This post was first published in 2020 and updated on December 8, 2021.
Are you reaching your regulatory reporting goals? Even more importantly, are you working toward the right goals?
“A lack of transparency results in distrust and a deep sense of insecurity,” the Dalai Lama once said.
Chances are he didn’t have regulatory and SEC reporting on the brain when he did. But his quote is just as applicable there as it is to life itself. For regulatory reporting teams worldwide, public trust is the end game, and transparency is the method of achieving it.
In complying with regulatory checks and balances in place around the globe, teams from highly accountable industries such as banking, investment, and insurance build confidence in their brands and offerings with regulators, outside investors, shareholders, and the general public.
But achieving accurate and comprehensive regulatory and SEC reporting has traditionally been a long, largely manual process—one that invited the opportunity for error or oversight. But modern practices have helped alleviate that.
For starters, introducing a more consistent, efficient, and accurate system built around collaboration, strong controls and a higher level of automation.
The right people, processes, data, and technology help facilitate those changes. Ultimately, this establishes a more standardized regulatory reporting system enabling both greater accuracy and increased efficiency.
Modern Regulatory Reporting Goals
Regulations such as the United States’ Sarbanes-Oxley Act and Dodd-Frank Wall Street Reform and Consumer Protection Act—as well as similar mandates across the globe—are designed to protect shareholders, investors, employees and the public from accounting errors and fraudulent financial practices. Through regular reporting and audits, they also protect future recessions.
Further reporting submitted to the U.S. Securities and Exchange Commission (SEC) and other similar regulators assists investors and regulators by providing information on a firm’s financial and operational health.
If you’re part of a regulatory reporting team? Then satisfying those regulations while also maintaining public trust are key objectives of the work you do. Not to mention, accomplishing those objectives means serving up reporting that’s clear, complete, accurate, and timely.
Four primary regulatory reporting goals
With that in mind, your team will be focused on delivering reporting that meets four main goals:
- It clearly communicates financial information and explanations.
- Reporting communicates comprehensive data and commentary that complies with reporting requirements and addresses possible investor concerns.
- It provides accurate information on the amount, completeness, and compliance with reporting requirements and accounting standards.
- It meets the filing deadlines.
To achieve those goals, teams rely on people, processes, data and technology. Consider each in turn.
Even as regulatory reporting becomes more automated, people are still one of the most critical components in getting it right.
While the regulatory reporting team itself will quarterback the entire process—establishing reporting controls and processes, setting milestones and timelines, and monitoring changes in reporting rules and interpretations, among other things—there are plenty of others who contribute to the process as a whole.
Data and commentary contributors, accounting policy teams, legal experts, investor relations and senior management play key roles. These roles include assessing and reporting on matters that might cause inaccuracies or difficulties in meeting deadlines, monitoring legal actions, staying on top of reporting changes to prepare for investor questions, and providing final review and approval.
Other players with a role also include accounting close and policy teams, technology providers, your board of directors, internal and independent auditors, and regulators themselves.
Clear communication and effective collaboration across team members ensure the reporting process remains smooth and seamless—all of which can be facilitated by the right process.
Driven by Process
The best regulatory reporting protocols will self-identify errors, identify proper data requirements and interpretations, understand how to retrieve the needed data, build proper documentation, and support practices. All of that relies on implementing an effective process and procedures.
Of course, with inherent checks and balances in place too.
What else should be built into that process? Key milestones, well-communicated deadline expectations, clear accountability, and safeguards that identify and resolve anything that might push the reporting process off track, to name a few.
A progress dashboard delivered weekly or even daily can start to identify those issues. Then, protocols and triggers can be built in along the way.
(Speaking of dashboards, visit this post next to read about the top three dashboards to improve financial reporting next)
Accessing the best data to fuel your regulatory reporting system also requires the right process. That process will optimize data accuracy and ensure the accuracy of your reports as a result. It also ensures you’re able to get to your data and use it effectively.
Built on Data
Data integrity, consistency, validation and quality are all key to achieving these regulatory reporting goals.
To achieve them, data silos must be bridged. A centralized data warehouse is one way to accomplish that. But it can also be costly and time-consuming to build and maintain. Performing a reconciliation process across reports and putting the right reviews to spot data inconsistencies also helps ensure data quality and effectiveness.
(Don’t miss this post next for your ultimate guide to account reconciliation next)
And remember, manual errors can add to data inaccuracies. So, increasing automation and expanding your use of technology help build a more reliable and actionable data foundation.
Fueled by Technology
The final piece of the puzzle—technology—can help keep your reporting process running smoothly. It also facilitates the teamwork and collaboration necessary to keep it going and ensure your data is efficiently sourced and aggregated every step of the way.
The right technology can save you both time and money by automating the integration of data and commentary, facilitating XBRL tagging for those reports requiring it, and running audit checks before filing.
(Learn more about how Vena helps you reach your regulatory reporting goals and deadlines here)
Technology builds more accurate and efficient reporting, giving contributors more time to react to rule changes and introducing risk-based controls to mitigate further errors. It eliminates the chance of manual errors, expands collaboration, bridges data silos, and accesses and validates data. New technologies like machine learning also offer the opportunity to evolve even further, cutting costs and increasing efficiencies through increased automation.
Combining people, process, data, and technology can bring you closer to meeting the four goals of regulatory reporting and putting a seamless system in place. In doing so, you’ll begin to create the transparency you need to build wide and lasting trust.
Learn more about Vena’s solutions for regulatory compliance and reporting today. Or, register for Vena’s Plan to Grow Workshop to watch the on-demand talk, “Transforming Regulatory Reporting Through Teamwork,” with Terry Hardy, the former manager of the Wells Fargo SEC Reporting team.
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