Education

Integrating Financial and Compliance Matrix for Enhanced Reporting-By Carl Mensah Ahadzi

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Compliance matrix is now used extensively in many fields, like healthcare, shopping, banks, and colleges and universities. In these areas, using a compliance matrix will help to combine the different departments’ compliance needs on their own, which will also improve the compliance of each department. It is crucial given that every area is reviewed at least once a year, including Accounting and Finance, Treasury, Human Resources, and Secondary Marketing. An annual meeting to go over all the necessary standards will be very helpful. Each department’s employee is responsible for reporting what changes have been made for that year. This is how a compliance Matrix keeps companies on track with regular compliances. Making this an annually rule is meant to make sure that every department checks the compliance at least once a year. This will make sure that all departments have control over all transactions.

The integration of financial and compliance matrix is a crucial aspect of enhancing corporate reporting and compliance in various industries, such as banking, retail, higher education, and healthcare. It helps combine different departments’ compliance requirements autonomously and increase the particular department’s compliance. A compliance matrix is a tool used to help every department understand what kind of compliance is required for each transaction, setting guidance for each employee to ensure their transactions comply with U.S. Generally Accepted Accounting Principles (GAAP) and Mortgage Bankers Financial Management.

The introduction of large-scale advanced data analysis provided by service-based systems like SAP and Oracle Corporation, and cloud-based storage and processing, has led to the replacement of traditional methods with sophisticated financial reporting systems. For a system to be truly efficient for both financial reporting and compliance requirements, the methodology and process must be integrated. This allows a single set of data to be used, which then drives all the standard financial reporting requirements and the additional compliance requirements that may be necessary. Like most systems, this is not without its own challenges, as transitioning from the traditional model of financial reporting to a more technology driven one can be a herculean task. For this purpose, businesses may have approached it in a very manual, labor-intensive fashion, collecting data from several different sources into a spreadsheet or some other type of application and then manually performing a lot of validation and other calculations.

The integration of the compliance matrix and financial matrix aims to create a “lean” compliance reporting methodology that adds value to the business and reduces compliance-inducing activities. By integrating these systems, businesses can provide faster and more transparent insight to management teams, enabling them to comply as part of their everyday business activities. The benefits of integrating the financial and compliance matrix include a streamlined report process, enhanced accuracy and transparency, improved compliance monitoring, and reduced time spent compiling reports. This leads to informed decision-making and confidence in the data produced, as well as reduced compliance risks.
It is worth the mention that the integration of the financial and compliance matrix offers numerous benefits, including a streamlined report process, enhanced accuracy and transparency, improved compliance monitoring, and reduced time spent compiling reports. By implementing the integrated financial and compliance matrix, businesses can build a sustainable positivity within the environment they aim for, ensuring better decision-making and compliance with regulatory requirements.

On the other hand, compliance monitoring is a crucial process that compares actual performance to an entity’s policies and procedures or other compliance requirements. It assesses if the entity is managing risks effectively, has a robust framework of control, operates in a compliant manner, and provides the intended outcomes. Improved compliance monitoring can be achieved through enhancements, additional measures, or changes to the relevant control environment, compliance plan, and method used to identify and manage risk, or any other control activities that lead to better results in compliance monitoring exercises.

Improved compliance monitoring requires an effective integrated financial and compliance system. Traditional methods of working with two standalone systems, the finance system and the compliance system, require manual compiling of reports and relying on current records. Implementing an effective integrated solution facilitates the exchange of information between finance and compliance functions, providing quick and instant access to relevant finance reports and transactional data. Automatic generation of compliance reports based on real-time data sets from the finance system is considered a giant leap in compliance monitoring.

Increased compliance monitoring can bring numerous benefits to a company, such as increased confidence in the compliance team, improvements made to the control environment, more accurate and timely compliance reports and returns, and a focus on the most important work for the business. The development and introduction of various measures and functions as part of the finance and compliance integration project will not only enhance compliance monitoring but also lead to significant improvement in efficiency, control, and productivity to the compliance team and related functions.

For instance, a university is reviewing its compliance monitoring activities to establish a new compliance monitoring matrix and identify opportunities for linking them. Risk-based approaches should be used to align compliance monitoring activity and provide suitable information for risk management decisions. The first task is to set out all relevant reporting requirements, including compliance objectives, the scope of the new framework, and the reporting needs of university committees, working groups, and relevant university policies.

The initial step in the implementation process is to establish a comprehensive reporting framework that sets out the standards to be applied in making decisions about what, when, and how to monitor and report on the compliance of relevant obligations. This framework should be developed in collaboration with business areas to adapt to the evolving needs of the university and provide valuable information to support decision-making.

To fully integrate financial and compliance systems, the organization’s compliance chart and its implementations need to be known in detail. A top-to-bottom approach is vital for designing a feasible and accurate integrated fiscal matrix. Effective communication is crucial for successful technology integration, as it depends on mastering successful changes to established work practices. Involving relevant personnel during the process of technology integration can create a positive morale in the workplace and help the team realize the importance of the integration process.

Stakeholders must be adequately informed and continuously engaged, and information flow across all forums and between all parties must be seamless and transparent. Workable reporting structures and channels that support cooperation and effective communication are crucial, also regular monitoring and evaluation are essential for maintaining a healthy financial state and ensuring regulatory and legislatively compliant investment practice. A proper investment compliance schedule, underpinned by a good software system, must be established to ensure the portfolio remains compliant with its mandate and any restrictions to the permitted investments.

The Author is a Chartered Accountant by profession and a Fellow of the Institute of Chartered Accountants Ghana. He is PhD candidate at the Girne American University, he also has an MBA in Finance from the Central University of Ghana and Two (2) Bachelor’s Degrees in Commerce and Law from University of Cape Coast and KNUST respectively.

Complimentary to these are Certifications in Big Data/ Data Science from IBM, Certified Scrum Master from Scrum Alliance, and BlockChain from the Blockchain Council. He works currently as the Chief Compliance Manager at the Forestry Commission of Ghana.

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