Redefining Accounting With Improved Compliance and Controls
Discover how automation can revolutionize compliance and control processes in the accounting and finance industry.
Mike Whitmire, the CEO and co-founder of FloQast, recommends a new perspective on compliance and controls within the accounting and finance industries. He suggests considering these tasks as strategic assets that will improve an organization’s overall success when effectively utilized with technology and dedicated staff.
It should come as no surprise that the accounting and finance profession is often seen as boring. More often than not, accountants are seen as “bean counters” who provide little strategic value to a company. This perception of accounting and finance has even driven a mass exodus from the profession – 2022 saw the lowest number of CPA exam takers since 2006 and, even further, 65% of accountants aren’t even sure they’ll still be accountants in the next 2–3 years.
Though this was once true, the accounting and finance industry today has the potential to be a core pillar of strategy and operations. Recent surveys have found that processes within these industries that are typically seen as just a tedious obligation, like compliance and controls, are incredibly inefficient and severely underutilized from a strategic standpoint. If leveraged correctly, these programs can save organizations untold costs in the long run – including fines, penalties, lawsuits, and loss of reputation – and be a key driver of organizational strategy.
It’s time for accounting and finance professionals to take advantage of this massive opportunity, enhance programs, make them more impactful, and, in turn, transform the industry as a whole.
The State of Compliance and Controls in Accounting
Today’s compliance and internal controls programs are just scratching the surface in terms of organizational value. Not only are many programs seen as a burden – around a third (30%) of professionals say their programs are a burden instead of a benefit – only 26% feel their existing programs add significant value to their organization. Even further, a majority (93%) of compliance and control programs are seen as legal obligations and nothing more.
To top it all off, these programs are expensive. The average compliance and controls professional reported their organization spent about $2.4 million annually on compliance and controls processes.
So, how can accounting and finance professionals transform their compliance and controls management programs to get more bang for their buck? The answer lies in three key actions:
- Investing in the right technology.
- Improving activities.
- Intentional staffing.
Unlocking the Potential of Compliance and Controls Programs in Finance
As companies look to reinvent their compliance and controls management programs, there are three changes leadership should make to unlock their potential:
1. Investing in the right technology
Perhaps the most important way to transform compliance and internal controls processes and, truthfully, the company as a whole is to invest in and leverage automation. Automation-driven solutions can support compliance teams by centralizing processes, increasing efficiency across teams, and enhancing visibility around compliance and controls-related initiatives. In fact, according to the 2023 Thomson Reuters: Risk & Compliance Survey Report 65% of corporate compliance professionals said using automation would help reduce the cost and complexity of compliance and controls management.
Additionally, automation helps to streamline compliance and internal controls, reduces the risk of errors and missteps, reduces burnout, improves recruitment and retention, and more. All in all, integrating automation solutions can enhance compliance and control processes in a way that encourages greater efficiency, creates happier employees, and enables collaborative, strategic thinking.
2. Improving activities
As it currently stands, many organizations are operating their compliance and controls management programs without a strong blueprint or strategy. Only 37% of accounting and finance professionals considered their compliance or control management a strategic program. Most of the time, they were just general efforts to understand or improve what was going on, rather than for strategic purposes. With an emphasis on execution rather than strategic thinking and process optimization, organizations can fall victim to blind spots that expose the organization to potential threats, drive misalignment, and waste valuable resources.
Implementing process narratives – a strategic tool that lays out the compliance and control process in context – helps establish a clear blueprint. Unfortunately, only about half of accounting and finance professionals report the presence of process narratives.
Business leaders would be wise to implement process narratives as they can contextualize functions and goals, prioritize activities that provide more value, and help employees better understand why this work is important. Ultimately, they are a key element in transforming compliance and controls processes into wells of strategic insights and knowledge.
See More: Digital VAT Compliance: From Burden To Opportunity
3. Intentional staffing
Lastly, while many organizations are tirelessly working to fill positions as the exit from accounting continues, it’s critical that leaders also think carefully about how to staff employees – both existing and new. Most compliance and financial control teams noted 6–10 people would be an appropriately staffed team. However, only 37% reported having a sufficient headcount to manage processes. Additionally, compliance literacy is surprisingly low within those teams.
This lack of appropriate manpower is leading employees to struggle not just with the volume of work, but with the larger purpose of their work; 65% of individuals do not understand how their roles and responsibilities lead to adequate controls and a strong internal controls environment. Not only can intentional staffing help organizations budget better around headcount, but it can also ensure compliance and controls processes are staffed by professionals who have a deep understanding of how to deliver strategic value through their work.
More Than Counting Beans
The accounting and finance profession stands at a pivotal juncture, poised to redefine its role from mere “bean counting” to a more strategic linchpin within organizations, particularly through the optimization of compliance and internal controls processes. Accounting and finance professionals can unlock the enormous potential of compliance and controls management programs by investing in automation and innovative technology, refining and improving activities, and adopting intentional staffing practices.
When leaders embrace these key changes, they have an opportunity to not only enhance the efficiency and effectiveness of these programs, but also to unlock richer data and insights that can drive organization strategy and overarching operational excellence.
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