How to build an audit-ready finance function

A practical guide to improving financial control, reducing risk and making audit preparation part of everyday business.

For many finance teams, the approach of an annual audit brings a familiar set of challenges. Documents need to be located, transactions checked, approvals confirmed and supporting information gathered from across the business. What should be a structured review can quickly become a time-consuming exercise in tracking down paperwork and piecing together what happened months earlier.

For Finance Directors, this raises important questions about visibility, control and risk.

• Can every significant transaction be traced back to its original documentation?
• Are approval processes being followed consistently?
• And how much time does the finance team spend preparing evidence that should already be readily available?

An audit-ready finance function addresses these questions throughout the year, rather than waiting until an auditor requests information.

For mid-sized businesses across the UK and Ireland, achieving this does not necessarily mean introducing an entirely new finance system or overhauling every existing process. It starts with establishing clear procedures, maintaining reliable records and making sure the right information is accessible to the right people when they need it.

1. Start with a clear, consistent audit trail

An effective audit trail allows you to follow a financial transaction from its original source through to its final entry in the accounts. It should be possible to establish what happened, when it happened, who authorised it and which supporting documents provide the evidence.

Consider a supplier invoice. An auditor may need to see the original invoice, the relevant purchase order, confirmation that the goods or services were received, evidence of approval and the corresponding accounting entry.

If these records are spread across email inboxes, shared drives, paper files and individual employees’ desktops, assembling that picture can take considerable time.

The challenge is not necessarily that the information is missing. It may simply be difficult to find, disconnected from the relevant transaction or held in a format that makes it difficult to verify.

How to improve your audit trail:

• Establish a consistent process for recording and storing financial documents.
• Auto link supporting documentation to the relevant invoice, supplier or accounting transaction.
• Digitally record approvals and key decisions, including who made them and when.
• Make sure changes to important records can be digitally traced where appropriate.
• Agree naming conventions and filing procedures so employees can retrieve information consistently.

A well-maintained audit trail makes it easier to demonstrate that transactions have been handled correctly. It also helps finance teams investigate discrepancies, answer internal queries and resolve supplier disputes without having to reconstruct events from memory.

The aim is straightforward: when someone asks for the evidence behind a transaction, finding it should be a routine task rather than a separate project.

2. Make document management part of your financial controls

Financial controls are only as effective as the information supporting them.

A company may have robust approval policies, established reporting procedures and experienced finance staff. However, if the documents needed to verify transactions are difficult to access, demonstrating that those controls have worked becomes unnecessarily complicated.

This is particularly relevant for growing businesses, where document volumes increase alongside supplier numbers, invoice volumes and the complexity of financial operations.

A centralised electronic document management system can help by providing a single, organised location for business documents. Instead of relying on employees to remember where something was saved or which email contained the latest version, authorised users can search for and retrieve records through a consistent process.

For finance teams, this might mean accessing a supplier invoice alongside related correspondence, approval records and other supporting documents.

It also reduces dependence on individual employees. If the person who normally handles a particular supplier is on annual leave, another authorised team member should still be able to locate the relevant information and understand its history.

Practical steps to consider:

• Review where invoices, statements, purchase orders and approval records are currently stored.
• Identify duplicated records, inconsistent filing practices and information held only in personal inboxes.
• Introduce clear access permissions based on job responsibilities.
• Establish retention and disposal procedures that reflect applicable legal and regulatory requirements.
• Ensure documents can be retrieved efficiently by supplier, date, reference number or other relevant details.

Document management is not simply about replacing paper with electronic files. It is about making information easier to find, control and verify, while maintaining appropriate access and retention arrangements.

3. Strengthen accounts payable controls

Accounts payable deserves particular attention when building an audit-ready finance function.

Supplier invoices pass through several stages before payment: receipt, data capture, verification, approval and posting to the accounting system. Each stage presents opportunities for delays, errors or control weaknesses if the process is inconsistent.

