Study: Compliance and Controls Processes Are Struggling
Accurate and agile compliance programs are essential for protecting companies and avoiding costly inefficiencies.
Whether it’s during turbulent economic times like we’re experiencing now, or a market boom, compliance and controls processes should provide businesses with confidence and insights to help steer themselves.
But here’s the thing: a significant number of accountants are skeptical of the value that compliance and controls processes provide their businesses. But just what does that mean?
According to a recent study conducted by FloQast in partnership with the University of Georgia Consumer Analytics program, only 26% of survey participants believe their existing compliance and controls management processes add significant value to their organization. While many view these programs — incorrectly, I might add — as “check the box” initiatives in place only to ensure regulatory compliance, the fact is that businesses should be getting more value out of their programs. According to the report, the average organization spends about $2.4 million annually on compliance and control processes. That’s a hefty price tag for questionable results, I’d say.
The report raises a number of questions. Given the role these systems play in business — and their potential to impact beyond what they provide now — it’s crucial to understand the implications of this issue, understand the importance of rectifying it, and uncover strategies for uplifting compliance efforts to drive enhanced organizational value.
Let’s take a closer look.
A Perception Problem
According to the survey, only 37% of participants reported a current strategic initiative around compliance or controls management programs. Further, most initiatives cited were general efforts to understand compliance and controls processes rather than focusing on how to optimize compliance and controls management for greater organizational strategy or agility.
Further to that point, 93% of compliance and control professionals cited adherence to regulations, not a desire to add organizational value, as the motivation for their efforts. That’s a clear indicator that businesses underestimate the role compliance plays.
More than half (56%) of participants indicated that current compliance or controls processes were adding stress to the work rather than removing it, but another interesting takeaway was how these professionals view themselves. The average professional rated their current compliance and financial control function a 69.9 out of 100 – about 70% benefit and 30% burden. Being stressed and also questioning your understanding of the key competencies of the role is concerning, to say the least.
Unlocking the Path to Compliance Excellence
The study wasn’t all doom and gloom, though. uncovered three key ways that organizations can transform their compliance and controls management programs to not only decrease burden but to also increase value and improve strategy, efficiency, and employee wellbeing.
Improve strategic focus: Teams should implement strategic process narratives in compliance and controls management programs in order to lay out processes in context, provide greater clarity around how they are functioning, what they seek to accomplish, and boost organizational agility and efficiency, particularly from a cost standpoint.
Better staff compliance and controls management: To better reflect companies’ scale and needs, they must work to appropriately staff their teams with professionals who understand how to deliver strategic value through their work.
Introduce automation: Implementing workflow automation to streamline processes and glean richer data insights can support compliance teams by helping streamline activities, eliminating manual and tedious processes, improving cross-team visibility, empowering programs’ strategic focus, and reducing the levels of burnout that employees might be experiencing.
The report details some pretty eye-opening statistics. With compliance perhaps more top-of-mind than ever before — just go ahead and Google “non-compliance” — it’s clear that, despite the attention it’s receiving, not much is really happening to bolster processes and empower professionals.
If you’d like to know more about FloQast Compliance Management, check out the solutions page and schedule a demo.