Most finance teams dread audits. Not because their numbers are wrong, but because proving they're right takes days of manual work. We sat down with Colleen MacCarthy, Co-Founder and COO at Grappler, to talk about what "audit-ready" actually means and how insurance businesses can get there.
What do you mean when you say "audit-ready"?
Audit-ready doesn't mean never making mistakes. It means having systems and processes that catch mistakes, document how they're resolved and provide clear evidence throughout.
The gap between "we closed the books" and "we can prove how we got here" is where the stress around audits comes from. Finance teams that are genuinely audit-ready have clear trails, consistent processes and evidence at their fingertips.
What are auditors actually looking for?
Auditors aren't trying to catch you out. They're looking for reasonable assurance that your financial statements are accurate and compliant. But their questions tend to highlight exactly where manual processes break down.
They want to see traceability. Can you trace this journal entry back to the original source documents? They want to understand the controls you have in place like who approved this transaction, and how do you enforce segregation of duties? And they want to know how you handle complexity accurately - such as how you allocated this premium across multiple territories.
Why do manual processes make audit preparation so painful?
When your finance operations run on spreadsheets, old systems and email inboxes, getting ready for an audit means piecing together the story of how you got to each number.
Take a simple question like "show me how you allocated this premium across multiple territories." If you're managing multi-territory risk splits manually, this triggers a hunt. You need to find the original remittance, the spreadsheet where you calculated the splits, the email where someone approved it, and evidence that it matches bank statements and policy data. If any piece is missing or doesn't reconcile, you're explaining discrepancies instead of confirming accuracy.
The evidence is fragmented. Bank statements live in one place, policy data in another, remittances in emails, reconciliations in spreadsheets. It's messy.
What does audit-readiness look like in practice?
Audit trails should exist by default. When a transaction flows through the system, you should be able to see the remittance received, the allocation rules applied, the approval workflow completed, and the final settlement matched against bank and policy data all in one place.
Every ledger entry should connect to its source transaction, that connects to the remittance, that connects to the policy and bank data. Audit trails should be designed into the system, not dependant on someone remembering to document it.
How should businesses handle exceptions and corrections?
Auditors know that exceptions happen. What they care about is that exceptions were identified, how they were resolved and if the resolution was documented and approved.
Best practice would be exceptions surface in a work queue, get assigned for resolution, their status is tracked, and sign-off is require before closing. Every exception should have a complete history from what triggered it, who investigated, what they found, how they resolved it, and who approved the resolution.
What about segregation of duties?
Manual processes rely on discipline. Someone is supposed to review before someone else approves. But when approvals happen via email or even Teams, audit trails get really messy fast.
Grappler's workflows enforce segregation by design. Finance prepares, operations review, management approves. Every step gets logged with timestamps and user IDs. It's about building the best process into how the work gets done.
What difference does this make when auditors actually show up?
Finance teams running on manual processes spend days preparing evidence and explaining discrepancies. Teams with proper systems in place can answer the auditors' questions in minutes so they spend audit time confirming rather than defending.
Where should finance teams start?
What I tell finance teams is to start by mapping your evidence gaps. Walk through a sample transaction from remittance to settlement and identify where the audit trail breaks. Can you trace every step? Are approvals documented? Is the evidence in one place or spread across systems? The gaps you find are the risks auditors will flag.
Then test your traceability. Pick a random journal entry and try to trace it back to source documents. How long does it take? How many systems do you need to check? If it takes more than a few minutes, your audit preparation will be painful.
And finally document your exception handling. Review how your team tracks and resolves exceptions. Is there a consistent process? Are resolutions documented and approved? If exceptions are managed ad-hoc, auditors will question whether your controls are effective.
Remember, audit-readiness isn't about perfection. It's about having processes that create clear evidence as a byproduct of doing your work.
See how Grappler customers approach audit preparation:
