The issue of corporate governance has become an important business problem for many companies over the past few years as new local and international legislation forces businesses to exercise greater and more transparent control over the way they do business. This has had a significant impact on the accounting trade, as financial governance leads the way in terms of prescribed openness, accuracy and accountability.
"Whether it's Sarbanes Oxley, the King report or the National Credit Act, financial governance has become of critical importance to the streamlined running of South African businesses," says John Olsson, sales and marketing director of Ability Solutions. "Fortunately, while legislative pressures have mounted, so have the technical advances within business software that companies can employ to make compliance easier."
Olsson says there are two basic governance issues business faces that technology can assist in resolving.
1 – The integrity of financial data must be assured. Not only does this entail securing the databases containing the financial information, but it also means being able to reliably track and trace all transactions that have an effect on the data.
2 – At all times, any actions relating to finance must follow the company's standard processes and practices. If they deviate a flag should be raised to draw attention to the problem. Better yet, people should automatically be prevented from taking any detours.
Technology comes into its own when ensuring the above points are realised, especially with more financial and business software vendors integrating business process management (BPM) and workflow into their products. The reality is that leaving humans to follow processes to the letter never works because there is always a shortcut to discover or corners to be cut that are not easily visible to management. And management has better things to do than to ensure everyone in the company follows procedure all the time.
"When technology is employed, a process is defined for every possible financial transaction and the relevant workflows designed to match," adds Olsson. "The BPM system then ensures that all rules are followed and automatically records an audit trail of all financial transactions from inception to completion. Should the information be required, it is simple to call up a workflow, determine who was involved at what time and what they did."
An added advantage to technology-empowered governance is that corporate financial data can be trusted implicitly for further use. When all the right checks and balances are in place, forensic audits can be conducted at the drop of a hat and business intelligence analysis can be run without worrying that the data may be inaccurate.
While governance regulations are necessary, without technical assistance in enforcing them a company can easily find itself in a bureaucratic maze of "things to do" that takes time, effort and resources while having no relevance to or benefit for its core business. Solutions such as BPM can reverse this situation, reducing the governance burden while improving compliance.