Few firms use strategic compliance, says FloQast study

A recent study conducted by the accounting transformation platform FloQast has revealed that only 16% of organisations are adopting a strategic approach to compliance, moving beyond mere box-ticking.

The research, titled "Exploring Strategic Compliance: The Next Frontier," surveyed 445 Chief Financial Officers (CFOs) and compliance professionals to assess the role of compliance in driving strategic insights and its impact on organisations.

The study identifies three primary approaches to compliance, with a new "risk orchestration" strategy emerging as the next frontier. This strategic navigation of risks allows organisations to shift from merely handling risks to gaining valuable insights that aid in steering organisational strategy. "Today's business environment is dynamic and competitive – we all know that much," said Mike Whitmire, CEO and co-founder of FloQast, CPA. "Trust is more important than ever, and compliance with an eye on risk is key for maintaining an ethical image in the eyes of stakeholders."

According to the survey, 80% of compliance professionals in strategic roles focus on helping their organisations identify appropriate risks, while 79% are committed to improving visibility to senior management. This highlights the growing importance of compliance in driving strategic decision-making and risk management. Additionally, nearly half of compliance professionals (47%) are concentrated on finding better, easier ways to alleviate the burden of legal requirements associated with compliance.

Whitmire discussed the benefits of this evolving approach: "Risk navigation and orchestration provide a necessary strategic approach to both pursuing and mitigating risks, that empower companies to better navigate various external factors, including the economy and different compliance environments. By structuring the compliance function to navigate risk strategically, organisations can respond effectively to all these external factors, thereby honouring that carefully placed trust."

The findings also suggest that compliance teams adopting this strategic approach report feeling more valued and respected within their organisations. Furthermore, these professionals are seven points more likely to be viewed as advisors compared to those focused solely on risk mitigation. This shift in perception could potentially lead to increased job satisfaction and higher compensation.

The study indicates that the administrative burden of compliance remains a significant challenge, with 47% of respondents looking for more efficient ways to meet legal requirements. Compliance currently feels like an administrative burden exacerbated by stringent external requirements. However, the research suggests that by integrating risk management with continuous control capture, businesses can enhance their compliance functions from mere oversight to key strategic partners, driving both protection and growth.

FloQast aims to promote industry research on crucial topics within the accounting and finance sectors. Earlier this year, the company released another report titled "Embracing Financial Transformation: What It Is, Why Organisations Should Want It, and How to Achieve It," further underlining their commitment to providing insights into contemporary financial challenges.

For this report, FloQast surveyed 104 CFOs and 341 compliance professionals in July 2024. Participants were based in three regions: North America (Canada, the United States), EMEA (Austria, Finland, Germany, Netherlands, Norway, Sweden, Switzerland, and the United Kingdom), and ANZ (Australia, New Zealand).