Automating controls drives frictionless process re-engineering

The finance community is witnessing a surge in client demand for advice and support in raising their control environment maturity and identifying opportunities to enhance the efficiency of their process controls through leveraging automation.

There are two main factors behind this market change:

• Increasingly demanding local compliance regulations
• Process controls are still organized in an archaic and manual way by most organizations.

The latter factor is even more surprising when one considers the pace of finance and accounting (F&A) core process automation. It’s almost as if process controls had been left behind, before the finance community realized this, too, should be allowed to enjoy the benefits of automation like the rest of F&A.

Re-engineering controls’ processes for automation

In the UK, local compliance regulations are expected to change drastically in the near future. The white paper “Restoring trust in audit and corporate governance” is the UK government’s response to independent reviews. Although this is not law yet, it is a matter of when not if this requirement will become law. In view of the level of effort required to be ready for a UK Brydon[1] regime – the equivalent of SOX in the US – companies are starting preparations immediately.

My experience of working on identifying automation improvements for clients’ process controls has led me to the conclusion that, very often, the processes themselves need to be redesigned in order to for controls’ automation solutions to be successfully implemented.

In fact, solutions that automate controls can be so powerful that I recommend clients start their finance process re-engineering efforts from the controls’ automation angle. Similarly, I don’t recommend performing finance process redesign without taking into account the automation of controls. Both cases represent a lost opportunity to make processes even more efficient and frictionless.

However, the greatest impact of controls’ automation on processes is to transform controls from being dectective to becoming preventive. This means that recommended

automated controls occur at the process start gateway instead of during or at the end of the process in a semi-automated or manual way. In many cases the existing processes are designed to enable the completion of these “old fashioned” controls.

Eliminate risk through implementing frictionless AI-enabled controls

Let’s consider a simple control where a non-purchase order (PO) invoice can only be processed once approved by an authorized person as per a delegation of authority matrix. An ERP report is generated, on a daily basis, by an accountant and reviewed to identify any exceptions.

Typically, my recommendations for automating the control would be to implement artificial intelligence (AI) or robotic process automation (RPA) at the beginning of the process. This validation control is performed to automatically block exceptions and route them to an escalation path.

To learn more about how Capgemini’s AI.GRC solution  – part of our Frictionless Finance offer – leverages a controls’ automation solutions library for hundreds of finance processes, AI controls’ architecture patterns, and algorithms deployment platforms supported by a proven implementation methodology to eliminate business process risks, contact: thierry.frechet@capgemini.com

Thierry Frechet designs sustainable finance and accounting target operating models for multinational market-leading clients. 

[1] Three independent reviews by Sir Donald Brydon, Sir John Kingman, and the Competition and Markets Authority were completed. The most prominent is the first one referred to as the Brydon report.

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