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A Covid auditing process: How to ensure compliance

A Covid auditing process: How to ensure compliance

By David Thorley, Director of Customer Development, FISCAL Technologies

For many, the month of December is a time of celebration and joy but for organisations up and down the country it’s a period that keeps the finance department awake for days – it’s time to conduct the yearly financial audit. This year, however, teams will be struggling to get a grip of how to go about this process following multiple changes to various financial processes that have occurred as a result of Covid-19.

While the auditing process at the end of the financial year is often considered testing and stressful, the new challenges many have faced since March have increased pressure. Expected rise in internal fraud as well as the changes to the working environment and team structure has put additional stress on finance teams.[1] So the question remains, how can financial departments ensure compliance during the Covid auditing process?

The impact of Covid

Before answering this question, it is important to understand what issues financial departments have been dealing with since March.


Pre Covid, internal control weaknesses were responsible for nearly half of frauds.[2] However, pressures on the supply chains like the urgency to secure supplies during a time of crisis or emergency increases the incidence of fraud. Therefore, it is no surprise that we have seen a 400% rise in procurement fraud relating to the Covid threat.[3] A major factor in this rise has been time pressure and fear of shortages, which has caused organisations to override established procedures.

The prevalence of fraud during the pandemic has shown that organisations have weak fraud prevention systems in place. For example, the Finance ERP and P2P systems on which many businesses rely – often described as the heart and lungs of a company – are known to have vulnerabilities that lay companies open to fraud by insiders and third-parties alike.

Structural/operational change

Over the course of a few days, many organisations were forced to adjust their operational structure to align with government guidelines – many having to do so with no prior planning. With all but essential workers working from home, organisations across the country had to adapt to a new working environment, which included operational and structural changes.

Structural change within a company leads to errors and opens the company up to an attack. Organisational change across the P2P function (systems, centralisation, decentralisation, acquisitions and mergers) increase the risk of duplication, error and fraud. At times of great change when systems are being configured and resources stretched, errors and omissions occur and processes take time to adapt. This creates a window for sophisticated fraudsters to target transformation projects, often something they accomplish with ease. But how?

During ERP migrations the Master Supplier File (MSF) is frequently left untouched and simply copied in its entirety from the old to the new system. Commonly an ERP migration project only copies open transactions to the new system, leaving historical intelligence behind. Critically, the important transaction history is often lost. Essentially spotting irregularities relies on comparing suspect transactions with this self-same historical data. This means duplicate payments or payments sent to a fake address can slip through the net.

Invest in a trustworthy payable assurance solution

The key to helping tackle these challenges is to adopt an end-to-end payable assurance solution. The right solution will enable organisations to stop payment errors before they happen but it also gives route cause and analysis. That root cause and analysis enables organisations to go back and find where processes have not been adhered too. It also allows them to find where their compliance may have been breached; where trends, and even down to the individuals tractions, may not be following those processes.

By offering a vast range of data that supports best practice but informs changes to processes as well as informs of compliance breaches, allows a financial department to trust the procedure they have in place. This is a vital step considering many organisations have to process thousands of invoices per month. Therefore, having an strong, safe and efficient solution to check and validate everything that goes through an ERP system will provide greater value, as well as benefit compliance, governance and reduce costs.

Looking ahead

Even during a normal year ensuring compliance during the auditing process is a stressful experience, however, this December it will be even tougher. To limit these challenges, it’s important to invest in the correct end-to-end payable assurance solutions for your business. Doing so will make the process less time consuming and more accurate. The depth of forensic analysis provided by the right solution can result in high-risk transactions being identified that had previously been missed, as well as spot transactions that are unusual. If 2020 has taught us anything it’s that it’s imperative we continue adjusting and innovating, while continuing to tackle the challenges that head our way.




Global Banking & Finance Review


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