Organizations need to adhere to the relevant industry standards and regulations. If an organization violates even one of these violations, it can lead to heavy penalties. Worst-case scenario, it can mean shutting down the business!
Because of this, companies must create compliance reports (besides offering compliance training for employees to be part of audits necessary for regulatory agencies or it can be used for their own reference. Read on to learn more about compliance reporting and its importance.
What is Compliance Reporting?
Compliance reports are documented evidence needed to produce for auditors to prove companies are compliant with requirements put in place by regulatory agencies and the government under particular regulations.
Compliance reports will determine compliance initiatives that were effectively undertaken, along with areas that require improvement to ensure complete compliance. Other than using the report as proof for submission to auditors, it should be used to make wiser decisions on allocating resources, risk management, and other measures related to compliance.
Note that compliance and compliance reports aren’t one-off affairs. Because reporting requirements and threats are ever-changing and evolving, businesses need to create necessary reports to meet the requirements of compliance regulations.
There are various types of compliance reports, focusing on critical business matters. Most reports would have a pre-determined structure depending on the requirements of specific industry standards and regulations. Some common industries focus on aspects like cybersecurity and IT, while others concentrate on health and safety, financial records, human resources, payroll, management standards, and the like.
While almost all industries are subjected to compliance reports, there are industries like healthcare, banking, hospitality, and the like, which receive more elaborate mandates. This is because they have a significant impact on the safety of sensitive information and human lives.
Examples of compliance reports include:
- Reviews of due diligence programs
- Summary of documentation and testing of security controls
- Report of policies and procedures required for compliance
- Review of policies and internal controls for compliance
The Importance of Compliance Reporting
Compliance reporting is as crucial as compliance training from True Office Learning. Here are some of the reasons why.
For starters, compliance reports are required by regulatory obligation. For instance, banks need to file specific reports with industry regulators to show their compliance with rules related to liquidity risk.
Second of all, even if compliance reports aren’t required by regulations, they can help inform regulatory reporting. Basically, compliance reports are crucial as they document the current state of the organization’s compliance posture.
But remember, the posture will not be perfect. Whether you’re documenting compliance with privacy, human trafficking, anti-corruption, or anything else for the matter, you will inevitably find a few shortcomings. Compliance reports will identify those shortcomings, thus providing the roadmap to mediation.
And finally, compliance reports may be required by customers. For instance, if one of your clients wants to know more about your cybersecurity programs before conducting business, with you, then compliance reports can answer such questions.
Wrapping It Up
Make sure you begin conducting compliance reports to mitigate risks and prevent any expensive consequences for your company.