As we approach 2025, CFOs and controllers will face a compliance landscape that is more complex and demanding than ever. To adapt to these evolving regulatory requirements, financial professionals must implement new accounting controls in the new year.
Embracing modern accounting controls will help your financial department create stronger audit trails and promote compliance with stricter regulations in 2025. Some of the controls and strategies you should adopt ahead of the new year include the following.
Integrating Advanced Technology for Enhanced Control
With compliance standards growing more stringent, relying on manual processes for financial controls is no longer viable.
Advanced technology solutions now allow your finance department to automate repetitive tasks and improve data accuracy. In turn, you can make it easier to meet compliance standards and eliminate human error from your workflows.
Here are some advanced technologies your team should explore.
Robotic Process Automation
Robotic process automation (RPA) tools can be particularly useful for finance teams. You can use RPAs to automate repetitive processes like data entry and reconciliation. These tools ensure more accurate data that aligns with compliance requirements.
RPAs also enhance efficiency, enabling you to focus on more strategic oversight rather than routine tasks.
Blockchain
The idea of using blockchain technology is gaining traction in finance. The technology offers superior transparency and security benefits when compared to traditional digital ledger solutions. The decentralized nature of blockchain can allow you to create immutable records and ensure critical financial data remains tamper-proof.
Data Analytics
Additionally, you should consider implementing data analytics tools for predictive compliance monitoring. These tools can identify potential risks before they translate to real-world issues.
For example, anomaly detection algorithms can flag unusual financial patterns that may be indicative of fraud or accounting irregularities, giving your team a chance to investigate.
Strengthening Audit Trails to Promote Transparency
Audit trails represent a cornerstone of regulatory compliance. However, the mere mention of the word audit can elicit feelings of concern and frustration among finance departments that rely heavily on manual, paper-based processes.
How do you alleviate the burden of audits and create stronger trails that promote transparency? You’ll need to leverage a multifaceted approach that includes several steps.
Digital Documentation
Paper-based documentation is outdated, inefficient, and can lead to inconsistencies. Moving to a digital documentation system simplifies storage and also ensures your files are accessible and organized.
Digital audit trials should include detailed transaction logs, timestamps, and user information. By digitizing documentation, you can provide auditors with a clear, chronological record of all transactions and streamline the audit process.
Role-Based Access Control
Implementing role-based access control (RBAC) limits who can access, modify, or approve specific financial data. By leveraging RBAC, you can maintain data integrity and prevent unauthorized users from accessing sensitive files.
With RBAC, each user’s permissions are aligned with their responsibilities. You need to ensure that each employee can tap into the information they require to perform their jobs effectively without granting them access to any additional files or data.
You’ll need to work with your IT department to create, implement, and update role-based permissions to ensure they are accurate.
Version Control and Change Tracking
Using software that tracks every change made to documents ensures that previous versions can be retrieved and compared. In the event of a discrepancy, you need to know who accessed a file and what specific changes they made.
Version control technologies not only promote greater transparency, but they can also help you avoid long-term issues in the event that someone makes an error.
For example, imagine that one of your team members accidentally inputs the wrong total on an important file. You could use version control and change tracking tools to determine what went wrong and revert back to the old version of the document.
Preparing for Stricter Regulatory Standards
Regulatory standards aren’t poised to get any more lax in 2025. With that in mind, you need to prepare for an increase in regulatory demands.
Performing Compliance Audits
A compliance audit helps you understand what you are doing well and pinpoint any gaps in your current compliance strategy. You need to identify weaknesses in your accounting controls before an external audit.
Create an internal audit checklist that covers compliance with financial reporting standards, transaction accuracy, and data security protocols. Review your accounting controls against the checklist and proactively address any areas of concern.
Implementing Continuous Monitoring
Continuous monitoring tools can track financial transactions and compliance metrics in real-time, providing you with instant visibility into the efficacy of your accounting controls.
These tools can be programmed to generate alerts for any activity that may not align with your policies and standards. The sooner you know about a potential issue, the easier it will be to correct the problem.
Which Controls Should Your Organization Prioritize in 2025?
As you prepare for the new year, it’s vital to conduct a comprehensive assessment of your current accounting controls. Identify your areas of strength and potential weaknesses so you can determine which modern controls will provide the best return on investment and promote organizational resilience.
