Every business should keep its rebate agreements transparent, recording each step in the process so that it can be traced back to the original source. To get the whole financial picture of your rebate deals you need to identify and fix any critical errors and assess ways to improve your rebate accounting process. To do this, you need access to a complete and reliable audit trail.
What is an audit trail?
An audit trail is a detailed record of a financial transaction or a document such as a trading agreement which may include the exact source, timing, products, individuals involved, and other relevant details. It provides evidence that a sequence of tasks or activities have been performed.
With a paper-based audit trail, it might be nearly impossible to determine what changes were made to various agreements, when they were made, or who made them. But in an automated, paperless system, it captures transactional data and any changes, making the information more accurate, readily accessible, and usable, allowing you to stay on top of your rebate records and bring more accountability to your team.
Well-managed audit trails are a good indicator that a company has its business under control. An audit trail with missing documents may be an indication that a company is not adhering to proper rebate accounting practices and could be losing out on valuable earnings.
Why are audit trails important?
Having a clear and detailed audit trail is not only vital to current operations but also ensures that your data cannot be compromised, whilst recording every business transaction. Without a good audit trail in place, you cannot have the confidence that your rebate deals have been recorded accurately and not altered by mistake.
Who uses an audit trail?
Audit trails are commonly managed by staff within the IT and compliance department, however any employee – whether it’s someone in the finance team or procurement – who can make an update to a record or access your rebate management system, will be included in the audit trail of the record. This will validate any questions that can arise at a later stage.
Benefits of an audit trail in rebate accounting
- Be compliant with financial auditors
An audit trail is used by both external auditors and internal auditors to trace transactions, as well as by the finance team to track down errors and the causes of differences in your financial statements. Auditors are not great fans of undocumented processes. At Enable we have helped many companies move to rebate management software (on more than one occasion) because their auditing and compliance risk is too great. When their internal auditors say the tools they are using to collect millions or hundreds of millions of dollars are simply inadequate, they know they need a dedicated system and turn to rebate management software to help them.
- More accurate reporting for rebates
Reporting errors can have significant repercussions for any business managing rebates. For example, in 2012, JP Morgan Chase made a loss of $6.2B as a result of a user error in a spreadsheet that wasn’t discovered until it was too late. By consolidating all your data into a rebate management system with a full audit trail can avoid costly mistakes because you will have access to all the relevant information attached to an individual transaction. This makes it easier to isolate problems and compare data sets to ensure reports are accurate.
- Simplify audits
Having a proper audit trail can take some of the pain out of the auditing process. With clear, easy to verify financial records, auditors can spend less time and resources on your audit, reducing your expenses and freeing you to return to business as usual much more quickly.
- Reduced errors
Besides making your rebate accounting more accurate, an audit trail helps you catch errors before they become issues. For example, if you’re currently using excel spreadsheets for rebate accounting, then these are susceptible to fraud and errors because it’s easy to change information and hard to keep track of who’s making the changes.
Audit trails connect every document and record to every person interacting with a transaction in any way, making it much easier to track and correct rebate errors while simultaneously reducing their likelihood from the start.
- Greater security
Audit trails ensure the security of your company’s rebate data. Every day companies face internal and external issues that are actively trying to compromise company data, both by accident and on purpose. The date, user access and even location stamps can be rolled into an audit trail report, therefore if there are threats of data corruption and theft, the audit trail will show it.
- Support negotiations
Because an audit trail can track how long and how frequently individual users access a trading agreement, it can be used to gain insight into which suppliers are most interested in a deal, enabling the company to be more strategic with its negotiations.
Enable’s rebate management software provides the audit trail for you
With Enable’s rebate management software, you can get the correct information to the right person at the right time—with everything filed, stored, and found in a safe and central cloud-based repository. The process ensures accurate audit trails, so having more trading agreements doesn’t lead to more confusion or costly errors.
Enable ensures you are fully compliant and have comprehensive audit trails and transparency of the retrospective income that affects your margins, providing confidence and assurance. A robust and comprehensive audit trail is paramount, so you can be confident in your accruals, and rapidly demonstrate regulatory compliance.
A rebate management system can also eliminate the time and cost involved in providing rebate claim evidence and can facilitate internal and external audit processes that are transparent and consistent.