Regulations and disclosure requirements are growing in complexity every year. Public companies must ensure that they meet these requirements, or they risk hurting their relationships with their investors, looking poorly to prospective investors, or inviting additional scrutiny from the SEC. Accuracy and efficiency are becoming more important by the moment. Manual compliance processes often don't cut it because their slow frameworks for tracking changes, providing approvals and filing by the deadline tend to introduce inaccuracies and inefficiencies.
Enter compliance workflow automation. The automation of common tasks like data entry and document preparation can save companies time and increase the accuracy and consistency of each disclosure. The integration of AI and other tools can streamline the work of documentation, review, and submission.
What Is Compliance Workflow Automation?
A compliance workflow describes the processes that companies put into place to ensure that they continue to meet regulations concerning various aspects related to governance, risk and compliance. Automation relies on technology, AI in particular, to execute many of the routine and repetitive tasks involved in data entry, verification, and preparation of financial reports. Businesses incorporate AI, digital tools, and data analytics to create a smooth workflow that reduces error and provides continuous compliance.
Compliance automation handles a variety of tasks, including document versioning, approvals to change tracking, alerts and audit trails. In essence, each automation tool aims to:
- Manage deadlines and task responsibilities
- Streamline the process for document creation and submission
- Track edits, including sign-offs
- Minimize the errors inherent to manual entry and oversight
Since compliance automation is collaborative by design, it provides a seamless way for finance, legal and governance teams to work together on compliance tasks in real-time.
Challenges of Manual Compliance Processes
In order to see how compliance workflow automation streamlines the work of regulatory compliance, you may need to know the weaknesses of manual processes. Manual compliance processes create a number of moving parts that are not usually in sync, which can create lapses, gaps, or outright mistakes. Common problems include:
- Version control issues when multiple editors are involved
- Inconsistent reporting that fails to meet best practices
- Gaps or inaccuracies in filings that may lead to filing rejection or penalties
- Late submissions due to a lack of visibility
- Repetitive manual tasks that drain the resources of a limited staff
These problems are more than inconvenient. Depending on the severity, they can lead to increased regulatory scrutiny, costly penalties for inaccuracies or loss of brand reputation. By comparison, automation improves overall accuracy, reduces redundant efforts and increases the quality of audit preparation.
Key Benefits of Compliance Workflow Automation
Although compliance automation tools have some variation in the way they work and their unique advantages, most companies can get these benefits from the integration of regulatory technology:
- Improved accuracy and audit protocols: Automated data entry, document validation and version tracking helps reviewers confirm that the information is correct, while building a detailed audit trail for regulatory transparency.
- Quicker reporting: Automated workflows streamline time-consuming tasks so that the work is done sooner and the filing ready before the deadline.
- Increased collaboration: Teams that complete work across multiple departments, like finance, legal, and investor relations, can work together within the same platform.
- Better visibility: Employees are less likely to lose track of their responsibilities when the tools provide a convenient dashboard and reminders.
- Stronger governance over compliance frameworks: Customization allows companies to dictate document preparation to meet internal policies and each compliance requirement.
The centralization of the document preparation structure ensures that no one is chasing data or worrying about submitting the wrong version.
Where Compliance Workflow Automation Delivers Value
Compliance workflow automation is convenient and efficient by definition, but it also contributes to greater policy adherence over time. The use of financial reporting software delivers value in these instances:
- SEC disclosure management and reporting: Streamline the work of preparation, verifying and filing disclosures like proxy statements, 10-Ks, and 10-Qs.
- Audit management: Automate data gathering and management to provide robust evidence for auditors.
- Compliance with internal policies: Ensure that document preparation meets internal frameworks for review and approval.
- ESG reporting: Automatically draw data from relevant inputs for publication of ESG disclosures, including updates to documentation to reflect investor goals and trends.
- Risk and control monitoring: Generate alerts concerning exceptions, inaccuracies, unauthorized access, or overdue compliance tasks.
Companies benefit from the integration of software that expands existing frameworks for compliance without adding to the employee workload.
Best Practices for Implementing Compliance Workflow Automation
When moving from a manual workflow to an automated framework, companies should employ a number of practices for best results:
- Evaluate existing processes: Identify redundancies and inefficiencies in existing frameworks that lead to inaccuracies, bottlenecks, or delays in reporting.
- Choose the ideal platform: Select software like ActiveDisclosure, which provides secure data rooms and other tools to support collaboration and scalability.
- Prioritize security of data and documents: Confirm that the software maintains robust encryption, access controls and compliance with security guidelines like ISO 27001 or SOC 2.
- Train teams to maximize efficiency: Offer routine and updated training to teams to maximize their confidence and efficiency when using the software.
- Continue to monitor and optimize: Provide regular reviews of processes and outputs and make adjustments to workflows as goals or regulatory requirements change.
A strong transition plan can lead to integration that feels seamless.
Automation as the Future of Compliance
The increasing adoption of automation into financial processes is more than just a trend. It is rapidly becoming the foundation of efficient, accurate risk-resilient compliance. Early integration is key to ensuring that companies can scale their compliance efforts with their business goals and changing regulations.
More than just increasing the efficiency of a single workflow, automation provides key information and insights necessary for strategic decision-making. Streamlining data collection and management offers advantages such as data analytics and data-driven predictive analytics. DFIN provides access to tools that increase the speed of data processing and report generation, as well as improving the accuracy and verifiability of each document. To gain peace of mind concerning your compliance status, contact DFIN for a demo.
