“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 to 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 that invited the opportunity for error or oversight. Modern practices have helped alleviate that by introducing a more consistent, efficient and accurate system built around collaboration, strong controls and a higher level of automation.
The right people, process, data and technology help facilitate those changes, establishing a more standardized regulatory reporting system that enables both greater accuracy and increased efficiency.
The 4 Goals of Regulatory Reporting
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 provide protection against future recessions. Further reporting submitted to the U.S. Securities and Exchange Commission (SEC) and other similar regulators assist investors and regulators by providing them with information on the financial and operational health of a firm.
If you’re part of a regulatory reporting team, satisfying those regulations while also maintaining public trust are key objectives of the work you do—and accomplishing those objectives means serving up reporting that’s clear, complete, accurate and timely. With that in mind, your team will be focused on delivering reporting that meets four main goals:
- It clearly communicates financial information and explanations.
- It communicates comprehensive data and commentary that complies with reporting requirements and addresses possible investor concerns.
- It provides accurate information as to the amount, completeness and compliance with reporting requirements and accounting standards.
- It meets the filing deadlines.
To achieve those goals, teams rely on people, process, 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 as well as 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 all play key roles, 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 will 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 and build proper documentation and support practices. All of that relies on implementing an effective process and procedures, with inherent checks and balances in place.
Key milestones, well-communicated deadline expectations, clear accountability and safeguards that identify and resolve anything that might push the reporting process off track should all be built into that process. A progress dashboard, delivered on a weekly or even daily basis, can start to identify those issues so that protocols and triggers can be built in along the way.
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 will also ensure you’re able to get to your data and to use it effectively.
Built on Data
Data integrity, consistency, validation and quality are all key to achieving the four goals of regulatory reporting. 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 in place to spot data inconsistencies can also help ensure data quality and effectiveness.
And since manual error can add to data inaccuracies, increasing automation and expanding your use of technology can 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, facilitate the teamwork and collaboration necessary to keep it going and ensure your data is efficiently sourced and aggregated every step of the way. By automating the integration of data and commentary, facilitating XBRL tagging for those reports requiring it and running audit checks before filing, the right technology can also save you both time and money.
Technology builds more accurate and efficient reporting that leaves contributors more time to react to rule changes and introduce more risk-based controls to mitigate further error. 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.
The combination of people, process, data and technology together 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 to watch the on-demand talk, “Transforming Regulatory Reporting Through Teamwork” with Terry Hardy, the former manager of the Wells Fargo SEC Reporting team.