from the accounting system and run your needed audit checks. Once done for all companies in a group, you can easily consolidate the accounts with the available standard format. Even if no consolidation is needed, automating this process should still be preferable for auditors.
Saying that auditors are not on top of digitalization is a too broad statement. However, saying that there is still room for improvement is something most people can agree with.
Looking at two recent polls for the same forum with responses from approximately 500 finance professionals. In one, 55% of respondents replied that auditing the consolidation is done in Excel. 55% is a lot in a world where we expect to become 85% cloud-driven in 2025. Interestingly, in another poll, almost the same amount of people agreed that cloud software is the most promising solution. Nearly half of the 555 votes pointed to cloud software, and only a snippet pointed towards Excel macros.
If every second audit is in Excel, why digitalize other work processes, but keep more rules-driven processes, like consolidation in Excel? Can we trust the numbers companies deliver if the audit is at risk of being full of manual errors? With APIs and seamless integration between most software today, you would think auditors already could step into a digitalized world as well. Since auditors often form longer-term relationships with their clients, digitalization should be worth the time and investment needed.
What if you could cut manual tasks and get back 50% of your time?
The right tools can cut down time significantly. And Konsolidator Audit is one of them. The software ensures error-free and efficient reporting (some audit customers report to have cut down consolidation time to an average of just 7 minutes). As an auditor, you know there is simple and complex consolidation. While the simple one, like the word implies, is relatively easy to audit, the complex consolidation likes to pull too much time out of the calendar – and time is money.
Benefits of using a cloud-based consolidation tool, like Konsolidator:
- Reduce manual time and realize an average of 50% time savings on each consolidation process
- Produce audit-compliant consolidation with an entire audit trail
- Get quality assurance, total transparency, and documentation
- Manage all your accounts quickly, access all your clients in one central system, and switch between them
- Free up time for other revenue-generating work
- Use the same process internally to prepare group consolidation
Automating the consolidation eliminates the risks of manual errors so that you can deliver accurate consolidation statements as quickly as possible. Like every other profession, the audit profession has to evolve to meet all stakeholders’ current and emerging needs within the financial function. But the role of responding to market needs and shaping the path forward should not fall onto auditors alone.
Why not be a part of the change now and not after your clients?