Besides mitigating risks such as the departure of a colleague, a system crashing or a human error in manual entries, automating event-driven accounting vastly increases the first-time-right entries initiated by day-to-day business triggers. Automating mutations from transactional accounting is, however, only the beginning. Implementing an accounting hub creates opportunities for simplifying finance processes down the line, by including periodic (risk) calculations and reducing the need for manual entries, whilst documenting the accounting rules for validation against the accounting policies. Moreover, all this establishes a solid control framework where data lineage and consolidation between systems can be safeguarded by automated controls. By standardizing and documenting accounting rules for each business event, the formulated business rules recognize the business event and post the relevant debits and credits into the general ledger. This greatly improves the (technical) control and alignment with accounting policies, which will prove useful for audit purposes. Based on the business rules, organizations can also recognize and tag the business event to set up automatic feeding into the appropriate movement schedule.
A controlled change includes buy-in from all relevant stakeholders that impact the end-to-end process. Therefore, this should be a joint effort between Finance, IT, Regulatory Reporting and Risk. IT leads the technical implementation, whilst Finance remains responsible for the functional implementation of accounting policies. Furthermore, modern accounting hub solutions provide Finance with the tools to self-implement updates to the accounting rules, ensuring vast improvement in quality and control, since the business and regulatory requirements will inevitably continue to develop over time.