Author
Michael C.
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Over the decades, accountants have embraced new technology to help them in their day-to-day work. It has evolved from the humble calculator, to spreadsheets, and more recently to automation and artificial intelligence (AI).

Finance teams are looking for ways that technology can make the process of preparing financial statements easier and less prone to error. It can free them up to focus on the work that needs more critical thinking, estimation, and judgement.

So how can you use technology well to prepare your financial statements?

Get good data

Modern technology relies on good data. The old saying of ‘garbage in, garbage out’ still applies today even though the tools have changed. But technology can help you with getting good data.

Implement automated checks of the data that people enter in to your finance system to make sure you receive necessary information in the format that you need it.

Remove manual entry of data where you can, to help reduce the risk of human error. Some entities use optical character recognition for scanning documents, which automatically populates the relevant fields in the finance system. Others use electronic invoicing so systems can speak directly to each other.

Run exception reports and regularly clear the issues it raises. A growing backlog of issues to review will make it harder for you to prepare accurate information. Automated tools and AI could help you to identify those exceptions and suggest how to fix them.

Know how to access your data. Modern advancements in data analytics mean that you can put large datasets into various tools to perform analysis, provided you know how to access it. If your data is hosted by a third-party, understand what contractual arrangements you have regarding access.

Automate what you can

Once you have good data, it becomes easier to automate certain tasks. Look at tasks that you repeat every day, month, or year. Robotic process automation (RPA) uses software to repeat tasks that a human would usually do. AI is expanding this with ‘agents’ that can use a set of rules as a guide to undertake tasks on their own.

Consider your monthly balance sheet reconciliations. You probably run the same reports each month and follow-up exceptions in a similar way. There might be opportunities to use RPA or AI to help you perform those reconciliations and find the exceptions that need your attention.

As your auditors, the Queensland Audit Office (QAO) will ask you for supporting workpapers and documentation each year to verify your transactions, balances, and disclosures. Often, entities give us a series of spreadsheets. Are there ways that you can automate your preparation of these spreadsheets, and the supporting documents that come with them?

Streamline your monthly and annual financial reports

Modern analytic tools can help bring together data and present it in simple, graphical ways for management and senior leaders to interpret quickly and customise for their needs. Drill‑down capabilities mean they can understand faster what makes up a balance.

Natural language AI could help you analyse variances quickly and provide initial commentary on unusual items. This can free up your time to focus on insights and advice that management and senior leaders need to make good decisions.

Some purpose-built tools can help you prepare your financial statements, whether this is in a spreadsheet model or separate software. These tools have inbuilt data integrity checks to help prevent errors.

AI tools could help you to write your annual financial reports in plain language, or to research a new accounting standard and help you understand the implications for your entity.

Upskill your teams and manage the change

Finance teams will need the skills to use new technology effectively and securely. This includes understanding how the tools work and what their role is in checking the inputs and outputs.

You will need to carefully manage any changes to existing processes. Staff will need to understand what they must do differently and be supportive of the new approach. Sometimes people can feel concerned that automation will affect their future role or employment.

Understand the risks from using technology

Part of having good data is making sure you have appropriate data governance in place. It is important to know where your data is stored, who has access to it, and whether your security controls are effective. This helps to maintain data integrity.

If your entity is going to introduce AI, then you need to understand the risks and manage them appropriately. Humans still need to check what inputs the AI tool has used and whether the output produced is correct. AI is known to ‘hallucinate’ – producing inaccurate results that it thinks are right. And you need to think about where the data is stored and what it is used for after you have entered it into an AI tool, particularly if it is sensitive information. 

Even when using AI tools, you remain accountable for the fair and accurate presentation of your entity’s financial statements.

Lastly, your auditors will also need to understand how you have used technology to prepare your financial statements, including the use of AI. We will look at the inputs and outputs, and how management has assured themselves that the tools are working as expected.

By managing these risks well, finance teams can leverage the benefits of technology to help prepare their entity’s financial statements faster and more effectively. 

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