Document Management: A Key Tool for Audit Preparation

If you want to get an IT manager riled up, ask about compliance and audits.

You don't even have to mention a compliance regulation, such as HIPAA (Health Insurance Portability and Accounting Act) or Sarbanes–Oxley, otherwise known as the Public Company Accounting Reform and Investor Protection Act (in the Senate) and the Auditing Accountability and Responsibility Act (in the House). Just say the word "audit," and the IT manager will imagine the worst possible scenario looming on the calendar.

Audits mean auditors, and auditors demand documentation. But if you hand them boxes of paper, they will get testy, and it doesn’t benefit you to make auditors testy. Make their job easier, on the other hand, and they’ll get out of your hair that much quicker. It's come to the point that regulatory agencies have levied fines in excess of $1 million when companies can't find information the auditors demand. To them, "file not found" means evasion.

The best way to find information is to store it carefully. The best way to store information carefully is digitally and redundantly, with full search capabilities. That means modern document management techniques.

But because of cost and complexity and some high-profile failures, some managers will freak out if you mention "document management.” For them, call the process "audit preparation," which sounds less frightening.

Getting Started with Document Management

When starting the "audit preparation" process, you need a way to scan documents, a place to store scanned and electronic files, and software that facilitates file indexing and retrieval. You can spend tens of thousands of dollars, but small customers can actually get started with everything they need for around $500.

To get started, you will need at least two scanners: one sheet (document) scanner for individual 8½"x11" pages, and a flatbed scanner for odd-sized items. A multifunction printer-scanner will work fine for the flatbed scanner. Sheet scanners start at less than $400, but they can go up to thousands for higher speeds and advanced paper-handling.

Popular entry-level models include Fujitsu, Epson, Visioneer, Kodak and Canon. All of these can handle 20 or 30 pages per minute, double-sided, and they come with software to index and retrieve the documents. In fact, if you face only minimal audits from one customer, one sheet-fed scanner and its included software may be all that’s needed. Higher demands will require better indexing and retrieval software, but good packages start at less than $100.

Storage can range from the personal computer connected to the scanner via USB port (low end), to shared and redundant network storage systems (high end). If you only need low end, be sure to copy and back up your resulting scanned files. Be aware of access control limits. Are these files sensitive or mundane? Treat them accordingly, keeping sensitive files private with extra security or perhaps their own storage volumes.

Audits within the financial industry might demand the storage of certain records on non-rewriteable and non-erasable media. This will certainly add to the cost and complexity of the audit-prep system, but for low-volume work, writing scanned files to a write-once DVD might be enough. Financial services firms that deal with higher volume need more help than a short article can give, but their employees know that already. When auditors can send people to jail, budgets and manpower for proper scanning are available and necessary.

Small firms outside of the financial industry don't face jail time for lost information, but they do face aggravation from audits. Whether a client wants to check up on processes or an outside accounting firm wants to look at your books, make life easier for the auditor, and the auditor will make life easier for you. A few hundred well-spent dollars can change an audit from painful drudgery to minor annoyance. Just keep the words "document management" to yourself.