Accounting has, historically, been seen as a not-so-exciting profession. The industry has had fewer graduates join the profession over the past few years, and some recent studies even found that jobs in finance and accounting are perceived to be among the most “boring” in the world.
Part of this misconception is due to the more tedious and mundane processes accounting and finance professionals have on their plate, like compliance and controls management. Depending on the organization, compliance may live with accounting teams or a completely separate, dedicated function.
Either way, it often is seen only as a requirement or a “check the box” initiative designed to comply with laws, rules and regulations.
Even though compliance and controls deeply impacts the company as a whole, nobody has ever bothered to look deeper into the process to see not only how it could be improved, but how it could provide greater benefits to accounting teams and entire companies.
Due to this lack of information and data, and to better understand the current state of today’s compliance and controls environment, FloQast conducted its latest study in conjunction with the University of Georgia Consumer Analytics program — “Compliance and Controls: The State of the Industry.”
The study found that the compliance and controls process is severely underutilized from a strategic standpoint, and there is a massive opportunity to enhance programs, make them more impactful and, in turn, transform the accounting profession.
The Current State of Compliance
According to “Compliance and Controls: The State of the Industry,” today’s compliance and controls management professionals are really just scratching the surface of many positive outcomes these programs could otherwise be driving.
Nearly a third of these professionals stated their organization’s program constituted a burden (versus a benefit) and only a quarter (26%) of survey participants felt their existing compliance and controls management processes add significant value to their organization.
Even further, this high level of burden and low level of value also means compliance and controls management professionals are experiencing more stress: in fact, more than half (56%) of participants indicated that current compliance or controls processes were adding stress to the work rather than removing it.
Lastly, compliance and controls functions were most often seen as legal requirements (93% of participants surveyed)—but nothing more.
Despite this frustrating outlook on compliance, the study also uncovered several key ways that organizations can transform their compliance and controls management programs to decrease burden, increase value, and improve strategy, efficiency and employee well-being.
The Recipe to Improve Compliance
There are three key changes that leadership should make in order to develop more strategic compliance and controls programs that can benefit the company as a whole: improving activities, staffing, and technology.
1. Improve the Activities
Currently, many organizations are operating their compliance procedures without a clear blueprint. As such, the emphasis of controls and compliance programs is on execution and tactics, rather than optimization and process improvement for greater organizational agility and strategy.
In fact, only 37% of the survey participants reported a current initiative related to compliance or controls management as a strategic program, and most of the reported initiatives were general efforts to understand or improve rather than strategic initiatives.
This lack of strategic thinking means there is a greater opportunity for blind spots that expose the organization to negative outcomes. However, when a strategic plan is in place—like a process narrative that can clearly contextualize functions and goals—it can direct employees and prioritize activities that are most likely to provide value to an organization.
2. Staff Intentionally
As companies struggle to hire new individuals to join the accounting profession, it seems as though there is a misunderstanding about how to staff existing employees. Most compliance and/or financial controls teams noted six to 10 people would be a well-staffed team.
But only 37% of compliance and controls professionals reported having sufficient headcount in place to manage compliance/financial control processes.
Further, with this lack of manpower, employees are struggling to find the larger purpose of their work—just 35% of the survey participants clearly understood how their actions lead to effective controls and a strong controls environment in their companies.
Altogether, these misunderstandings can lead the organization to be exposed to burnout or management issues. Fortunately, based on the study, it’s clear that when compliance and controls functions are staffed appropriately and intentionally, companies see increased strategic value and greater success.
3. Enhance your Technology
Lastly, the most important way to not only transform compliance and controls is to leverage technology and automation. Automation solutions can support compliance teams by centralizing processes to make them more efficient, and generate more cross-team visibility around compliance and controls-related initiatives.
Right now, only 2% of professionals have fully automated their compliance processes, however, according to “Compliance and Controls: The State of the Industry,” 70% of organizations could benefit from automating their compliance processes.
When companies implement automation, it not only helps to streamline their compliance and controls management processes, but it also reduces the risk that compliance could miss an important step or error, helps to bolster the technical foundation of companies as a whole, reduces burnout and leads to happier employees.
Creating a More Strategic Future with Compliance
Despite many believing that compliance and controls management are “check the box” initiatives with little organizational impact, there is a massive opportunity to transform the process and make it more informative and engaging.
Compliance and controls management is an underutilized function in accountants’ and financial professionals’ tool belts that can actually help enhance strategy. As such, leadership should look to revamp and enhance their compliance and control management programs, particularly by investing in technology.
Technology is the best first step to architecting the right environment as it can empower their compliance programs and teams to be more than just a mundane, yet required function and, instead, leverage data and insights to steer organizational strategy in the midst of challenging times.
With innovative and helpful technology, we can change compliance and control management initiatives to be the strategic tool that propels companies to success.
Mike Whitmire, CPA, is co-founder and CEO of FloQast.
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