Business leaders are committing to and investing in global compliance to build trust and reputation, finds a global study from Mazars. The majority of businesses view compliance as an opportunity creator that can build trust and reputational benefits and are investing significant senior time in compliance: some three-quarters have top executives engage with compliance questions at least quarterly.
Those are two key findings from ‘Unlocking trust: why global compliance is on the business agenda’ – a study based on a survey of 892 senior accounting and tax compliance professionals working in multinational companies from 25 countries.
Securing valuable opportunities
Valuable prizes are on offer for meeting compliance requirements, according to the survey, some 65% think good compliance increases investor confidence; 64% say it increases client/customer trust; 61% say it helps build a good reputation.
To secure those opportunities, three quarters of businesses have their top executives or board address compliance on a quarterly basis or more (39% monthly). This engagement is most likely to be part of a pre-scheduled review of risks (50%) but is also often in pursuit of new insights or opportunities (44%). That dedication seems to be paying off: businesses are highly confident in their compliance functions with some 82% of respondents expressing confidence of at least 8/10 (on a 10-point scale) they are meeting compliance obligations now, and that they will continue to do so in future.
Those same leaders appreciate the risk of falling short. Some 77% say their business has faced accounting and tax compliance-related challenges somewhere in the world during the last five years. These consequences most commonly include reputational damage, internal disciplinary action, and fines.
Complexity cited as most pressing challenge
Compliance is becoming more complex, faster-moving, and harder to manage, acknowledge the survey respondents. Some 38% of respondents cite increasing complexity as among the most significant challenges to compliance over the next five years, the same number say impacts of the pandemic and 36% highlight new legislation. Brexit also presents some disruption to compliance but does not rank high on the list of challenges (23% globally name it a top challenge).
Better technology and skills needed
Improving technology is the most cited solution to take on that complexity. Some 45% of business leaders say new accounting and tax compliance technology will be one of the biggest drivers of their function’s improved performance in five years’ time. However, they are held back by a lack of team knowledge and skills: two in five respondents (42%) feel this is a major obstacle to their team meeting compliance goals.
Broad regional consistency with some outliers
Regions and countries return broadly similar answers across the question sets but some outliers can be identified: 50% of leaders in Latin America review their compliance issues monthly or more, which is 11 points higher than the global average, and they view compliance most strongly as an opportunity out of all the regions surveyed (65% vs 58%). Respondents in the US cite the biggest challenge to compliance as increased scrutiny from regulators – which does not feature in the top three challenges for all respondents, while in the Africa-Middle East region, Latin America and the US, compliance leaders are more likely than respondents overall to have increased their resources dedicated to compliance in the last 12 months (78%, 71% and 78%, respectively, compared to 60% overall).
Erick Gillier, Partner and Global Head of Outsourcing, Mazars says: “Global compliance has long been a cornerstone of good business practice but can still be viewed by some as simply an obligation to be met rather than an opportunity to be capitalised on. That’s why we set out to uncover how business leaders approach global compliance, including the attention they devote to it, the returns they expect, the risks they anticipate, and where they focus investment. Our survey and study show when global compliance is done well it builds investor confidence, increases client and customer trust, and shapes a positive reputation with the outside world.”
Erick adds: “This survey and study demonstrate the clear sense of responsibility business leaders have towards compliance. With scrutiny on business as tight as ever, the findings that most leaders plan on increasing financial and human resources dedicated to compliance should be reassuring for anyone who wants to see good business done well.”
To better understand the role global compliance plays in business today, you can read the whole study here: Unlocking trust: why global compliance is on the business agenda.