Virtual data rooms have transformed the M&A process. Thanks to VDRs, combination events are now more secure, efficient, and streamlined than ever before. What was previously unthinkable—a fully remote M&A transaction—is now increasingly common, thanks in large part to the functionality and security of a virtual data room.

Such a transformative technology is already on most companies’ radars, and it is rare to see an M&A deal without a VDR. However, many firms have failed to use them for another crucial activity: audits.

Audits are a frequent and sizable expense, both in terms of financial cost and company bandwidth. VDRs have the power to reduce the time, resources, and headaches that an audit entails.

VDRs- Giving Audits an Added Assurance

If you’ve ever been involved in an audit, you might already see the benefits of a virtual data room. Audits can be long and arduous. They involve exchanging sensitive information across departments, and making that information easily accessible throughout the process. What’s more, all that communication needs to be trackable; audits are all about accountability and transparency.

Here are some of the ways that VDRs make audits safer, faster, and more successful.

Efficient Upload, Secure Access

Audits aren’t cheap. In 2018, audit fees for private companies averaged roughly $140,000. For public companies, that figure balloons to nearly $9 million. Any opportunity to streamline the process can result in significant savings for your business. VDRs offer the chance to save on an audit’s largest expense: time.

Some companies still use a physical data room for their audits. That means piling reams of sensitive materials in a secure room, leaving audit teams to sift through needed files. Virtual data rooms remove the cost and headaches of a physical data room, and empower audit teams to surgically assign permissions and quickly access the information they need.

In addition to quick access, VDRs make it easy to anticipate and save on each subsequent audit, since your most important documents are already gathered from the last audit

Clear Trail, Explicit Permissions

A good VDR has an extensive audit log feature, which records each user’s activity in a timestamped audit log. From accessing 2018’s income statement to uploading a supporting PDF, all activity is automatically recorded and consolidated in the audit log. This audit trail creates transparency and accountability.

VDR’s also have the benefit of “rooms within rooms”, which grant access to only the people who need it, and assign relevant department members to provide the information that auditors request.

Audit logs don’t just make your team’s life easier, they provide clues to where an audit team is likely to devote the most attention. How does the auditor determine materiality? Where did we spend the most time last year, and how can we streamline that process this time around? Answering these questions starts with data in the audit log, making it far easier to plan for the next one.

Virtual Vouching (and Tracing)

Two of the most important audit activities are vouching and tracing. Vouching follows the trail from a financial statement entry to the supporting documents that validate it, such as the sales invoice and cash transaction. Tracing goes the opposite way, from a source document such as a wire transfer to its entry in the financial statements.

These two processes are among the most resource-intensive parts of an audit, with team members hunting down randomly selected documents for auditors to vouch and trace. VDRs not only consolidate all relevant files in one place, they allow auditors to immediately access all needed files. That means it takes fewer (billable) hours for both the auditor and support staff to get the job done.

Keep Communication Flowing

Modern VDRs don’t just empower teams to access and upload documents quickly and securely, they also feature powerful collaboration tools to maintain a smooth flow of information. Many include powerful collaborative tools to maintain a smooth flow of information such as a Q&A feature.

Users can add a question or comment to folders and documents to avoid long email chains and trips back and forth between departments. Users can add a question or comment to folders and documents, so any issue can be resolved faster. Quick Q&A approval features mean that nobody is left wondering if an issue was resolved.

Step into the Digital Age

Digital solutions have revolutionized the way we exchange information. If you’re not using a VDR for audits, it’s time to graduate to an easier, safer, and more efficient process.

SecureDocs VDR empowers audit teams with safer, permission-based access to your most sensitive files.

They supercharge the feedback loop with Q&A functionality, so company team members can quickly resolve any issues that come up during the audit. Audit logs protect everyone with a streamlined system for indelible accountability, and make preparing for the next audit that much easier.

Save time, money, and headaches on your next audit. Get in touch today about how our VDRs make messy audits a thing of the past!

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