Electronic storage is becoming commonplace in today’s work environment and that creates modern perils for managing financial data. Companies should continue to revisit how they use electronic storage to their benefit, as well as the controls over items stored, to ensure that the control environment remains strong.
This blog will cover three components to electronic storage: the storage means themselves, the actual accounting records, and management of electronically stored items.
Companies should consider who owns the storage (i.e. are they subscribing to cloud storage or do they own the servers?). It is important to ensure that the servers containing company files are backed-up, safe from physical harm, and protected against cyber-attack. Management and IT should work together to ensure that whomever owns the servers has adequate competency to protect the accounting records.
Accounting records are an integral part of communicating business performance to stakeholders. In order to provide meaningful and high quality reports, records need to be well organized. There are three things to consider when evaluating how effectively your business is using its storage:
- How do you avoid duplicates?
- How do you maintain version control?
- How do you use formatting to make files easy to use?
Ensuring that you have an effective written process for avoiding duplicates and proper version control will yield time savings when locating files. It can also reduce the potential for financial statement errors that can occur by simply using the wrong files. Ensuring that your files are easy to read and use helps management, and auditors, decipher the essence of transactions and the impact they have on the company’s financial position. Finally, keep financial data stored on a yearly and monthly basis so that it can be easily accessed and analyzed.
As the concept of electronic storage ages, so do your records. Best practices should include written retention policies that achieve both proper and timely disposal of unnecessary documents, and proper storage of documents that must be retained per the law and company policy. Proper management of electronic storage can be achieved through written policy, awareness, and consistent management oversight. Since technology changes rapidly, policies and the control environment should be reassessed regularly.
By Kristi Ray