Data Rooms For Financial Audits

The use of virtual data rooms simplifies the audit process in many ways.  In this post, we will cover how data rooms have reduced the time and costs involved in creating and managing the necessary documentation, through:

Financial audits are a necessity for most companies. In many jurisdictions it is now the time of year when auditors arrive, sending your entire operation into a tailspin as they now scrutinize all financial records, legal and corporate records in detail. It’s also one of the most time-consuming activities, and if you’ve experienced it you know how much extra work auditors create for your staff.

Working through an audit checklist, they generate multiple requests for documentation from governance policies and procedures to copies of obscure invoices, wanting you to dig up everything they require. Here is how data rooms have been able to bring efficiency to the whole financial audit process:

Document Exchange

Data rooms provide a simple and secure way to organize and exchange information. This secure document exchange is a vast improvement on typical methods of emailing or passing around a USB drive. Not only is there a record of all users’ activities, but simply logging in versus making endless copies wins hands-down due to its convenience. Often only senior auditing staff works on your premises, and documents have to be couriered, posted, or emailed. All this hazle disappears with the use of virtual data rooms.

Improved Process Communication

While the audit is in progress, it’s common for auditors to have queries about contracts, agreements, and other documents. This generally causes lots of “back and forth” by email and telephone to resolve issues. Data rooms offer Q&A options, which enable users to post questions about specific documents online. The system forwards the questions to approved reviewers, who post responses in the data room. Not only does the auditor avoid trawling through pages of emails to find information, but both questions and answers remain attached to the document for future reviewers – avoiding the same questions during later audits.

Document tracking

Keeping track of progress during a financial audit can be full-time work itself. In the past, it was normal to have duplicate requests for one piece of information, repetitive documentation, and lost documents. Datarooms are an easy way to eliminate that as they provide an easy way to organize materials.  Moreover, they also offer the option to send alerts when:

• A new document is uploaded.
• A request has been viewed.
• A response has been generated. 
• What’s more, it’s possible for the auditor to do all this without incurring costs or wasting time by traveling to the client’s premises.

Enhanced Security

Paper documents can be lost, left in airplanes, or stolen.  Data rooms have security features that ensure your confidential data is not compromised. From restricted access to the ability to set permissions that allow only select users to view, print, download, or edit documents, the entire process is secure. 

Process Compliance

Compliance with auditing requirements is only half of the battle. In a financial audit, auditors are also required to confirm that all the documentation required was made available to them, and that staff complied with requests for information. Data rooms serve as solid evidence for the transparency of the process, with detailed reports on when requests were made, who reviewed them, and what the final response or outcome was. This is critical to avoid the unwanted “blame game” after the audit.

Virtual data rooms are now widely used in all M&A transactions.  We are confident that in the very near future all financial audits will also use datarooms.  Using data rooms to simplify financial audits streamlines your business processes, reduces difficulties, and reduces costs.