Market Perspectives

As an organization transitions from being smaller and more informally managed to a larger business, it typically needs formal processes and controls. These ensure accurate financial reporting and protect the organization’s assets. These controls include, for example, systematic reviews and approvals, a second signature for the disbursement of material amounts, supervision when creating and removing customer accounts and three-way matching of invoices.

Organizations going through an expansion often take an incremental ‒ and at times haphazard ‒ approach to creating systems and processes. Faced with the need to have better controls, businesses cobble systems together, often using spreadsheets to manage compliance. This is understandable because checklist spreadsheets offer a simple, expedient and inexpensive way of organizing controls. However, over time spreadsheets become a source of risk as they fail to actively manage controls, overlook necessary controls and become unwieldy to manage and report on, especially across multiple organizational entities.

FloQast has earned a reputation for providing accounting teams software that works while minimizing the time, effort and cost of using the applications. Its software is designed expressly for midsize to smaller enterprise organizations that need a comprehensive approach to controls. It enables organizations to enhance the effectiveness of financial controls and reduce risk while potentially cutting the time spent on these efforts.

The company recently began offering FloQast Compliance Management, software that facilitates the design of accounting risk controls as well as their implementation, testing and optimization. It simplifies the creation of a risk-controls matrix, automates the management and recording of the work performed and synchronizes this information to create flowcharts that visually explain risk controls and their status. The software assists in the creation of narratives to streamline the production of reports on risk controls and management. Like other FloQast software, Compliance Management can enable organizations to complete the accounting close sooner with less effort.

Compliance Management supports a pragmatic approach to transitioning to a formal and comprehensive financial control system. Ideally, organizations should perform a thorough and extensive evaluation of existing controls, create a plan for designing and implementing a complete set of controls, develop a methodology for their periodic testing and formalize a process for reviewing these tests and remediating defects when necessary. FloQast compliance supports this approach and evolves to fit the time available.

The software facilitates the creation of controls by capturing them while performing accounting tasks such as account reconciliations or closing the general ledger. The process establishes visibility into control ownership, responsibilities and performance and review, making it possible to simplify the delegation of accountability to business task owners and enforce control testing. The software matches controls to identifiable risks to ensure they are fully covered. Surfacing a comprehensive set of risks promotes greater risk awareness and understanding, while facilitating risk detection and prevention efforts. Rather than relying on emails and spreadsheets, organizations can use workflow automation to assign periodic controls testing to the individual responsible. The assignee can record the result to ensure completion, and if there is an issue, the software can set off a remediation process.

Workflow automation is especially useful when multiple individuals have responsibility for parts of a control, which is not uncommon. The system also records that steps have been performed and responsibly reviewed, cutting administrative overhead and providing a reliable record for internal or external audit teams to consult. This latter capability can streamline interactions with external auditors, eliminating unnecessary audit costs. Moreover, auditors can use the software to track control owners’ assignments and define and execute testing plans, increasing collaboration between audit staff and control owners and eliminating time-consuming bottlenecks.  

Our Office of Finance Benchmark Research demonstrates the connection between automation and a faster close: 88% of organizations that have substantially automated close processes are able to complete the close within six business days compared to 40% that apply little or no automation. Ventana Research asserts that by 2026, two-thirds of finance and accounting departments will improve use of readily available technology to close quarterly books within six business days, up from one-half that can do it today.

Public companies required by the U.S. Securities and Exchange Commission to file financial statements have used FloQast Compliance Management to satisfy the controls and reporting requirements under the Sarbanes-Oxley Act.

Midsize and smaller organizations, especially those that are expanding, often find that control systems need to evolve. FloQast Compliance Management provides the flexibility to add and adjust controls as conditions demand. The software makes it possible to identify control issues sooner, make necessary changes and mitigate risks before they become an audit issue.

Finance executives looking for ways to accelerate the financial close can use FloQast Compliance to streamline the control elements of the process. The software also helps address the need to enhance the productivity (not simply the efficiency) of the finance and accounting staff. Substantially reducing the unnecessary hassles of managing controls and compliance promotes a working environment to better attract and retain talent.