Finance transformation: four areas of focus for the audit committee
Innovative technologies, the push for automation and demand for real-time, data-backed insights are causing big changes in finance. The end goal is a modern finance function, one that is agile and efficient, delivers real value to the company and is a partner across all aspects of the business.
The benefits of finance transformation are significant, and many companies are already starting to transform their finance functions. You should already be hearing about finance function transformation from your CFO. So, what are the key areas your board of directors and audit committees should be discussing with management?
Focus area #1:
Strategic plan: understand how the finance function strategy fits into the big picture
The strategic plan needs to outline the vision for finance transformation and connect that vision to the company’s overall business strategy. The plan should identify the overall objectives and goals of the transformation and should lay out how the finance function will get from its current state to the future state.
Audit committee pro-tip: Audit committees will want to discuss how the CFO can maintain the integrity of financial reporting—finance’s core responsibility—while undergoing these changes.
Focus area #2:
Finance operations: discuss the impact of automation and technology and how finance processes are changing
Automating certain processes can make the finance function faster, cheaper and more efficient. With automation, transactions can be processed in real time. Manual reconciliations can be eliminated. Accounts can be settled daily and closings and consolidation cycles shortened. And because it lowers the risk of human error, automation helps keep data more accurate and systems more secure.
Audit committee pro-tip: Audit committees will want to focus on how internal control is maintained. They'll especially want to focus on what controls the company has built into any automation software or bots.
Focus area #3:
Talent: understand the talent and people strategy and how roles are evolving
As new technologies, automation and digitally enabled processes are incorporated into the finance function, the workforce behind it will also need to change. Digital change doesn’t mean finance employees will no longer be needed. Instead, the talent strategy should be one that emphasizes augmenting and upskilling, not replacement.
Audit committee pro-tip: Audit committees will want to understand finance’s talent strategy and how headcount is expected to change in the short and long term. They’ll want to know how the company plans to fill any skills gap.
Audit committee pro-tip: Audit committees will want to monitor progress and understand if the finance function is achieving the objectives, goals and metrics outlined in the strategic plan. They’ll want to know whether the company achieved a return on its investment.
Focus area #4:
Outcomes: establish how to monitor performance and the benefits of finance transformation
All parts of the company can benefit from a modern finance function by gaining deeper insights and greater transparency. Self-service dashboards, data visualization tools and voice search tools will allow internal stakeholders and business units to focus on the data they want in a user-friendly and real-time way. But they'll still need finance’s expertise to draw conclusions or validate decisions.
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