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The Essential Guide to Audits Using a Firmex Virtual Data Room

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Can you imagine running an M&A deal without the use of a Virtual Data Room? Neither can we. Now, the same principles that made VDRs indispensable to M&A are being applied to the complex world of audits.
Audits are lengthy, complicated, and costly. This is largely due to the fact that they still rely on outdated technologies – physically hosting a team of auditors in an office, covering travel expenses, and providing the auditors with physical documents in a secure environment. Costs balloon for a company covering multiple jurisdictions in remote locations, as is often the case in the oil & gas industry.

A recent study showed the number of hours required for a public audit in 2013 averaged 17,525, at an estimated average cost of $249 per hour. For private companies, the average audit hours required were 2,927, at an estimated average cost of $179 per hour.

A Virtual Data Room (VDR) can revolutionize your audit in the same way that it has the due diligence process. Hosting your audit in a VDR brings with it tremendous cost and time savings, provides auditors with a centralized location to review and keep track of audit documents, and streamlines the process of addressing auditor’s questions and answers. It’s the natural choice for bringing audits to the modern era.

Read the article below to find out more.

A centralized location to collect audit documents

Audit-in-Firmex

Regardless of the nature of your audit – whether environmental, financial, or operational – auditors will provide your team with a multi-page list of required documents. Don’t panic!

The smartest thing to do is to load the requirements list into your VDR. This sets several things in motion:

  1. It creates a central repository for your audit. From now on, every document will be held in one place.
  2. Each item from the requirements list automatically receives its own folder.
  3. A full audit trail is being captured – who is loading what to the audit, and when they are doing it.
  4. You can begin dividing and delegating tasks using item statuses and tags (see section below).

Most importantly, the full VDR feature-set becomes available to the audit process. That means tools such as search, protection options and email notifications become available to a list that was static just a few minutes ago.

You’re well on your way!

Track audit progress with tags, comments, and statuses

Crucial to the success of any audit is the need to track audit progress and maintain transparency. This includes whether an item has been viewed, whether an item requires someone’s attention, and whether an item has been flagged.

While there are similarities between auditing teams and regulatory standards, each team works in their own unique way. For that reason, Firmex VDR includes three ways of tracking an item’s progress:

  • Item statuses are customizable for each audit. They can be applied to an item from a pull-down list for consistency and appear on status reports. For example, any item can be given a status of Not Applicable, In Review, Audited, Flagged, or Final.
    add-status
  • Tags can be applied to an item or folder. Tags are typically used when dividing the request list, and then filtered by team members. Tag an item with a person’s name to draw their attention to it.
  • Comments allow teams to communicate back and forth around an item or folder. All comments are date stamped and identify the team member making the comment.
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Tags, comments, and statuses can be used together or individually to facilitate your unique audit workflow.

Address auditor questions with Q&A

Maintaining open communication with your auditors and addressing questions in a timely manner is crucial to conducting an efficient and cost effective audit. Firmex VDR integrates Q&A directly into the audit process and requires no additional software. Auditors can ask general questions, or questions directly related to submitted documents.

Your team members are notified via email as soon as a question is asked. Different roles such as Answer Coordinators, Experts, and Approvers ensure that questions are always funneled to the right person.

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Answers that are time sensitive change colour, and reminders can be sent to questions that are awaiting reply. Questions that require document proof can be linked directly to the data room in your answer. Best of all, a Q&A archive keeps track of every question and answer, and can be exported at the end of the audit for record keeping.

Automatic email notifications

Firmex automatically notifies auditors when new documents are uploaded. Using the same mechanism, you and your team members will be notified the moment the final audit report is uploaded by auditors.

QA-Question

Emails to auditors can also be exchanged in Firmex using our Message Centre, and can provide a full communications audit trail for regulatory compliance.

Ad hoc audit snapshots

At any time during the audit process you and the audit team can run on-demand snapshots of the audit. The snapshots capture items that have been fulfilled, items that still require attention, items in review, and items that have already been reviewed. Snapshots are a great tool for keeping track of the audit progress, and catching any hurdles as they appear.

The snapshot can be run for the entire audit by exporting a project listing or for a subset of the audit by exporting a folder listing.

Digital archive of past audits

Past audits are easy to store, reference, and share in your Firmex VDR. Making a copy accessible to your board portal, fundraise, or extranet is as easy as dragging-and-dropping.

If you’re interested in learning more about how to use a Firmex virtual data room for an audit, just contact us and we’ll be happy answer any questions.