Financial institutions of all sizes still struggle to achieve efficient, scalable audit-preparation workflows—especially those relying on paper loan files and manual processes. Empowering staff with the right technology is key to enabling better audit preparation, but doing so requires an openness to change.
What’s the best path forward? At Alogent, we often see credit unions faced with choosing between three paths. Choose carefully, as certain options pose more obstacles than others.
Path 1: Paper-Based Audit Preparation
Preparing for an audit in a paper-intensive environment can be operationally disruptive and frustrating for credit union employees. Maintaining the status quo may require the least amount of change, but moving forward with paper-based audit prep poses several challenges. These include:
- Time-consuming workflows: Each file must be physically located and checked for accuracy. Sometimes this involves several phone calls and emails, such as when a file is checked out to a lender at a different branch.
- Shadow files: Paper loan files can only be in one place at a time. Making photocopies of loan files temporarily reduces the chance for member service issues, but doing so creates duplicate records — commonly referred to as “shadow files.” This can cause confusion, especially when it comes to versioning.
- Cost and risk of moving paper files: Relying on couriers presents a tangible cost to the credit union. There’s also a chance that information will become lost or damaged during transit.
- Stacks of paper for auditors: Auditors may be accustomed to working through stacks of loan files, but that doesn’t mean they enjoy doing so — especially when their other clients are adopting technologies that streamline access to loan documentation.
- Inability to benefit from “virtual audits”: It’s practically impossible to reap the efficiencies of offsite (or “virtual”) audits when maintaining files exclusively in hard copy format.
Path 2: Network Drive / Digital Repository
Some financial institutions store digitized loan documents in a general repository, such as an existing network drive. Although this approach addresses several accessibility issues and the risks of paper-based audit prep, it still comes with challenges. These include:
- Difficulty finding information: Simply digitizing a loan file doesn’t guarantee credit union employees will be able to find what they need. After all, many things can still go wrong without implementing the proper controls. Documents may be placed in the wrong folder. Files might have inconsistent names. Users may accidentally move or delete documents. As a result, locating documents still requires considerable work.
- Administrative effort to copy and paste files: Once documents are identified, they likely need to be copied into a folder for sharing with auditors. Copying and pasting documents is tedious and error-prone.
- Ongoing reliance on shadow files: Credit union employees are less likely to adopt digital workflows when they struggle to find information in the network repository, and shadow files will still exist. This can lead to a hybrid situation of paper and electronic files, making audit prep even more challenging.
Path 3: Document Management System with Built-in Audit Prep
Organizing electronic loan files in a system that’s built specifically for the financial services industry empowers staff to find information, resolve exceptions, and prepare for audits in less time.
For example, Alogent’s AccuAccount solution is built to “look like” a traditional loan file, while offering the enhanced accessibility of electronic document management. Multiple users can view the same records simultaneously, and exceptions are cleared as documents are added to the correct location. A significant benefit is the built-in audit preparation feature, streamlining audit file generation, and practically eliminating copy and paste – enabling secure, virtual audits.
Watch an overview video about audit preparation in AccuAccount. For added efficiency and end-to-end document management, learn about Alogent’s enterprise content and information management platform, FASTdocs.
