Accounting automation has far-reaching applications than just faster reporting and bookkeeping. However, many applications offer automation with limited functionality in other areas. In fact, automation plays a major role in developing and maintaining important accounting processes. Here’s why your accounting needs automated internal controls.
Internal Control Automation
First, internal controls maintain your data safety and compliance with key regulations. These are defined rules, procedures, and IT mechanisms established to prevent flaws and maintain accounting data accuracy. Additionally, these are also used to maintain accountability and safeguard the system against fraud and internal data theft. Internal controls provide an integrated web of protections for your data. Simultaneously, protections and processes can also tie into regulatory processes.
Automation lets you create rules and processes that run independently once established such as:
- Define who has access to what accounting data
- Restrict and control who can do what with accounting data
- Maintain proper accounting and reporting sequences
- Establish and reinforce specific data requirements
- Log changes and access to data
Automated controls prompt users to perform functions according to rules established around best practices and/or to satisfy compliance. Internal controls also protect accounting data from exterior and internal threats. Furthermore, let’s examine specific automation features you can use for compliance and security.
With compliance, efficient accounting is only part of the equation. Internal controls serve to manage the data according to regulations and work to prevent non-compliant activity.
Businesses can easily prevent accounting compliance issues and streamline the process by using high-level accounting automation. In regulatory compliance, process automation is critical, given the rapidness of the modern workplace and data error and theft risks. Above all, financial data needs to be secure but also transparent and logged according to specific requirements. Automation empowers you to maintain financial data that satisfies any requirements upon entry and updates. Instead of manually documenting files to be compliant, automated rules does this for you for each record.
The most important internal controls for your company’s compliance dictate how data is cataloged in the system. You have options to create automated rules that will disallow improper data handling. You can also automate specific rules for data entry, permissions for viewing or manipulating data, and defining sequences.
Here are some specific features:
- Validation rules
Create standards for recording and handling data. Based on business logic, these rules prevent processes from being completed out of sequence or inappropriately. This is an essential tool for making your financial compliance reliable and easier to manage.
- Workflow rules
Establish and automate internal processes and procedural steps orchestrating key accounting functions. Dictate how data is logged, accessed, processed, and used. These can be formed to comply with regulations too.
Automate sequences of events to require an official signoff on record to ensure accuracy and legitimacy. No one can alter or use the accounting data unless they are designated approvers or are given approval.
All of these features, and other compliance-focused automation, also double as security measures.
To fully protect your accounting data, you need to fully control who can view, alter, and share it. You also need to track activities within the system. Automated accounting internal control functions help protect you from both internal and external data theft. Specifically, how accounting data is implemented and handled.
Today, 80% of breaches are attributed to human error. This includes times when staff have access to key information and accidentally allow hacks or viruses into the system. All of these can seriously harm your businesses’ operations, finances, reputation, and customers. To prevent this, define the level of control staff has over the financial data. This is done through features like user permissions and user role hierarchy. Respectively, these features automatically recognize and restrict who can do what in the financial records. Let’s look at these and a few other automated features in detail.
Here are some specific features:
- Two-factor authentication
Automatically enable the second level of authentication for every login. You should also be able to implement this when a user is performing a specific function.
- User permissions
Define what tasks users can perform, approve, and access. Create unique permission sets for more complex processes. These are in place automatically whenever people work in the system.
- User role hierarchy
Establish a user hierarchy that lets you dictate which specific user(s) can view or change specific components of accounts or records within the system, like reports.
- Real-time event monitoring
Monitor and detect standard events in near real-time. You can store the event data for auditing or reporting purposes.
Immense Added Value with Automated Internal Controls
Automated controls don’t just make things easier and safer, they enhance your entire accounting lifecycle and workflow. Additionally, these also enhance your overall operational proficiency. Can you imagine not worrying whether you’re meeting compliance rules or that your data is adequately protected? In addition to this peace of mind and efficiency, your accounting data is stronger and more reliable.