Audit at Batigère confirms how well its accounting is run

While its internal audit and procedures already meant the risk of irregularities was limited, Batigère wanted the benefit of an outside view of its accounts payable. So it appointed Runview to run a profit recovery audit of the parent company, Batigère Grand Est. The outcome was confirmation of the high standard of its accounting processes, although a few areas for improvement were uncovered, including the removal of duplicates in the supplier database, which will be helpful too in view of the upcoming large-scale adoption of electronic billing in France.

“You should always be re-assessing your performance,” believes David Fenart, the Accounting Manager at Batigère Grand Est. This was the mindset that led the firm to appoint Runview in 2022 to conduct a first Profit Recovery audit of its accounts payable.

One of the leading names in social housing, Batigère Group, which was established in eastern France in the 1980s to manage former steelworks housing, has since spread nationwide. The Group comprises around ten separate entities, employing 1,800 people and managing some 105,000 housing units. In 2022, it invested €500 million on renovating 2,000 homes. Batigère Grand Est is the parent company (the name refers to its roots in eastern France) with about 420 employees, 38,000 housing units and turnover of €238m.

Multi-site accounting department and digitalization

Each entity has its own accounting department, and in Batigère Grand Est’s case, the department is multi-site, spread across three towns. This organizational structure is one of the reasons behind the decision to conduct a profit recovery exercise. “We wanted to check that there was no data lost or duplicated from site to site,” explains the parent company’s Accounting Manager, David Fenart. Until Covid struck, the departments used to work mainly with paper invoices, a system that always means a large administrative workload. To lighten that workload, and facilitate working from home, various solutions were put in place in 2020, including an automatic document reader (ADR) and an invoice workflow and approval system. The majority of files now arrive by email. But Fenart is aware that digitalization can also be a source of errors. “Duplication happens easily with ADR. It just needs to read a letter O as a zero and for staff not to spot it, and produce a payment authorization anyway,” he explains.

Fully aware of the causes of irregularities in accounts payable, Fenart is nonetheless confident about the quality of accounting procedures at Batigère Grand Est. This confidence is based on the company’s own internal audit system and clearly-marked, reliable, audit trail. It regularly conducts circularization exercises with certain suppliers. The idea to run a profit recovery audit therefore stemmed more from a wish to confirm the quality of its work. “We wanted to check that our processes were working properly and see if there was room for improvement on any points by benefiting from a view from outside of our business,” Fenart tells us.

A test assignment on the group's parent company

A presentation of how Runview works and the Exaus platform used for assignments convinced the Group to make use of this accounts payable audit specialist. The “speed in making contact”, the “ease of starting the assignment” and the “platform’s intuitiveness and straightforward use” all appealed to Batigère’s financial management team. The Group initially decided to run an audit on financial years 2017 to 2021 for Batigère Grand Est, examining double payments and conducting a circularization exercise, making a total of 440,000 accounts entries and €475m for Runview to analyze. “We handle 110,000 to 120,000 invoices per annum at Batigère Grand Est, which is the largest number of any Group entity, and the idea was to run a test on the parent company and extend it to subsidiaries if we were satisfied with the audit,” says the Accounting Manager.

The assignment started in the spring of 2022. “We sent the ‘FEC’ computer file of accounting records for the last 5 years, our trial balances and general ledgers,” David Fenart recalls. The ‘FEC’ files (France’s statutory file of accounting entries sent to the tax authorities every year) are comprehensively examined using the AI-enhanced data-mining software developed by Runview. Irregularities identified in this way are then checked by the consultants internally, by examining the invoices for the corresponding transactions, before being forwarded to Batigère Grand Est’s team for ratification. “Everything happens on the platform, very easily, and if there are any questions, Runview consultants provide answers very quickly,” Fenart says. A dedicated team at Runview then takes charge of recovering the ratified over-payments.

At the same time as the ‘FEC’ file was being examined, circularization exercises were run with around thirty suppliers selected by Runview, with a response rate of 93%. “We do conduct circularizations ourselves, so while we don’t delve into as much detail as Runview, our suppliers are used to being asked, and are willing to cooperate,” David Fenart points out. The findings were sent to Batigère Grand Est in a final audit report, which the Accounting Manager approvingly describes as “a clear, concise document that quickly makes clear the points to watch and those requiring attention”.

David Fenart, Accounting Manager at Batigère Grand Est

With duplicates now identified and removed, we will have a clean starting point for installation of our e-billing platform.

Reassuring findings and some useful information

Taken overall, few irregularities were found, and around €38,000 was recovered, which testifies to the high quality of the work done by the Batigère Grand Est accounting staff. “We felt reassured about our processes, although the audit uncovered a few points to watch,” David Fenart explains. Batigère Grand Est consequently recovered some €22,000 in double payments thanks to Runview’s efforts. These arose mainly from duplicates attributable to the existence of more than one entry for a supplier in the Batigère Grand Est supplier database after a merger between two companies. One invoice could, as a result, be recorded and paid twice to two third parties, different in the database but in actual fact the same entity. “We knew that a few duplicate subsidiary ledger codes were lingering in the accounting system, which the audit confirmed, and gave us pointers towards improvements,” the Accounting Manager says approvingly.

This information is all the more valuable as electronic billing is looming large for all French business, and implementation will be easier if supplier databases are “housekept” first. “With duplicates now identified and removed, we will have a clean starting point for installation of our e-billing platform,” Fenart reports, adding that, as the government-approved platforms are not yet known, implementation is probably going to be a fairly hasty affair if the planned schedule is to be met.

The circularization exercises conducted by Runview were also fruitful, enabling Batigère Grand Est to discover credit notes that it had never actually received. By definition, such unsent credit notes can only be found by examining the supplier’s accounting records. “Unless we run a circularization exercise with all our suppliers, we’ll never find this information, but we haven’t got the time to do that,” the Accounting Manager emphasizes.

The good results from the audit were both circulated in-house at Batigère and forwarded to the firm’s statutory auditors. “They very much appreciated the idea of getting audited by an outside body,” David Fenart says. His view of the experience is very positive. Besides the “ease of use” of the Exaus platform, he highlights the “consultants’ speed of response and professionalism” and the added value of their thorough examination of accounts payable. “We do analyze our accounting records, but we don’t have the time to drill down into our entire ‘FEC’ file sent to the tax office, look back over several financial years, or run circularization exercises with all of our suppliers,” he continues.

Satisfied with this first audit, Batigère plans to start a new assignment for other entities in the group, and fully intends to repeat the exercise in future because, as Fenart says, even if processes appear to be working well, it is always helpful to have an outside appraisal. “Our teams and our processes are undergoing changes. And in 2024, everything will change with electronic billing. It will be interesting to check whether we are maintaining our quality with this transition and the switch to an e-billing platform, or whether improvements will need to be made,” he concludes. Question, check and improve. Three words that sum up Batigère’s ongoing approach, now supported by profit recovery audits.