Compliance demands are top of mind for many finance leaders as they develop their staffing plans for the year ahead. They need to ensure skilled accounting and finance professionals are in place to help the business effectively meet compliance mandates both old and new.
The Sarbanes-Oxley Act (SOX), the Patient Protection and Affordable Care Act (ACA), and anti-money laundering laws and regulations are just some examples of requirements that are currently increasing the compliance burden for many businesses.
Even though few expect the overall cost of compliance requirements to drop in the coming years, half of U.S. financial leaders predict it will hold steady, according to the latest Benchmarking the Accounting & Finance Function report from Robert Half and the Financial Executives Research Foundation (FERF). This trend can be attributed largely to many organizations streamlining their key internal controls and improving their business processes.
However, 68 percent of U.S. companies surveyed for the 2016 report said they expect their compliance burden to increase over the next three years. Only 2 percent of U.S. respondents said the compliance burden for their organization was likely to decrease.
For some private businesses, an anticipated rise in compliance efforts is due to their voluntary adoption of regulatory requirements, like SOX. The Benchmarking report suggests that these firms are either looking to provide stakeholders with greater assurance in their operations or to position the business for a sale or future initial public offering.
SOX compliance becoming 'a more dynamic process'
Even businesses that have been meeting SOX requirements for many years are spending more time and money on compliance activities, according to separate research by Protiviti, a Robert Half subsidiary. In its 2016 Sarbanes-Oxley Compliance Survey report, Protiviti notes that many organizations devoted more hours to SOX compliance in their latest fiscal year compared to prior years.
Protiviti writes that SOX compliance “was once thought to be a relatively stable, predictable process that organizations could rely on to be routine and, for the most part, static. Yet market and regulatory changes continue to make this a more dynamic process, with costs and hours continuing to rise for many organizations.”
Based on its research, Protiviti cites the following as possible reasons for increased SOX-focused activity for many organizations: ongoing implementation of the new COSO internal control framework; evolving external auditor requirements for Section 404(b) compliance; and efforts by organizations that currently comply only with Section 404(a) to prepare for the level of rigor required to comply with Section 404(b).
Even though it requires greater effort, the additional work is paying off for companies. Brian Christensen, executive vice president with Protiviti and leader of the firm’s global Internal Audit and Financial Advisory practice, said, “More and more [organizations] are realizing that if they approach their compliance processes in the right way, employing proven best practices such as automating more of their key controls, there will be positive ripple effects throughout their organizations.”
Beyond specific concerns about SOX compliance, however, it appears many business leaders are worried about the state of the regulatory environment in general. Respondents to the fourth annual Executive Perspectives on Top Risks Survey from Protiviti and North Carolina State University’s ERM Initiative cited heightening regulatory change and scrutiny and the potential impact on how companies deliver their products and services, as a top risk for 2016.
Strategies to keep pace with compliance demands
If your organization is among those expecting to see their compliance burden increase in the near term, consider applying the following tactics as part of your preparation for meeting this challenge:
Learn from others. How are your competitors and peers managing SOX compliance and the requirements of other mandates that are relevant to your business? Adopt their best practices — and avoid repeating their mistakes. (See Robert Half’s Benchmarking report for insights.)
Assess your resources. First, look to your in-house team. Does your firm have the right roles and skill sets in place to manage expected compliance-related tasks and assess potential risks? For example, should your business consider hiring a compliance officer or an internal auditor? And if the firm has compliance initiatives planned for the year ahead, will your core team be able to handle them in addition to their primary responsibilities? If not, you may need to engage project consultants who can provide additional support and specialized expertise.
Equip your staff with knowledge. As a finance leader, it’s your responsibility to ensure your team is up to date on regulatory changes that may impact the business. No matter how you choose to share these details, whether it’s through regular meetings or weekly email blasts, ongoing communication is key. Also be sure that your staff members are aware of, and have access to, relevant resources such as industry publications and webinars. You may also need to arrange for formal regulatory compliance training for your team, in some cases.
Another strategy to consider for the long term: Whether through an enterprise resource planning (ERP) system or other technology tools, automating processes and controls can help organizations realize substantial cost and time savings to better manage certain compliance initiatives. In Protiviti’s 2016 Sarbanes-Oxley Compliance Survey, well over half of organizations surveyed said they were planning to automate manual processes and controls related to SOX compliance in the near future.
Looking for a consultant or team of consultants who can help support your SOX compliance initiatives? Contact us — we can help.
Are you a SOX compliance expert looking for consulting engagements? Search our site for job opportunities in your area.
More resources for finance leaders
Whether you’re already a finance leader, or planning to become one someday, these recent blog posts from Robert Half Management Resources may be of interest to you:
7 Ways Leadership Is Changing — and How Financial Executives Can Respond: In a survey by our company, two-thirds of CFOs said being a business leader today is more challenging than it was five years ago. Read this post to learn about the challenges that many finance leaders and their teams face.
More Responsibility, Less Sweat: How New Managers Can Find Balance: New to the management ranks? See this post for tips that can help you avoid common missteps and succeed at staff management.
Don’t Leave Accounting and Finance Staff Puzzled: Explain Their Impact: Research by our company shows that many professionals don’t understand how their work adds value. Read this post for tips on how to help workers make the connection between their day-to-day duties and the firm’s bottom line.
Don’t Let the Good Ones Get Away: 5 Steps Every Manager Should Take to Retain Star Employees: With the costs, time and difficulty involved to replace top performers, would you stop them from walking out the door if you could? Boosting your retention efforts can help. This post outlines five steps every manager should take to retain star employees.