The estimated cost of financial crime compliance across financial service-based businesses in India was $5.51 billion for the year 2020, according to LexisNexis Risk Solutions. Regulations, especially those that focus on business finance, are significant and designed to safeguard against risks like fraud and conflicts of interest. Most importantly, financial regulations ensure businesses keep records that reflect their activities and client transactions accurately. To ensure you comply with business laws, you need to stay updated with compliance in income tax filing and other regulatory changes in business finance. Remember, failure to stay compliant can result in hefty fines that may hurt your finances. Read on to learn several ways on how to enhance financial compliance for your business.
How To Enhance Financial Compliance For Your Business
Create Robust Policies
Creating a solid business expense policy is key to fostering a financial compliance culture within your organization. Note that an expense policy outlines how employees should spend company money. Having a good expenditure policy helps you understand employee spending and how your business is run. You’ll also get clear insights into the best reimbursement practices while complying with state and federal laws.
With an expense policy in place, you’ll have an easy time answering any financial-related questions your employees might have. So, make sure your policy defines what’s acceptable and what’s not with easy-to-understand examples. Also, encourage your staff to submit expenses for pre-approval to avoid anomalies that often result in payment issues. Most importantly, communicate expense guidelines clearly before any money is spent.
Be Smart About Record Keeping
When it comes to mitigating financial risks, you should be smart about keeping records. The last thing you want is for your business’s financial statements to land in the wrong hands. Therefore, implement tight measures to keep business financial records safe. This includes using access management software on your computer to ensure that your financial data is accessible only to authorized staff.
In addition to digitizing paper records, setting strong passwords, encrypting, and backing up data, consider creating financial information in WORM (write once, read many) format. When you choose to comply with WORM regulations, you’ll also want to switch to cloud-based storage solutions. Doing so enables you to manage a more accountable record-keeping process and meet all the financial regulatory standards. A cloud-based WORM compliant database allows businesses to make their data easy to access while protecting it. That’s because, unlike hard drives and paper documents, files in WORM storage cannot be tampered with or deleted.
Monitor Budgets And Financial Records
Financial information like business budgets, balance sheets, income statements, and cash flow records are essential assets, as they help you determine your company’s profit levels. As a rule of thumb, monitor your business finances every month to ensure all your records are accurate. Finance experts suggest keeping financial records that comply with general alliance accounting principles (GAAP). Furthermore, make it a habit to get to the bottom of any anomalies in your records before storing them.
Managing business finances can be challenging, and adding in government regulations makes it worse. However, you can manage your finances while complying with government rules if you follow the right steps. As a general rule, establish solid expense policies and be cautious about record keeping. Also, monitor budgets and financial records to protect your business from fraud, data breaches, and conflict of interests.
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