The intense scrutiny and demanding timelines inherent in audits can stress accounting teams, impacting both individual well-being and organizational efficiency. While a relief, the conclusion of an audit doesn’t mean the end of stress. There is often a “post-audit hangover” from the mental exhaustion of the audit, the strain of catching up on delayed work, and beginning a thorough review of how things are done internally. While nothing will make the audit process completely stress-free, identifying the root causes of audit strain is essential for implementing effective solutions and ensuring a more streamlined audit experience in the future. This blog addresses audit and post-audit stress in lease accounting, offering practical solutions and strategies.
The post-audit analysis
Post-audit, teams face a barrage of challenges: mental exhaustion from prolonged pressure, data reconciliation burdens, and operational backlogs caused by deferred routine tasks. Manual data comparisons lead to time-consuming error correction, and glaring process inefficiencies, like manual report compilation, expose the need for automation. Evolving accounting standards further heighten compliance concerns as teams implement audit findings.
Documentation deficiencies, revealed during auditor requests, highlight organizational and accessibility issues. These problems stem from reliance on manual processes, scattered data, insufficient documentation, last-minute preparations, limited automation, and the complexities of lease accounting standards.
Solutions for post-audit improvement
A proactive approach to improving lease accounting audits involves implementing technology-driven solutions. LeaseQuery, and similar platforms, provide a strong foundation by alleviating manual burdens and ensuring data accuracy.
Organizations can further optimize their audit processes through the following strategies:
Centralize lease data
By consolidating all lease information—including lease agreements, payment schedules, and critical dates—you eliminate the time-consuming process of manually searching for and reconciling data. With a single source of truth, all relevant stakeholders can access the same information, which reduces the likelihood of misinterpretations, and saves valuable time.
Automation
Automating key lease accounting processes is crucial for avoiding or alleviating the post-audit hangover. By eliminating manual, error-prone tasks that often lead to discrepancies during audits, teams can:
- Save significant time during audit preparation and the audit itself.
- Ensure consistency and compliance across all reporting periods.
For example, automated recalculation of lease liabilities based on updated discount rates or lease term changes ensures accuracy and reduces the risk of audit adjustments.
Beyond calculations, automation should extend to:
- Tracking critical lease dates: Automate the tracking of critical lease dates, such as renewal options and termination notices, and trigger automated alerts. This minimizes the risk of missed deadlines that can lead to financial penalties or operational disruptions, issues often highlighted during audits.
- Lease data entry: Leverage AI to extract key lease information from documents, automatically populating fields such as lease terms, payment schedules, and asset details.
Streamline reporting
Streamline your reporting processes by utilizing lease accounting software like LeaseQuery, to automate the creation of essential reports, such as lease liability rollforwards, right-of-use asset schedules, and disclosure reports required by accounting standards. Reporting templates automatically populate with lease data, ensuring consistency and accuracy across all reports.
Lease accounting software further enhances reporting capabilities by streamlining data sharing with auditors. Read-only auditor access enables auditors to efficiently review and pull reports to validate information. Direct export of reports into formats preferred by auditors, such as Excel, CSV, or PDF enables them to review and manipulate lease data outside your systems. This reduces the need for your team to find and/or manually format data, by allowing auditors to self-serve on their data requests to verify calculations and assumptions.
Enhance audit trails
Implement a system that automatically logs every lease data modification—user, timestamp, and specific change—creating a detailed audit trail. This streamlines audits, enabling quick verification of data integrity and identification of discrepancies. Auditors can easily trace changes to lease terms, rates, or schedules, ensuring financial statement accuracy and eliminating manual tracking.
A platform like LeaseQuery provides auditors with direct, read-only access, eliminating the need to navigate disparate documents and systems, and enhancing transparency and efficiency.
Conclusion: Avoid the hangover with proactive compliance
Don’t wait for the next audit to scramble for lease data and documentation. Implement a proactive compliance strategy by utilizing lease accounting software that provides real-time visibility into your lease portfolio. This allows you to continuously monitor compliance with lease accounting standards, identify potential issues early on, and take corrective action before they become audit findings. For example, track lease liabilities and right-of-use assets, ensuring they are accurately recorded and reconciled with the general ledger, preventing discrepancies and simplifying audit procedures.
By proactively managing compliance throughout the year, you can minimize the risk of audit adjustments, reduce stress, and ensure a smoother audit experience. This proactive approach not only helps avoid the post-audit hangover but also strengthens your organization’s overall financial integrity and governance.
