Read this article to learn what a compliance report is, why your organisation needs such a report, and what kind of information it should include.
A compliance report is a document presenting information that shows that your business is adhering to all the applicable regulatory requirements and standards. To create particular compliance reports, oftentimes, you need to gather data from across the entire organisation. It is also imperative that the person creating the report has expertise in the specific business operations under review and the regulations involved in the associated compliance initiatives.
Generally, it is the compliance department’s responsibility to generate such reports. In most large firms, the chief compliance officer (CCO) is tasked with establishing company-wide standards and implementing procedures to ensure the effectiveness and efficiency of the compliance program. However, in smaller organisations, the responsibility for compliance reporting may fall on the legal department or another qualified employee(s).
Compliance reports can go to several different audiences – the board and senior executives, external auditors and regulators, business partners, and others. The audience to receive the report depends on the specific focus of the report and whether the report is internal or outward-facing.
To be effective, compliance reports must be useful to the reader. And while your company’s senior executives or board directives understand some compliance concepts, they won’t necessarily know all the terms that compliance teams might use internally. Thus, you should anticipate that reality and ensure the compliance report is written in such a way so that its readers can put it to good use.
Compliance reports come in different shapes and sizes. Some reports may have a specific structure, especially if particular regulatory requirements drive them. Many, however, can take whatever form and design make the most sense for your company’s needs because the content of the compliance report is what matters most.
Generally speaking, a compliance report should include the following main elements:
Additionally, a compliance report should also include action items to improve your organisation’s compliance.
In-depth compliance reporting is the best way for your organisation to measure the effectiveness of the current compliance program and create a checklist of all required actions. It will help you ensure that your organisation’s approach to compliance is comprehensive. A compliance report spots areas within your organisation where compliance initiatives are being met successfully. It also identifies areas where you need to put more work to meet the applicable regulations, standards or internal controls. This information can help you make more effective decisions about risk management, resource allocation and strategic planning.
With regulatory requirements constantly changing, compliance must be fully integrated into your business strategy and processes. Furthermore, you should review your business processes to evaluate potential compliance risks at least once a year and keep up with changing laws, regulations and standards. Compliance reporting can be the starting point for any plan related to resolving potential non-compliance issues. Failing to comply with a single applicable regulation leads to hefty fines and damages your business’ reputation, causing loss of customers.
In some cases, compliance reports are required by regulatory obligation. For instance, product manufacturers must file specific reports with their industry regulators to demonstrate compliance with product safety rules. Compliance reporting provides you with concrete evidence that your company is on the right side of such regulations. An inability to generate a compliance report could create serious legal issues for your business.
Lastly, you need to have an up-to-date compliance report because clients may request it. For instance, a client may want to understand your company’s compliance procedures for ensuring products’ quality and safety before they agree to do business with you. And a compliance report can offer such information. A thorough compliance report can demonstrate to your clients that your operations and controls are trustworthy.
The process of creating a compliance report is often considerably lengthy and labour-intensive. It can take your compliance team hours, or even days, to pull together the required regulatory compliance reporting. But introducing an element of digitalisation can speed up the process and make it more efficient and accurate. Hence, minimising the risk of a regulation breach due to human error and enabling real-time snapshots of your compliance procedures. Automating compliance reporting also provides valuable business insights with regularly generated analytics.
You can leverage tools like Clever Compliance’s product compliance management system to:
Learn more about Clever Compliance by downloading the product brief here. For more information about how Clever Compliance can help you or for requesting a free demo of the compliance management system, contact an authorised Clever Compliance representative today at [email protected].