The increased use of electronic systems for accounting and financial management in companies has decreased the use of physical documents in many companies. The reliance on digital record management systems and financial accounting programs has allowed some auditing firms to offer paperless auditing to companies that primarily run a paperless office. Models for a paperless audit have been established through government regulations, auditing companies’ preferred methods and accounting organization proposals.
Companies that opt for a paperless audit can provide increased accessibility to financial documents and statements for auditing personnel. Increased accessibility can decrease the amount of time required by accounting and financial staff to provide documents to auditors. Depending on security requirements, accessibility may allow auditors to conduct their review from outside the business facility.
Most paperless audit systems offer reporting and tracking abilities throughout the auditing process. Managers from the company being audited as well as the auditing firm's management can easily track and monitor each step in the review process. This increased tracking may help streamline resource requirements and helps manage the auditing timeline. Tracking and time management can be essential, especially for public companies with SEC-mandated reporting deadlines.
Reducing the need for duplicate copies of financial documents, storage facilities and office supplies can reduce the amount of waste both companies generate. Paperless audits use less paper, ink toner, electricity and office supplies than a traditional paper-bound audit. The reduction in paper and associated supplies can offer cost savings and an ecological benefit. This green focus may be important for companies that want to promote their company as being environmentally-friendly.
A paperless audit may take less time than a traditional paper-trail audit process. Financial documents can be easily loaded for review and analysis with greater accuracy. Electronic processing of audit tasks minimizes human errors and the need to manually enter information into an auditing system. When an audit item is flagged for additional review, auditors can easily send the information to the financial lead for review and additional information. Electronic reviews may take less time than in-person physical meetings with paper forms. Less manual work and easier reviews can decrease the total auditing timeline.
Physical documents are more difficult to secure than electronic documents. Electronic data and documents can be secured through passwords and other digital security methods. An electronic tracking system can also notate who has reviewed each data element for security review purposes. Physical documents can be copied, lost, or placed in an unsecure location. A paperless audit increases the security of a company’s financial system.