Regulators rely on regulatory reporting to reduce the likelihood of businesses breaking the law. Regulatory reporting is the process of in-depth reporting that companies use to track and demonstrate how well they adhere to industry standards, regulations, and rules governing their business practices.
Compliance reporting requires compiling information on any business aspect covered by local rules, laws, and regulations. This could be how company data is used, collected, stored, and processed to anti-money-laundering laws in the finance industry. At a time when companies are facing ever-increasing regulatory pressure to tighten compliance procedures, reporting is more critical than ever.
As data collection increases and rules change, businesses must have the best systems in place to ensure they’re up-to-date by utilizing strategies and automated tools to maintain compliance. Having the correct reports in place is a huge part of the process.
Within large companies, the responsibility of compiling regulatory reports falls into the remit of the chief compliance officer. Smaller businesses might have a different official post and may opt to give that duty to employees with relevant qualifications. Whoever the task falls to, implementing an automated system to help streamline data collection and provide reports can be an invaluable resource.
How Are Regulatory Reports Used?
All businesses need a complete overview of how they’re performing. Regulatory reports are produced for numerous people. Externally, they will form part of a compliance audit or be assessed by a compliance agency. Evidence of non-compliance may be met with severe consequences such as hefty fines or even prison. It’s, therefore, essential that reports are accurate and compliance is in place.
Internally, stakeholders, board members, or departmental heads will be interested in regulatory reports. Different people may look at regulatory compliance in more detail, seeking to improve areas of weakness and assess how other procedures could be adapted.
Why Is Compliance Reporting Useful?
Because laws and regulations change so frequently (especially around data collection, which affects most businesses), companies produce reports to ensure they act within the law.
In the finance industry, for example, legal compliance is in the public domain. With customers having access to compliance reports, non-compliance will directly impact their trust and decisions.
Reporting can also highlight where compliance policy could be better.
So What Are The Tools And Strategies For Compliance?
The first thing new businesses should consider is a compliance budget. Once compliance officers have a clear budget, they can plan how to execute a compliance strategy and determine what systems can be purchased to produce regulatory reports.
What Should A Compliance Report Contain?
Regulatory compliance is different in each industry. Some areas are more relevant to office-based businesses, such as data protection legislation or even VoIP telephone service regulations when used in police stations.
However, the fundamentals of a regulatory report remain similar. Reports should use clear, concise language and be easy to follow. Any actions needed should be given a timescale. Effective compliance reports should contain the following information:
- A clear overview of the regulation or legislation applicable
- A summary of what is included in the report
- A summary of what the compliance officer reviewed, altered, or added
- An overview of the process of checking compliance
- An admission of key findings, e.g., is the company meeting the compliance criteria
How Can Compliance Management Software Help?
Traditionally, checking compliance has involved lots of record-keeping and checks, which is a time-intensive process. On top of the costs involved, there is always the risk of human error when relying on manual processes.
With the emergence of the digital age, the evolution of compliance technology has also enabled compliance managers to keep abreast of changes more systematically. Compliance management software pulls together several programs to perform a series of compliance-related functions, such as monitoring and keeping track of compliance measures to help ensure you remain compliant in your practices.
Integrated tools can pull out relevant data, perform calculations and generate reports in a set format, thus saving time and reducing the risk of error. Regulatory compliance monitoring software means that everything is stored in a central location.
Gleaning reports from centralized data maintains its integrity while saving time. In addition, the built-in analytics can transform information into insights, highlighting where you, as a business, fall short of compliance while providing a basis for sound decision-making.
Utilize Cloud-Based Systems
Cloud-based systems go one step further than in-house software packages. Cloud computing can help compliance in various ways. Not only do cloud-based compliance systems centralize everything, but they are also accessible remotely, meaning they fit better with a more modern, hybrid-remote office style.
These points aside, cloud-based systems enable scalability and amendments much quicker than traditional software. What’s more, additional cyber-security features can be accessed depending on the size of the business and the requirements.
In addition, using a cloud phone system for business can also aid compliance because cloud-based phone systems automatically record calls.
The benefits Of Using Compliance Software
To make regulatory reporting easy, utilizing software is imperative. Here is an outline of some of the main benefits of using software to make regulatory reporting easy.
Put the security, health, and safety of your customers and staff first
Excellent health and safety compliance requires reports highlighting business practices’ strengths and weaknesses. Examples of health and safety compliance could be things as simple as how accidents and injuries are recorded to what protective equipment employees may need.
Furthermore, technology can automate some areas of health and safety, such as monitoring water temperature or automatic sprinkler systems for fire protection.
Track KPIs
Automated KPI trackers can monitor how close you are to your compliance goals or where you fall short. A list of key compliance metrics relevant to your industry can make tracking easier and reports more accurate.
KPIs should track things such as:
- The frequency of policy updates
- The number of regulatory failings or policy violations
- How often employee training is conducted
- The annual cost of compliance violations
- The number of internal compliance complaints made
Keep up to date with regulatory changes
There is no doubt that technological advances are driving a continuous need for new regulations. Keeping up to date with these changes without technology can be time-consuming, with plenty of scope for error.
Software designed to fit a specific industry will also keep track of changes to industry-specific legislation and provide advice on best practices. This saves compliance managers time monitoring changes and updating policies, as the software will do it for them.
Improved accountability
Because of the analytical reporting that compliance software provides, the success of compliance policies can be proven with statistics and other evidence. In addition, individual team members will have unique log-in details so any work they do is traceable. This gives team members accountability.
As part of good compliance, businesses should have a whistle-blowing program. By creating a culture of solid compliance and encouraging employees to identify areas of improvement, employees will have a stronger desire to care for the company’s reputation. Employees should know how to raise concerns and feel comfortable in doing so.
Reduces costs
Minimizing business costs is an integral part of any business’s strategy. As compliance is ever-changing, the task can quickly require a larger team. As mentioned above, cloud-based compliance software can grow your business, but that’s not the only benefit. Compliance staff will have more time to focus on other areas of business growth once compliance is streamlined and automated.
For example, instead of compiling data, cross-referencing policies, and compiling reports, they can use computer-generated data to oversee and improve systems.
Data is centralized
Centralized data reduces the risks of duplication and makes data more reliable and easier to retrieve. Pulling from a centralized place also means measures can be implemented to prevent duplicate documents or one document from being edited by two people simultaneously. Therefore any automated reports drawn from it will be more accurate.
Final Thoughts
Regulatory reporting is a vital part of compliance for all businesses. The critical thing to remember about compliance is that it’s never ‘done.’ There isn’t an ending, as it’s an ongoing process. This is why having a compliance team, chief, or manager is essential.
While a person can oversee the whole process, industry-pending regulations could be coming in thick and fast, leaving scope for error or oversight. Implementing in-house or cloud-based software can help streamline the entire process, while continuous review and improvement will lead to better overall compliance.
The financial benefits are also a massive benefit to businesses. Automated reporting gives compliance managers insights to make better-informed decisions without bogging them down in red-tape production. What is clear, though, is that compliance software can help streamline compliance and produce accurate, useful regulatory reports much quicker than ever before.