What is Global Compliance and Reporting?
Modernization and technology has changed lot many things but most importantly it has changed the definition of success for a business. Gone are the days when businesses use to operate within one boundary and be successful in the same. In today’s scenario, it is important for a business to not only explore different markets and territories but also be successful, however succeeding in a global economy means having the agility to explore and pursue available opportunities in the targeted market and while it is easy to expand globally, catch is to match up with the compliance and reporting demands because wrong and inaccurate reporting and inconsistent oversight not only expose your business to potential risks but can also make you suffer certain unexpected financial penalties. It is important for the companies and the businesses to be aware of the compliance and reporting demands because as mentioned, missed global fillings can not only translate into substantial fines but can also halt entire business operations in the potential and important global growth markets.
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Compliance, much contrary to its common notion, may be a routine function and if have got the right nerve of it, it has the potential to add tremendous value to your business. However, if done wrong, it can destroy a company. Notwithstanding its potential, not many have reached the stage of optimum global compliance efficiency and are still a greenhorn in the field of global compliance and reporting.
If to talk in general terms, compliance means conforming to a rule such as specification, policy, standard or law and regulatory compliance describes the goal that organizations aspire to achieve in their efforts to ensure that they are aware of. UK regulatory framework demands that a fair global compliance and reporting process to be followed by the companies listed or registered in the country and last 20 years have been increasingly challenging and complex legislative landscape governing accounting and regulatory compliance has only added to the woes of not only for those organizations having an international footprint but also for those businesses who are taking their first steps into new global markets. With the advent of technology and cloud platforms, the need and demand for real-time reporting has increased multi-fold with an exponential increase to the cyber threats and cyber security challenges and thus it has become important to give a closer look to global compliance and reporting for three main reasons:
- Business models have evolved.
- Transforming finance functions.
- Increasingly complex regulatory landscape.
Global GCR model
As per a recent study, it has been reported that there almost 80% of the companies have changed their finance models i.e. they either have recently completed or in the process of completing a finance transformation in the next 2 years and while global compliance and reporting being an indispensable part of such transformation, most of such companies have either overlooked many essential sub-processes such as the flow of financial data to global compliance and reporting or have not taken cognizance of it at all. When an organization or a business undergoes a financial transformation, it isn’t just reorganizing but is rather going through a comprehensive evaluation of its finance model and its mission in order to determine its optimal utilization and while the driving force every company might differ, for example, may be for one business it is largely cost focused whereas for another it is more performance; global compliance and reporting is going to be impacted in a way or the other and every company must consider it with sincerity. Need to give a serious thought to global compliance and reporting comes at a time when there are changes happening in the regulations where the focus is being more intently on the collection of tax revenues and sharing tax information globally and because of the same, companies are more focused on expanding market and customer reach, which in turn is making changes in the existing financial models an obvious one.
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- Adoption of new sourcing models
- Evolution in information systems
- Implementation of standard global processes
- Reduction of in-country resources
- Deployment of shared services centres (SSCs) and centers of excellence (CoEs)
The companies who have done an overhaul of their financial model and have capitalized on the opportunity to transform Global Compliance and Reporting (GCR) processes in conjunction with their broader transformation have already reaping the benefits of the same, such as enhanced operational agility, greater cost-effectiveness and improved decision-making and the companies who haven’t included GCR as an integral part of their financial transformation, will very soon feel an increasing need to do the same, because when a company decides to exclude GCR from their finance transformation, they are bound to face a significant risk of increased costs, mainly due to incorrect filings and other risks such as:
- Incomplete or inaccurate data
- Additional cost of compliance and reporting
- Missing deadlines/incurring penalties related to compliance and reporting
- Increased tax burden
Implementing a global GCR model
Companies in UK are taking help of experts who are helping the companies with the development and implementation of GCR model by putting forward the framework to focus on four main components of GCR, such as:
In order to improve or work on the GCR, it is important for the businesses or the companies to first assess where they are with GCR today in terms of efficiency, control and value and then work as per the core operational elements of GCR as mentioned above.
Also See: Outsourced Bookkeeping and Accounting
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