Why Accountants Are Focusing More on Team Communication

In the accounting field, numbers, documentation, and compliance have always been crucial. Spreadsheets and financial statements are no longer the only priorities, though. This trend doesn’t seem to be slowing down. Accountants across all industries are growing increasingly concerned with how their organizations communicate.

Communication as a Problem with Compliance

The importance of documentation has long been recognized by accountants. A paper trail is required for every transaction. Support is necessary for every decision. In ways that would have seemed excessive ten years ago, this mindset is now permeating workplace communication.

The expectations of regulatory bodies have been made explicit. Financial institutions have been fined billions of dollars by the SEC for failing to maintain business communications. FINRA is still closely examining how firms keep an eye on their employees’ interactions with clients. Although broker-dealers and investment advisors are the main targets of these enforcement actions, every business with financial reporting obligations is affected.

Public companies are especially scrutinized. More inquiries concerning retention procedures and communication policies are coming from auditors. Electronic communications provisions are becoming more and more common in internal control frameworks. Accountants are now legitimately concerned about what employees say to one another and how they say it.

Informal Channels’ Ascent

The shift to remote and hybrid work accelerated changes that were already underway. Teams that previously convened in conference rooms now collaborate using a range of digital tools. Slack channels, Microsoft Teams chats, WhatsApp groups, and text messages have taken the place of casual meetings and conversations in the hallway.

This fragmentation presents serious challenges for accountants. Financial information flows through these informal channels constantly. A CFO might discuss a major expenditure via text message. A controller may discuss revenue recognition in a Teams chat. An accounts payable clerk could use WhatsApp to resolve a vendor dispute. Each of these interactions potentially creates records that are crucial for financial reporting and auditing.

Compliance experts are increasingly concerned about the issue of off channel communications. The company loses access to what was discussed and decided upon when employees use personal devices and unapproved apps for business purposes. This blind spot is becoming more and more unacceptable for accountants who are in charge of making sure financial records are accurate.

Audit Trails and Documentation

Every seasoned accountant understands the importance of a strong audit trail. The ability to trace decisions back to their source can greatly simplify the audit process when questions about a transaction come up. Records of communications are now a crucial component of this trail.

Imagine that an auditor raises concerns about a noteworthy journal entry. Invoices, contracts, and approval forms were examples of supporting documentation in the past. These days, auditors might also want to view the chat messages where questions were posed and addressed, the email thread where the transaction was discussed, and any other correspondence that clarifies the reasoning behind the entry.

Conversations are awkward for organizations that are unable to produce these records. At best, auditors may require additional testing to be satisfied. In the worst case scenario, they might determine that internal financial reporting controls are inadequate. For the accounting team in charge of the audit relationship, neither result is ideal.

Implications for Risk Management

Accountants are increasingly participating in risk management within their organizations. This expanded role brings communication practices squarely within their purview. There are a lot of serious risks.

Legal hold requirements present one obvious concern. In the event of a lawsuit, a company is required to retain all potentially relevant correspondence. Employees who use personal devices and unauthorized apps create gaps in this preservation. If important messages are lost or deleted, the company might face fines or negative court rulings.

Fraud risk is another consideration. Schemes often leave their mark in communications long before they appear in financial statements. Unusual vendor agreements, management pressure to reach targets, and manipulating numbers are all possible topics for messages. Organizations that capture and monitor communications have a better chance of detecting problems early.

An additional layer is added by regulatory examinations. During investigations, communications are frequently requested by government agencies. Businesses that are unable to provide comprehensive records come across as evasive or inept.

Useful Actions for Accounting Teams

To address these issues, accountants do not need to become IT specialists; however, they must actively participate in communication policies.

Start by understanding what channels employees actually use. Although official policy may specify authorized platforms, actuality often differs. The real locations of business discussions can be found by speaking with department heads.

Assess retention capabilities in collaboration with IT and compliance. Are messages being properly captured and stored? Can you get them when you need them? These inquiries are important for both practical audit support and regulatory compliance.

Think about the implications for the control environment. Documentation of monitoring protocols and communication policies may be required as part of the internal control framework.

Lastly, promote explicit guidelines that staff members can truly adhere to. Practical guidelines that acknowledge how people really work have a better chance of achieving compliance than overly restrictive rules.

Beyond the Spreadsheet

The attention accountants pay to communication practices will only increase. As regulatory expectations evolve and enforcement actions make headlines, organizations that ignore these issues do so at their peril.

For accountants, communication might not seem like a natural focus. However, the profession’s attention is both necessary and welcome in a setting where every message has the potential to matter.

---