In a modern business environment, audit and audit planning have become a regular part of corporate practice. Meanwhile, in a world of ever-increasing innovation, globalization, and changing regulations, legal professionals who conduct an internal audit face never-before-seen challenges.
Today, both outside legal counsel and in-house legal teams have to address legal issues in multiple jurisdictions, cover distributed network of branches and subsidiaries, and work with a decentralized network of local service providers. At the same time, legal professionals have to attend to multiple aspects of governance, risk, and compliance (GRC) related to ownership, control, tax, and other areas in a shorter time span while having to work with an ever-increasing volume of data.
In doing so, lawyers have to work with distributed onsite and remote teams in multiple time zones and geographies, cope with data privacy and cybersecurity issues, and process data in various formats and media on different platforms and apps. Why are companies throwing so many resources into conducting internal audits and audit planning? Why is staying audit-ready so important both for businesses and their legal counsel? How do legal entity management systems make internal audits more streamlined and efficient?
Why Audit and Audit Planning Are Essential for Governance, Risk, & Compliance
With political, regulatory, environmental, technological, and other changes coming up almost on a weekly basis, companies face multiple risks that can limit their ability to fulfill their mission and achieve their established goals. A failure to stay compliant with new regulations, address the changes in legislation, or ensure the compliant launch of new products or services can lead to losses, poor performance, lack of trust from investors, not to mention penalties, civil and administrative liabilities.
An effective internal audit allows to mitigate those challenges, address uncertainty, assist with decision-making, and align performance with business goals. Internal auditing is meant to help an organization check existing controls, avoid using a fragmentary approach, and build a strong governance, risk, and compliance (GRC) strategy.
Given the number of existing and new regulations, the importance of internal audit and GRC activities cannot be overestimated. The most significant benefit of internal audit is to discover governance, risk, and compliance issues before they materialize and create costs, lead to penalties, or constitute a threat to the whole business operation. An effective audit also helps increase investors' trust in the company, increase opportunities to get financing, speed up transactions, and provide shareholders and the board with valuable insights into the company's operation.
The Importance of Staying Audit-Ready with Accessible Software
A sound plan for internal audit is essential for systematic risk analysis. In fact, audit planning is a foundation of any effective audit that helps to make the whole process smoother and focused. Effective audit planning will make the reporting accurate, ensure comprehensive analytics, and provide efficient issue management.
Your audit planning should enable your auditing team to identify critical risks and controls to be checked and ensure that all bases are covered. Meanwhile, a failure to come up with an effective plan for your audit can make it much costlier, taking more time and expense for the entire organization, so that it is essential to structure and map out the audit process in advance.
Meanwhile, effective audit planning is often easier said than done with distributed corporate structures, shared responsibilities between legal, tax, and finance departments, and multiple law firms providing services on various compliance aspects. The situation becomes even more complicated if the company uses outdated legal entity management software or still employs paper-based or spreadsheet processes.
Your audit planning and implementation can be significantly facilitated by applying modern legal entity management software. In fact, having such software in the first place is often considered a must-have for staying audit-ready in the modern global environment.
Best Practices in Audit Planning
The mechanism of audit planning remains pretty much the same, both for periodic risk assessments and ad hoc audits addressing specific regulatory changes or transactional needs. In its simplest form, it includes developing a comprehensive legal questionnaire, retrieving necessary information and documentation, and running a series of conferences with designated managers and employees to clarify information about the company.
However, in reality, it is far from being that simple, given the distributed corporate structures, the number of persons involved, legislative complexities, and uncertainty created by technological, political, environmental, and other factors, not to mention differences in geographies and time zones. It is not uncommon when these factors cause an audit to take much more time and expense than anticipated and fall short of expectations, creating legal uncertainties and gaps in governance and compliance.
Here is where a robust legal entity management system can significantly facilitate audit and audit planning, making it a smoother process overall. A cloud-based and modern entity management software increases collaboration across the entire organization by offering specialized user access from anywhere. It boosts productivity by automating repetitive processes, which allows your team to spend less time on administrative tasks and more time on high-value job functions.
Cloud-based entity management software comes with several indispensable benefits allowing lawyers to run a comprehensive internal audit for all types of organizations, including innovative businesses from highly-regulated industries and global corporations. The best legal entity management software comes with extensive functionality to help companies and legal professionals:
• Centralize all critical data related to governance, risk, and compliance.
• Create profiles for each subsidiary with crucial information.
• Manage access rights and permissions for various users.
• Provide for cloud collaboration on a secure cloud.
• Maintain audit track record, including an immutable history of changes to corporate data.
• Ensure effective project management, scheduling, and communication.
• Standardize templates and reporting to ensure consistency and minimize revisions.
Learn More About Athennian’s Top-Rated Entity Management System
The Athennian LEM software is an entity management system specifically designed around the challenges faced by law firms and legal professionals in both the United States and Canada when planning and conducting internal audits. The Athennian entity management software aims to make the legal audit and audit planning a plug-and-play process, automating the workflow and scaling up collaboration. With more than 150,000 users, Athennian remains one of the leading entity management systems in North America, serving both external law firms and in-house legal teams. Schedule your demo today.