For example, an invoice might be processed without the correct approval, entered twice, assigned to the wrong account or left waiting in someone’s inbox without a clear record of its status.

These issues can affect financial reporting, cash flow, supplier relationships and the reliability of management information.

The scale of the opportunity is illustrated by research from the Institute of Finance & Management (IOFM), published through SAP Concur. Its comparison of accounts payable processes found that departments with no automation and inconsistent processes incurred an average cost of $6.30 per invoice, compared with $1.45 for departments using end-to-end automation and consistent workflows. These figures are research benchmarks, not guaranteed savings for an individual business. Nevertheless, they demonstrate the potential value of improving invoice processes. Source: SAP Concur UK and IOFM.

For Finance Directors, the benefits extend beyond processing costs. A consistent accounts payable process helps establish greater visibility over outstanding liabilities, approval delays and exceptions requiring attention.

For AP teams, the objective is to reduce repetitive administration while retaining the checks and judgement needed to process invoices correctly.

Consider introducing the following controls:

• Auto Invoice verification: Check key details and identify potential duplicates or discrepancies before payment.
• Auto Approval workflows: Route invoices to the appropriate people according to agreed authorisation limits.
• Auto Purchase order matching: Invoice data verified with purchase orders and goods-received information.
• Auto Exception handling: Flag missing information, mismatches and unusual transactions for review automatically rather than allowing them to pass through unchecked.
• Auto Accounting integration: Automatically transfer verified invoice information into the accounting system, reducing unnecessary rekeying and the risk of manual entry errors.
• Auto Status visibility: Make it clear which invoices have been received, approved, queried or posted.

Accounts payable automation can support these controls by capturing invoice information, applying configured checks and routing invoices through defined approval processes.

Importantly, automation does not mean removing human oversight. It means allowing technology to handle suitable routine tasks consistently, while people focus on discrepancies, exceptions and decisions that require their experience.

4. Establish clear approval processes and accountability

A finance function needs more than documented procedures. It needs to demonstrate that those procedures are being followed.

Approval processes are a good example. A company might have clear rules about who can authorise expenditure, but if approvals are recorded inconsistently across email, spreadsheets and paper documents, it can be difficult to establish whether the correct process was followed.

A stronger approach makes responsibilities clear and records decisions in a consistent, accessible way.

Start by reviewing your existing approval structure. Are authorisation limits documented? Do employees understand which transactions they can approve? Are there appropriate checks to prevent one individual from controlling every stage of a transaction?

Segregation of duties is particularly important. Where practical, responsibilities for creating suppliers, approving invoices and authorising payments should be appropriately separated. Smaller finance teams may not always have enough people to separate every task completely, so additional review controls may be necessary.

Technology can help by auto routing invoices according to predefined rules and recording who approved them, when the approval took place and whether further action is required.

However, automated workflows need to reflect the organisation’s actual policies. An approval process is only as reliable as the rules behind it, the permissions assigned to users and the way exceptions are handled.

To strengthen accountability:

• Document approval limits and responsibilities.
• Review user access regularly, particularly when employees change roles or leave.
• Maintain digital evidence of approvals and changes to important financial records.
• Introduce appropriate independent checks for sensitive transactions.
• Review exceptions to identify recurring weaknesses or opportunities to improve procedures.

The result is greater clarity for everyone involved. Finance Directors gain a more reliable view of how controls operate, while AP employees have a clear process to follow and less uncertainty about who needs to act next.

5. Use automation to reduce manual work and improve consistency

Manual processes often develop for understandable reasons. A spreadsheet is quick to introduce, email is familiar and experienced employees know how to work around the limitations of existing systems.

Over time, however, these workarounds can create unnecessary complexity and errors. Information may need to be entered several times, approvals can become difficult to track, and important knowledge may sit with a small number of individuals.

Automation offers an opportunity to address these issues, provided it is introduced with a clear understanding of the existing finance processes and rules.

In accounts payable, for example, suitable technology can extract information from invoices, check details against configured rules, identify potential discrepancies and route documents to the appropriate approver. Once verified, invoice information can be transferred into a connected accounting system, reducing repetitive data entry.

