By AAT Comment Automation Existing compliance and controls processes struggle to add organisational value 7 Jun 2023 FloQast’s survey suggests that companies are failing to properly protect themselves. Companies breaching compliance face serious reputational damage, not to mention the costs of paying any associated fines. Only this week, reports reveal that Microsoft has been ordered to pay $20 million for child privacy violations. This case, like many before it, highlights the impact to organisations that fail to meet compliance and regulation standards. A new study from FloQast, the fintech unicorn, shines a light on organisational attitudes to compliance. And, why most are failing to add value when it comes to their processes. What’s the research? Compliance and Controls: The State of the Industry is a market research survey done in conjunction with the University of Georgia Consumer Analytics program. It takes into account the perspectives and opinions of 213 accounting and finance professionals from the United States and 157 from the United Kingdom. It found that only 26% of participants believe their existing compliance and controls processes add significant value to their organisation. There’s significant room for improvement within compliance and controls management environments, and that reinvestment in compliance and controls programs may not only benefit and protect the company during challenging economic times, but also improve employee work-life balance. The study explores the root of this lack of confidence, offering key solutions to drive greater value within the organization. These include reinvestment in compliance and controls management strategy, reevaluation of team structure and adoption of technology. ”Accurate and agile compliance and controls management programs are essential for protecting companies and avoiding costly inefficiencies, especially during turbulent economic times,” says Mike Whitmire, co-founder and CEO of FloQast, CPA. Key findings Compliance and controls management professionals are experiencing inordinate levels of stress: The average professional rated their current compliance and financial control function a 69.9 out of 100 – about 70% benefit and 30% burden. More than half (56%) of participants indicated that current compliance or controls processes were adding stress to the work rather than removing it. Organisations are inefficiently staffing their compliance and control teams: Only 37% of professionals reported having sufficient headcount in place to manage compliance/financial controls processes. 35% of the survey participants had a clear understanding of how their work impacted their company. Today’s compliance and controls management professionals are just scratching the surface when it comes to delivering organizational value: While the average organisation spends about $2.4 million annually on compliance and control processes, only 26% of survey participants believe their existing compliance and controls management processes add significant value to their organisation. 93% of compliance and control professionals cite adherence to regulations, not a desire to add organisational value, as the motivation for their efforts. There’s a lack of strategy within existing compliance and controls programs: Only 37% of participants reported a current strategic initiative around compliance or controls management programs. Most initiatives cited were general efforts to understand compliance and controls processes, rather than those focused on how to optimise compliance and controls management for greater organisational strategy or agility. Technology is not properly being leveraged to drive organisational value: 70% of organisations would benefit from automating their compliance processes. Those that already have a strong technical foundation indicated they are seeing greater benefit from their adoption of new technology. Developing solutions to optimise compliance and controls: The study uncovered three key ways organisations can transform their compliance and controls management programs to not only decrease the burden but also increase value and improve strategy, efficiency, and employee wellbeing. One: Improve the strategic focus behind all compliance and controls activities. 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. Two: Staff compliance and controls management to better reflect companies’ scale and needs. Companies must work to appropriately staff their teams with professionals who understand how to deliver strategic value through their work. Three: Perhaps most importantly – implement workflow automation to streamline processes and glean richer data insights. Workflow automation solutions are a key tool for supporting 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. FloQast is a provider of accounting workflow automation software created by accountants for accountants, delivering an Accounting Operations Platform that enables organizations to operationalize accounting excellence. AAT Comment offers news and opinion on the world of business and finance from the Association of Accounting Technicians.