Building Corporate Governance and Auditability into Financial Software

Corporate Governance, as we know it today, emerged in the 1970s. Corporate governance is effective when it achieves three things, trust, transparency, and accountability. These three things bring in long-term investment, financial stability, and business integrity. Clearly, it comes down to managing your money well and ensuring that everyone in the organization respects you, the manager, for it.Trust, transparency, and accountability, the three pillars of corporate governance, can be raised by great expenditure management beginning with procurement and ending with accounting.  

Pillar 1: Trust 

To achieve trust, you should be able to share important information with and among your employees and suppliers, ensure the right communication happens between employees, and that the leadership itself becomes approachable. Procurement helps you ensure all three prerequisites. Procurement is the first and perhaps the most critical business operation for any organization. As the number of internal stakeholders increase and the number of vendors also grows out of proportion, the likelihood of maverick expenses also increases in procurement. A cloud-based e-procurement system can help. 

It will ensure that: 

1. Employees get the information they want easily and quickly
2. POs can be shared along with other requirements easily across multiple vendors 
3. Approvals are obtained quickly as per the DoA matrix

Pillar 2: Transparency

To achieve transparency, you must trust employees, the decisions they make for your suppliers and the end users, share results, and open up communication channels. To do so, you must have a platform that lets you implement the right strategy at the source, enabling your employees to make the right decisions. Begin with a strategic sourcing platform like the RFX Manager from Expenzing. It brings together your procurement team and your vendors, keeping in mind the needs of your end users. 

1. Your procurement team can now compare suppliers, and make use of RFI templates to garner better sourcing insights. 
2. Algorithmic supplier ranking also speeds up this process. 
3. The entire RFP process is automated with both internal and external stakeholders getting a clear and transparent view. 
4. With a clear, credible, and trackable process, auditability is also improved.  

Pillar 3: Accountability

The last pillar of corporate governance, namely accountability, is raised when one leads by example, that is, by being accountable, by setting realistic achievable goals, and by holding each other accountable. To add to the capabilities we mentioned earlier, it would be great to have a spend analyzer. This would help build accountability to a great extent, so that everybody knows the results of every decision that is made. An unwanted travel expense, a not so profitable supplier account, unaccounted for or uncategorized miscellaneous expenses. The spend analyzer is your answer to all of these problems. 

Another thing that would help improve accountability, quite literally, is to automate the accounts payable process. Intelligent robotic agents will check against quantity, rate, order value, goods received note, and advances paid to ensure that the transaction is legitimate. Only if the goods received match with the quantities and the rates provided in the PO, will the invoice be authorized. An automated accounts payable solution can ensure the sanctity of business operations and improve accountability in your organization.

The Floor and Ceiling: Auditability

Auditability sets the foundation on which the pillars of corporate governance are raised, ensuring that your establishment can stand the test of time. It allows an auditor to get accurate results when he/she analyzes the financial statements of the organization. In this sense, auditability once again promotes the three pillars of corporate governance, trust, transparency and accountability. You can improve the auditability of the finances of an organization through:

1. A cloud-based e-procurement system
2. An RFP process that is easy to manage 
3. Accurate spend tracking 
4. Recurring expenses and rent management

Closing Words

The lack of transparency and poor practices for the disclosure of information makes corporate governance ineffective. When your financial software has corporate governance and auditability built into it, the organization will benefit greatly. The obvious advantages of such spend management software are:

• Greater process efficiency
• Improved spend compliance and visibility 
• Better risk management

If you are looking for spend management software that has corporate governance and auditability built right in, talk to a spend management advisor at Expenzing.