The Case for Compliance Automation
With new regulations demanding stricter KYCs for banks and other financial institutions coming in force, the Singapore compliance industry has suddenly come under huge talent acquisition pressure. While this is good news for experienced compliance professionals in Singapore (much better pay on the horizon) and also bad news (lots of pressure on them), it does offer an opportunity to look at compliance automation.
Compliance Automation for faster decisions
Organization compliance processes, although usually motivated by external reporting obligations, provide management information in consumable formats. The entire idea behind XBRL, for example, is to help internal and external stakeholders (and prospective stakeholders) take better and faster decisions.
The ‘compliance’ in compliance automation is actually quite a broad term. It includes laws such as the Sarbanes-Oxley in the US. It also includes IT standards such as COBIT. Of course, every country has its own set of rules and combinations of rules.
Automation of compliance, like that of any process, saves a lot of time and effort and standardises output.
One of the reasons compliance automation is difficult for organizations to implement is because, like all automations (again), it requires significant investments of time and money for the initial set-up process, which may be complicated. Take the example of a detailed chart of accounts. From a compliance (and management) point of view, details of each account may not be necessary. Some aggregation of those accounts is needed for reporting and decision-making.
This implies that an automation system would need to be set up to aggregate all those accounts to a single value in a manner shown below. This process, called mapping, has to be done once. After that, whenever data changes in any of the accounts, it flows in to the aggregation via a calculation (usually weighted addition).
Of course, something like Accounts Payable – England (in the figure) could:
a) be an aggregation itself; and/or
b) flow into multiple downstream aggregations
The advent of automation in an industry usually means lesser jobs for people. But, in a situation such as Singapore’s, this can only mean a reduction of the load.
DataTracks is a global leader in preparation of financial statements in XBRL and iXBRL formats. With over 10 years’ experience, DataTracks prepares more than 12,000 XBRL statements annually for filing with regulators such as SEC in the United States, HMRC in the United Kingdom, Revenue in Ireland, ACRA in Singapore and MCA in India. DataTracks provides world-class services with its team of certified accountants experienced in US GAAP, UK GAAP, India GAAP, SFRS and IFRS.
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