PREPARING FOR VIRTUAL AUDITS
Technology Improvements for Every Nonprofit
Technology is consistently changing the way business is conducted, and this even applies to how some financial audits are currently and will be conducted in years to come. It’s in a nonprofit’s advantage to prepare for a virtual audit even if it is known that the financial audit will be in-person as this will not only assist the organization with preparing for future audits that may be virtual, but it will also lend itself to helping the organization’s operations become more technology-driven. Gone will be the days of lost paper files and pulling records for the auditors and instead files will be easily accessible in the cloud and shared with auditors through simple collaboration tools.
Nonprofits can easily prepare for virtual audits by making a few changes to the organization’s IT infrastructure and adjusting a few processes. Below are seven steps that each nonprofit should consider.
1. Move your organization to a paperless environment. Save files and audit support documents electronically only. Consider using a cloud-based file storage solution where files can be kept in soft copy and make sure the folders are organized using an easily understandable system. Aim for systems that allow folders to be easily shared electronically with external recipients. This will allow you to simply share folders and files with auditors without the need for emailing and/or printing documents.
2. Look into using online payroll and timekeeping systems. If your organization is still completing paper timesheets, consider upgrading to an online platform that will allow staff to complete these electronically and enable electronic time-off requests. In addition, make sure managers are trained on the process for approving timesheets and time-off requests and the required deadlines.
3. Consider an accounting software that is cloud-based. You might select an accounting system that allows support documentation (such as invoices and bills) to be attached and stored to each transaction within the system itself.
4. Think about moving your organization to an online bill payment system. This will allow your organization to move to ePayments and eliminate the need for check cutting. In addition, it can also serve as an online file storage solution. If your organization is already using an online bill payment system, consider giving your auditors read-only access to the system.
5. Select a video conferencing software or VOIP system that can be deployed organization-wide. These systems will become essential in the virtual audit process by helping prevent misunderstandings and, given the tendency for people to misinterpret emails, facilitate the right communication needed for a successful audit.
6. Look into using software that allows for electronic signatures. In a paperless environment, the need for approvals will not go away, so consider options for allowing staff to sign documents electronically.
7. If staff are filling out paper expense reports and submitting receipts, consider transitioning to an online expense reporting system that allows staff to simply take and upload photos of receipts. And, once deployed, provide the auditors with read-only access to the system so that they can easily review the receipts remotely.
Moving to a virtual audit should be the goal of every nonprofit even if the organization still anticipates in-person audits as the system upgrades and improved processes outlined above will help organizations move from manual and paper processes to more technology-driven systems. And the easier it is for nonprofits to maintain accounting files and records, the more the audit will be painless and, more importantly, less time-consuming.