Compliance and controls — policies put in place to ensure that businesses follow regulations involving their financial information and sensitive data — are not viewed to be as strategic as they should be, according to Mike Whitmire, co-founder and CEO of accounting software company FloQast.
In fact, only 26% of 370 surveyed employees at organizations across the U.S. believe that their existing compliance and controls processes add significant value to their organization, according data from a recent FloQast and University of Georgia survey.
Compliance: tedious — yet strategic
Not relaying how inherently strategic internal controls and compliance are is a missed opportunity by organizations, according to Whitmire, a former senior accountant and auditor at EY and other large firms.
“I think a lot of controls are very necessary, and perhaps not viewed as strategic because they're not described well enough,” he said in a recent interview.
Less than half (37%) of the surveyed participants said a current initiative related to compliance or control management was a strategic program, according to the survey, which was published this month.
Although compliance may not be seen as a strategic, or glamorous part of a business, it is, in fact, essential. Compliance programs may feel like busy work to some, “but if you ask maybe the head of the Sarbanes-Oxley team, why you have to do a certain thing, they might say, ‘well, it's really important if we don't do XYZ then we can go into material weakness in our financial state, or the price of our stocks is going to drop by X percent,” Whitmire said.
Meanwhile, only 37% of respondents said they feel they have sufficient staff running their compliance and internal control programs at their organization.
The accounting industry at large has been experiencing a talent crunch in the past year or so — and this is no exception. Compliance programs especially, are areas where audit leaders are feeling pressure and burnout with limited brainpower and resources, CFO Dive previously reported.
Additionally, outdated processes are further crunching accountants from properly and effectively rolling out compliance and internal control programs, with the data showing that 70% of organizations could benefit from some kind of updated processes.
“When you don't have enough people, the only thing you can do is turn to technology to get better at any of these processes and become more efficient, that's how you scale,” Whitmire said.