12 advanced strategies to ensure compliance

Without ensuring compliance, companies may face endless legal difficulties. CFOs should place compliance risk, recovery and management at the top of their list of priorities.


From increasing efficiency and reducing costs, to enhancing day-to-day operations and improving overall strategy, CFOs have lots of responsibility. Also, CFOs must ensure compliance – because regulatory obstacles can keep an organization from running as it should. How do CFOs consistently ensure compliance, while handling all these other duties? And how do they stay on top of an ever-changing regulatory environment? This guide highlights 12 advanced strategies to ensure compliance.

1 Take active ownership of compliance

With regulations continually changing across regional, national and international borders, the compliance function must evolve, if CFOs are to ensure consistent compliance. This means taking on responsibilities such as the following: • Building and overseeing a robust risk identification and assessment model. • Creating and enforcing a risk-mediation process that addresses root compliance issues (and doesn’t just treat the symptoms). • Analyzing the risk environment of the organization and objectively looking at strengths and weaknesses. In this sense, CFOs should view the compliance function as more than just having an advisory role. They must go beyond simply offering advice on new regulations and laws – and provide practical perspective for organizational strategy and operations, so that no issues arise.

2 Address organisational shortcomings

As the regulatory landscape continues evolving, expectations continue rising. Some CFOs just don’t have the resources and/or capabilities to ensure compliance as well as they would like. For instance, research from PwC reveals that only 25 percent of financial institutions have fully implemented a plan for using data analytics for compliance testing. This low number is primarily caused by staff retention issues and a skills gap. To address shortcomings like these, CFOs should make co-sourcing arrangements when deemed beneficial, allocate resources for training future compliance leaders, and develop a strong technology program to reduce compliance tasks.

3 Focus on process breakpoints and residual risk

For any given business process, there are typically numerous risk controls associated with regulatory requirements. Testing all of these controls consumes tremendous resources and isn’t always effective. Instead, CFOs should perform mapping of risks to processes. This can be done by identifying process breakpoints and then designing key risk indicators (KRIs). These KRIs can then be used to monitor residual risk. By focusing on critical process breakpoints and monitoring for residual risk, CFOs not only optimise compliance testing (by not testing individual controls), they also gain meaningful insights into key issues with compliance. Then, the remediation process can be accelerated and legal problems can be avoided.

4 Coordinate compliance and risk management

A modern compliance framework shouldn’t be separate from risk management governance. They are driven by the same underlying factors. CFOs have numerous options for coordinating compliance and risk management. Traditionally a part of the legal function, compliance can be migrated to risk organisation – a common trend among global financial institutions. Compliance can also become a standalone function. Regardless of how it’s done, CFOs must integrate compliance and risk management. The benefits are tremendous. The CFO:

1. Gets full visibility into the organisation’s portfolio of risks, ensuring no material risk is missed.
2. Can enhance the efficiency of compliance activities since duplicate risk assessments are eliminated.
3. Is left with extra resources for improving compliance risk management.

5 Adapt quickly to new compliance requirements

The ability to adjust quickly to new compliance requirements doesn’t just prevent legal issues, it also helps organisations gain a competitive edge. The problem is that regulation changes can feel overwhelming, especially for CFOs at multinational organisations. To continually adapt to regulatory changes effectively, CFOs must ensure their departments are nimble and ready to cope with uncertainty. This requires the right workplace culture as well as utilisation of the proper technologies. Ideally, CFOs adopt a system that can handle regulatory updates and implement system-wide updates. This decreases the need for time-consuming manual updates and reduces compliance risk.

6 Standardize the financial reporting process

CFOs can’t afford to have disparate, labor-intensive and/or spreadsheet-driven processes. This decreases efficiency and creates significant new risks, including those associated with compliance. This is why reporting processes, such as formulating income statements and balance sheets, need to be standardised. To do this, CFOs must first utilise software that makes standardisation of processes as simple and automated as possible. Then, they need to clearly communicate reporting guidelines and expectations to all relevant people.

7 Streamline data consolidation

Data comes from a broad range of sources. The problem is that too many organisations rely on outdated data consolidation processes. Outdated processes make inefficiencies and errors, such as data duplication, more likely (especially with manual checking). Along with creating new compliance risks, outdated consolidation models also cost much more to manage. Streamlining data consolidation is the solution. To make this happen, CFOs should adopt cloud-based finance software that unifies the financial function within one customisable platform. Such systems take away the complexities of bringing multiple data sets together.

8 Check data accuracy vigorously

In 2014, Bank of America agreed to pay $7.65 million to the United States Securities and Exchange Commission because it had previously overstated the amount of capital on its balance sheet by $4 billion, violating record keeping and internal rules. It would be funnier if it wasn’t true. The reality is that accounting errors happen. CFOs can make such legal headaches much less likely by using the latest technology to streamline data checking and eliminate errors and inefficiencies from manual processes. The accounting software being used should offer multiple ways to verify financial data is accurate.

9 Establish a great ethics and compliance training program

Without reinforcing ethical principles and educating the organisation about compliance with law, personnel won’t place top priority on ensuring compliance. That increases legal risk and could put the organisation in a bad position strategically. CFOs must make sure organisational culture is built on integrity. They should lead with actions, allocating resources for a training program that actively teaches about ethics and compliance, as well as equips employees with the skills to use tools and processes to ensure compliance. Note: Delivery and content of this training program should be flexible. With technologies constantly evolving and financial regulations changing, CFOs require a compliance training system that can move forward with the times.

10 Adopt an agile approach to compliance

It’s alarming that some large corporations still use traditional ERP systems. When a major policy change comes, such systems require incredible effort to change. That change is costly too. CFOs must employ an agile approach to compliance, which requires abandoning the old way. Compliance management should be seen as an iterative process, one where there is constant assessment and adaptation. This is the only way to improve. Of course, being agile isn’t all about culture. The right tools are required. For example, a flexible ERP cloud suite can allow CFOs to build and tweak financial reporting best practices, internal controls and benchmarking standards as needed.

11 Promote collaboration to find better solutions

In addition to using the latest technologies, CFOs must stress the value of a collaborative approach to compliance. A lot of different talents and departments have a hand in ensuring compliance – and it’s simply a waste if auditors, compliance officers, accountants, financial analysts and others aren’t actively working together. The problem is that obstacles do exist when different departments get together. First, CFOs must align the objectives of each department within the goals of the organisation. Second, CFOs must help the departments find common language so that issues can be addressed more effectively.

12 Value transparency and accountability

Everyone knows the story of Enron. The company’s fall stemmed from its corrupt culture – which began at the top. CFOs have a responsibility to be fully transparent and hold themselves and everyone they oversee accountable. This is how an organisation actually adheres to laws and regulations. Leadership must lead the way. For CFOs to promote transparency and accountability, they need to actively communicate compliance goals and objectives, explain decisions and strategies, and listen to others involved in compliance. In this sense, CFOs need to be leaders with vision and purpose – not just financial authorities.