Maintaining regulatory compliance lies at the heart and soul of any accounting firm. MNCs are one of the biggest segments impacted by the failure to meet these regulatory requirements. And there are reasons. Some of the common reasons why MNCs fall big when they fail to meet these government-levied regulations include:
- They are big and operate in cross-geographical regions. If they fail to meet the compliance in any of these regions they could be in trouble.
- Because of the size of their businesses, they are often already in the public eye. Even a small inconsistency can lead to big scrutiny.
- Internal and external auditors audit MNCs. Their failure to comply could easily be caught on the radar unless they have people who can help them get away with illegal activities.
That is why, the MNCs must know exactly what they need to do. It is easy to lose track of things when there is so much on your plate. The internal teams may not always be equipped to stay ahead in the operational activities and keep up with the constant change in the regulatory requirements. That is why you need to outsource compliance to competent and expert teams who can help ensure that you can keep up with the changes as and when they happen. This reduces the chances of falling prey to legal and financial complexities.
Let us delve deeper into how MNCs can help manage global compliance needs with outsourced solutions:
- Helps in dealing with jurisdictional complexities:
Most MNCs operate in different cities and countries across the world. Each of them has its very own compliance requirements. As firms continue to scale up their operations, it becomes important for the leaders of the MNCs to meet the regulatory standards everywhere they are operational. Local tax laws, labor laws, environmental standards, data protection regulations, and corporate governance rules can be overwhelming to keep up for the in-house teams.
Outsourcing global compliance solutions has teams of specialists who help the MNCs navigate through these jurisdictional complexities. Outsourcing partners have a global presence with on-ground experts who are aware and updated on the local laws and market practices. These experts help monitor regulatory changes and help ensure that the MNC is up-to-date with compliance needs, helping them avoid fines and operational disturbances.
- Helps reduce the risk of non-compliance:
Many firms spend a significant amount of their time, energy, and resources focusing on making sure they are persuading the auditors to allow them to make things right. Because their actions before might have been indicative that they could be levied with penalties or even criminal charges. Each industry has its unique regulatory framework that requires the firms to have detailed oversight. With the rise of international regulations such as GDPR (General Data Protection Regulation), Sarbanes-Oxley, or FATCA (Foreign Account Tax Compliance Act), MNCs are often under a microscope by government bodies.
Outsourced compliance solutions are designed to help MNCs mitigate the risk of non-compliance through systematic tracking, auditing, and reporting mechanisms. By getting access to these teams of experts, MNCs gain access to risk management tools that help ensure proper oversight and reporting or compliance activities. These partners help deploy cutting-edge technologies such as AI-driven platforms that help automate compliance monitoring. This also allows them to flag potential risks before they escalate. These firms can also help the MNCs with rigorous audit trails and compliance documentation processes. This prepares the firms with defense mechanisms in case of a compliance issue.
- Allows scalability and flexibility in compliance management:
As MNCs continue to expand into new markets, the compliance needs become complex too. In-house compliance teams often struggle to scale their operations to manage this growth. Outsourcing compliance functions allow MNCs to quickly adapt to the changing regulatory environment without overstretching internal resources.
Outsourced solutions help MNCs gain the flexibility needed to scale compliance management services up or down. For instance, as an MNC enters a new market in a new country, the outsourcing partner can immediately provide the expertise needed to meet the new area’s regulatory framework. This helps ensure that the MNC remains compliant from day one. The flexibility not only helps save time but also the cost of hiring and training new resources.
- Helps ensure cost efficiency:
Managing compliance in-house can be challenging for MNCs. They need extensive investment in resources training, and technology. This challenge is compounded by the need to adapt to the changing regulatory landscape in different countries. By outsourcing compliance needs, MNCs can get a cost-effective solution by providing access to skilled professionals and technology without the added overheads of recruiting and maintaining an internal team.
Outsourcing also helps the MNCs avoid costly compliance violations. For example, failing to comply with anti-corruption regulatory needs under the Foreign Corrupt Practices Act (FCPA), can lead to financial penalties. The outsourcing partner with FCPA can help manage compliance processes, ensuring MNCs avoid these risks.
- Staying ahead of regulatory changes:
There is no doubt in the fact that the regulations are constantly changing. With so many other operational activities to take care of regularly, the MNCs may miss out on keeping up. This can have serious implications for the business strategy and operations. Outsourcing compliance to a partner that specializes in global regulatory trends can allow MNCs to stay ahead of these changes.
Outsourcing strengthens internal teams by monitoring and interpreting changes in the global regulatory landscape. They provide recommendations proactively about how to adjust their compliance strategies. For example, an outsourcing partner with experience in data protection regulation can provide guidance on the latest updates to GDPR, helping the MNCs avoid violations and protect their reputation.
The accounting industry is constantly changing. There is so much happening all the time. No matter how big the firm may be, it is very easy to lose track of things, especially aspects like compliance when they have so much to take care of.
By partnering with an outsourcing firm that understands your business and can guide you through the right path, you can stay ahead of things, thus avoiding unnecessary disruptions.
To get started on outsourcing your compliance needs, write to us at connect@finsmartaccounting.com.
Maanoj is Co-founder & Director of Growth Strategy & Alliance at Finsmart Accounting. He is an Outsourcing Expert, a People Champion, and a Dynamic Leader with strong Business Strategy and Scaling-up experience. He has incubated businesses, sold & exited ventures; helped build strong enterprises in very diversified verticals like Fintech, HR & Consulting spaces in various CXO capacities over the last 20 years.
