Internal controls are often viewed as necessary evils, essential for compliance but a hindrance to operational agility. This perception stems largely from how they are traditionally implemented and maintained.
For many internal stakeholders, finance teams are seen as rigid gatekeepers of financial rigor and rigid procedures, slowing down the business resilience in the name of compliance. The layers of checks, approvals, and documentation required for internal controls can create bottlenecks, leaving departments frustrated by delays in decision-making and execution. Finance’s efforts to enforce internal controls are often perceived as overly conservative, creating tension between teams striving for agility and those ensuring compliance.
Adding to the challenge, internal controls are frequently viewed as an additional administrative burden rather than a strategic necessity. For many employees, they appear to be an elaborate exercise designed solely to satisfy auditors. This disconnect creates a culture of compliance by obligation rather than collaboration, further alienating stakeholders from the control process. Your company doesn’t want to be the next victim of fraud or a cyber-attack though. Controls are vital.
The integration of continuous close and continuous controls offers a way to redefine how internal controls function, turning them into an enabler of efficiency and collaboration within the finance function and external stakeholders.
The Challenge with Traditional Internal Controls
Internal controls often exist in isolation from day-to-day accounting workflows. They are maintained in separate referential systems, creating silos between those responsible for financial reporting and those tasked with risk management. Worse yet, controls are sometimes duplicates of the rules already established in accounting manuals. This overlap results in unnecessary work and redundant reviews, bogging down teams with inefficiencies.
This disconnected approach also contributes to poor communication between finance teams, internal auditors, and risk managers. Internal controls become a burden, rather than a shared framework for improving processes.
Collaboration and Integration are Key
To address these challenges, organizations can rethink how internal controls are structured and implemented. Instead of creating standalone frameworks, internal controls should be seamlessly integrated into accounting workflows. A clear risk matrix that directly links controls to financial processes and closing checklists can eliminate unnecessary constraints and provide clarity for all stakeholders. Letting accountants focus on reviewing the financial performance of the company and internal controllers focus on the detection of errors and fraud.
An integrated approach means:
- ✨ Streamlined Communication: Control actions are clearly communicated to internal auditors, risk managers, and the finance team.
- 🚀 Optimization of controls: By harmonizing the accounting manual and control referential, organizations can optimize the review and control of accounting entries.
- 🤝 Collaboration Across Teams: Internal auditors and accountants can work hand-in-hand, fostering a culture of shared responsibility and efficiency.
Continuous controls: The Next Step
Continuous controls, when integrated into the continuous close process, transforms how internal controls are monitored and executed. Instead of waiting for periodic reviews, internal controllers can actively participate in real-time workflows, ensuring compliance and identifying risks proactively.
There’s
nothing more re-assuring when auditors can have the guarantee that the process
documents of the finance team are the ones effectively used as closing
checklist, and that any change in the close will directly be reflected in the
controls.
This approach not only reduces the burden on accountants but also aligns the goals of auditors and finance teams. By embedding auditing directly into the closing process, both groups can work together seamlessly, sharing insights and improving the organization’s overall risk posture.
How ContiClose Delivers Integration
ContiClose is at the forefront of enabling organizations to achieve this vision of integrated continuous close and controls. Our platform:
🌟 Combines Close Checklists, Process Documents, and Risk Matrices:
All in one place, ensuring that controls are embedded into daily workflows. There is a clear audit trail of changes in process documents on order to document when, what process was used.
⚙️ Delivers Continuous Closing Features:
Recurring checklists and automated workflows streamline tasks for accounting teams and AI tools.
🔍 Supports Continuous controls:
Internal controllers gain real-time access to closing activities, enabling collaboration with accountants and enabling the discovery of required post-close adjustments during the closing and not when the game is already over.
📊 Provides a Clear Audit Trail:
Every control action and accounting step is recorded, ensuring transparency and accountability.
By breaking down silos and embedding internal controls into everyday financial operations, ContiClose empowers organizations to meet compliance standards while driving efficiency.
Continuous Auditing in the Era of AI
The rise of AI introduces new opportunities and challenges for finance teams. While AI promises to enhance efficiency, automate repetitive tasks, and improve accuracy, it will not magically solve the long-standing disconnect between accounting and internal controls teams. Instead of replacing the need for collaboration, AI highlights its importance. Without structured workflows and integrated processes, the insights provided by AI can become fragmented, creating more silos instead of bridging gaps.
AI can
inadvertently exacerbate tensions if internal controls are seen as barriers to
adopting AI-driven solutions. For example, internal auditors may be hesitant to
trust AI-generated results without clear scoping, while accountants may
struggle to align AI outputs with rigid control frameworks. To unlock the full
potential of AI, organizations must ensure that internal controls are not
perceived as obstacles but are instead embedded seamlessly into AI-driven
processes.
A Future of Collaboration
In
a world where finance teams are increasingly adopting AI and automation, the
role of internal controls must continue to evolve. With the integration of
continuous close and continuous controls, finance professionals can not only
maintain compliance but also create workflows that are faster, more accurate,
and more collaborative.
ContiClose offers the tools needed to build this future, a future where internal controllers and accountants work hand in hand to drive efficiency and success.