Electronic document management can complement this by keeping the invoice and its supporting information readily accessible throughout its lifecycle.

Together, these capabilities help create a more connected process, from the moment a document arrives to the point at which the transaction is recorded.

There is also a practical benefit for employees. When less time is spent copying information between systems, chasing approvals and searching for documents, more time becomes available for reviewing exceptions, resolving queries and supporting the wider business.

For teams concerned that automation means replacing people, it is worth making the distinction clear: the aim is to automate repetitive tasks, not remove the expertise required to manage financial processes.

Human judgement remains important. Someone still needs to investigate unusual invoices, assess discrepancies, maintain supplier relationships and ensure the process is working as intended.

The best starting point is to identify where manual effort is highest, where errors or delays occur most frequently, and which improvements would make the greatest practical difference.

6. Make audit readiness an ongoing process

Even well-designed controls can become less effective if they are not reviewed regularly.

New suppliers, changing responsibilities, business growth and evolving systems can all introduce risks. A process that worked well two years ago may no longer provide the level of visibility or consistency the business needs today.

Audit readiness should therefore be treated as an ongoing responsibility rather than a once-a-year exercise.

Regular reviews help finance teams identify weaknesses before they become larger problems. They also provide an opportunity to assess whether improvements to systems and procedures are delivering the intended results.

Useful measures might include:

• The time taken to retrieve supporting documents.
• The percentage of invoices processed within agreed timeframes.
• The number of invoices awaiting approval.
• The frequency of duplicate invoices, discrepancies or manual corrections.
• The number of transactions with incomplete supporting documentation.
• The time spent preparing audit evidence and responding to information requests.

These measures provide a starting point, not a universal set of targets. The right measures will depend on your business, its transaction volumes, existing systems and areas of risk.

It is also worth involving the people who carry out the work every day. Accounts Payable employees are often best placed to identify where processes break down, where information is difficult to find and which manual tasks create the most frustration.

Their input can help ensure improvements are practical, rather than introducing additional steps that look good on paper but are difficult to maintain.

Finally, make sure your processes are tested. Select a sample of transactions and see whether you can trace each one from its source document through approval and into the accounting records. Check whether the supporting evidence is complete, the relevant controls are visible and any exceptions can be explained.

If the exercise exposes gaps, address them and repeat the review. This provides a more realistic indication of audit readiness than relying solely on documented policies.

Building an audit-ready finance function: where should you start?

Creating a more audit-ready finance function does not have to involve a major transformation project.

For many mid-sized businesses, the most effective approach is to improve the processes that create the greatest administrative burden or present the greatest risk.

Begin by asking three questions:

Can we find the evidence?
Can authorised employees quickly retrieve the documents and records supporting a financial transaction?

Can we demonstrate the control?
Can we establish who approved a transaction, what checks were completed and how exceptions were resolved?

Can we see where action is needed?
Do we have a clear view of outstanding invoices, approval delays, missing information and potential discrepancies?

If the answer to any of these questions is uncertain, there may be an opportunity to improve your processes.

Electronic document management, automated approval workflows and accounts payable automation can all contribute to a stronger control environment. The right combination will depend on your existing systems, business requirements and the areas where manual work creates the greatest difficulties.

At Enterprise Imaging Systems (EIS), we help businesses improve the way they manage documents and accounts payable through our TraX solutions. With more than 20 years of experience, we understand that effective technology needs to work alongside established finance processes, provide practical benefits to employees and support the level of control the business requires.

An audit-ready finance function is not about preparing better explanations after something has gone wrong. It is about building processes that make financial information easier to access, transactions easier to trace and controls easier to demonstrate throughout the year.

The result is a finance team that spends less time searching for evidence and more time using reliable information to support the business.

If you are reviewing your current document management or accounts payable processes, contact Enterprise Imaging Systems to discuss how a more connected approach could support your finance function.