Accounting and finance departments manage private financial information that could have dire consequences if mishandled. With the right financial governance in place, accounting departments can easily reduce risk.
Financial Governance
Financial governance is a set of rules, policies and practices that a business follows to properly manage their documentation. In an accounting department, governance can help them standardize their policies for deleting, retaining and preserving financial documents in their original format.
With hundreds of document types within the accounting department, governance can be a daunting and difficult task. As accounting departments stay aware of the compliance requirements for each document type and put automated governance into practice, they can greatly reduce risk.
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Retention
Document retention refers to making sure that important documents don’t get deleted before the required time period is up.
There are many financial documents that accounting departments are required to have on hand for a certain time period. For example, they must keep bank statements and deposit slips for seven years in most cases (although they should check with local regulations). Other documents will have to stay accessible to them permanently, like a general ledger.
What Risks Are Involved?
Although audits should not be viewed as a negative thing, they could come with negative consequences for those that are ill-prepared. If you have been selected for an audit and don’t have all the required documentation (like tax information from the previous year), you could be charged with some steep fines.
Accounting departments can completely avoid audit fines if they’ve ensured that their records follow the retention guidelines.
Deletion
The fear of an audit should not drive accounting departments to keep every document forever. Having more documents than necessary makes it harder to navigate through the required ones. In addition to the frustration of dealing with a disorganized filing system, there are risks for those that don’t delete their documents when they can.
What Risks Are Involved?
Accounting departments that fail to delete their documents after they have reached the specified time period could get themselves involved in a legal battle. If an accounting department has records in their system, they are responsible for them. Even if they don’t need them to maintain compliance.
For example, if the accounting department doesn’t delete their payroll data after the specified time period (usually seven years), they could be subpoenaed to present their documentation in court. Keeping documents longer than necessary will give organizations more information to review when served with a record request.
Additionally, if an organization deletes records while in the midst of litigation, they can be fined for failing to implement a litigation hold. If the records are deleted when they are no longer of use, organizations cannot be held responsible for them.
Another risk accounting departments can face is that the more documentation they have, the more access points there likely will be for a security breach. By only keeping required documentation, accounting departments can more easily avoid the consequences of security breaches.
Unaltered Documentation
Keeping certain documents unaltered is one more piece of content governance that accounting departments must consider. Not only do accounting departments need to make sure that certain records remain in their original format, but they have to be able to prove it.
What Risks Are Involved?
Looking back at what’s involved in an audit, tax documents must remain in their original state. If the accounting department can’t prove that they are unaltered, they could again face a hefty fine.
Technology Can Minimize the Risk
Keeping up with all forms of governance to maintain regulatory compliance may seem overwhelming. And it is for those organizations that plan on staying on top of content governance manually.
Technology exists to make life easier. Accounting departments can use technology like document management to automate document governance. There is no reason why accounting departments should stress about governance when they can implement a technology that will automatically delete a file after a specified period of time.
Instead, accounting departments can better use that time to assess the financial health of their organization and make future plans that will help the organization achieve its goals.
Revver is the ultimate document governance tool for accounting departments. It can automatically delete a predetermined document type when the time period has expired, lock documents so they remain unaltered, protect confidential data with customizable security options, and more. Discover Revver for your finance department today.
