In recent years, the focus on – and importance of – regulatory reporting has intensified. Accounting scandals, secretive financial dealings, and other shady business practices have lead to increasingly stringent guidelines such as Sarbanes Oxley, BASEL II, and other rigid financial reporting standards aimed at holding organizations more responsible for the way they manage, track, and account for their monetary assets.
Regulatory reporting requires companies to consolidate, calculate, and present their financial data in the most timely and accurate manner possible. But, with revenue and expense data residing in various disparate enterprise sources such as accounting applications, order entry systems, third-party payroll databases, and budgeting and forecasting solutions – how can an organization efficiently and effectively comply with these complex regulations?
Know the Guidelines
In many organizations, few stakeholders have full knowledge of all the guidelines and rules that govern the business. Additionally, legislation changes frequently, and the various federal, state, and local agencies are issuing new and revised laws all the time. Therefore, it is critical that you identify those who are most accountable for overseeing compliance with regulatory reporting guidelines, and put the appropriate measures in place to ensure that they are well-informed about existing rules, and keep on top of any new or revised ones.
It is also important to note that some regulatory bodies require companies to designate a senior representative to certify report contents, holding them personally responsible for the information’s accuracy and integrity. Choose this person wisely.
Assess Your Risk
Are your global operations, and such factors as accounting systems in multiple languages or currency conversions, hindering your ability to generate fast and consistent financial reports? Are consolidations and calculations manual, increasing the number of errors and negatively impacting data integrity? Or, do you lack an effective audit trail, so you can track how financial data has been entered, altered, or accessed?
Questions like these are critical to understanding where exposure for non-compliance exists, so you can take swift corrective action. Have a third-party “expert”, such as a consultant, come in and conduct an unbiased assessment of your current reporting processes and systems, and make recommendations for new procedures and tools to help ensure effective compliance.
Leverage Your Master Data and Metadata
Master data and metadata have both proven to be effective ways to enable improved regulatory reporting. For example, a master data management strategy allows companies to develop enterprise definitions, such as what “open” account status means in the case of a mortgage, a checking account, a line of credit, etc. This gives financial managers access to a common view of accurate and timely financial information from systems across the enterprise.
Additionally, metadata, particularly that generated by business intelligence systems, can help ensure the appropriate storage, retention, and disposal of mission-critical financial information – including that contained in unstructured formats such as emails and images. It also provides a virtual “audit trail” of financial information, such as what systems key accounting data resides in, how is it aggregated from various databases, or how expense, revenue, and profit numbers are calculated. Corporate Governance is Key Simply creating a report, and refreshing the data on a regular basis is not enough to guarantee ongoing compliance. If the data you are plugging into your report templates in inconsistent or inaccurate, then your reports will not meet the needed standards, and severe sanctions could result. Since financial data exists in many disparate systems across an organization, strict policies and procedures must be developed, documented, and enforced – and a governing body must be assigned to oversee them – in order to maintain the integrity of all relevant information across the enterprise. With these four surefire tips, you can help your organization facilitate effective compliance and avoid heavy fines and penalties, as well as bad press, damage to corporate image, and decreased trust among prospects, customers, investors, and business partners.
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