How to Increase Audit Efficiency

Auditing is a powerful and fundamental operation for every organization. But how much money and time should be spent on it, and how do you measure accuracy? Which operations do you adjust first to have the greatest impact? Having the proper tools, processes, and procedures in place to successfully audit expenses enables you to get the most of out your time and dollars spent on auditing.  

How much does a manual audit cost?

YES, you can calculate the estimated cost to perform all tasks related to manual expense report auditing; so logically, improving efficiency lowers cost. With this calculation, you can quickly determine if this is how you want to invest the time of your most valuable resource — your employees — or if it makes sense to automate or outsource some of the work and allow your employees to focus on other areas of your organization. A recent IDC report found that automating the audit process:

• Is 36% more efficient for expense report intake and handling
• Takes 43% less time to fill out an expense report
• Results in 65% more expense reports that are compliant with company policies

Not sure automation can help? Use our handy formula to see for yourself:

Time to Audit Formula

Which auditing type is your organization?

Non-compliant spending happens in every business and audits are essential for catching it. Having the proper tools, processes, and procedures in place to successfully audit expenses will optimize auditing efficiency and accuracy. Typically, organizations are using audit methods that fall into one of three categories:

1. Reactive: Audits are initiated only when fraud is suspected.
2. Random: Manual audits are conducted on a random sample of expense reports.
3. Manual: Manual audits are conducted on all expense reports. While effective at finding fraud, this method is the most difficult, expensive, and time consuming.

Consider whether it is most cost-effective to outsource auditing, implement automation, or better support your in-house auditing teams.

Streamline audits to improve compliance: 8 auditing best practices to leverage

Evaluating your top expense categories can determine which areas, teams, or categories require more or less of your auditing attention and will help you optimize your organization’s auditing efficiency. Consider things like clarifying expense submission procedures and creating automated rules around approvals or notifications, supported by consistent and scalable policies. Here are some of our best practices to get your auditing process on-track:

1. Reduce internal auditor effort: Use process improvements like outsourcing manual audit tasks or using machine learning tools to review each line item in a more holistic way. Then, bring the high-risk items to your auditors for resolution. This reduces the amount of time they spend on policy-compliant, low-risk entries.
2. Increase data entry accuracy: Use a receipt image capture or scan tool, like ExpenseIt from SAP Concur, and OCR conversion to populate required fields in expense reports to reduce exceptions that cause audits.
3. Use data to identify improvement opportunities: When corporate policies change, it may result in a higher number of expenses flagged for audit. By using data to identify areas of consistent non-compliance, you can pinpoint the cause and update your policy to reflect current business needs. We recommend using your organizational reports to review exceptions and re-determine the correct approach.
4. Use pre-authorized requests to match actual expenses: Use pre-authorized spending tools to match forecasted, approved spending to actual spend, like the way purchase orders work against invoices. This way, the review cycle and approval process happen prior to the transaction, reducing the amount of time and effort spent auditing after the fact. If the actual expense matches the requested amounts, little or no review is necessary. If the actual amount does not match the requested amount, it triggers the auditor to take a closer look.
5. Reduce the number of exceptions over time: Review the report trend “audit rule exceptions”. The number of exceptions in an expense report significantly increases the amount of time your team spends auditing it. Decreasing this trend reduces the burden on audit resources and increases employee productivity.
6. Improve first pass ratio: Reduce multiple touches. Expense reports that repeatedly cycle between submitter, approver, processor, and auditor are costly. In the best-case scenario, reports go through the process only once.
7. Increase card adoption. Review the report “spend channel adoption”. Card feeds ensure the accuracy of amounts submitted and reduce the need for manual validation. Simplify the auditing process by making corporate cards and p-cards your preferred payment method when employees are spending company dollars.
8. Provide ongoing training and support for employees: Provide continual training to educate users on policies and tools and ensure employees know how to apply policy correctly. Review these programs and materials on an annual basis, at a minimum. Most employees want to be compliant but don’t have access to all the available resources to answer their questions. Providing a help desk to address these questions can help reduce the number of potential non-compliant entries and actions.

Auditing resources to get started

After reading our best practices, here are some resources that you may find helpful while on your auditing transformation journey:

• Take our Finance Personality test to see where you stand
• Read our eBook: 5 ways efficient audits fuel business growth
• Get the whitepaper: The Importance of a Healthy Financial Process
• Are your audits on track? 7 Ways to Measure Audit Efficiency