Dive Brief:

• Compliance programs led by financial executives show a high tendancy to stay in step with technological advances and the increasing complexity in the business landscape, according to research released Oct. 19 by the Institute of Management Accountants (IMA).  
• CFOs and financial executives should use data analytics to design incentive programs for improved internal reporting and gain insights for better aligning employee behavior with compliance goals, the IMA report said.
• “Finance professionals and managerial accountants are skilled in the area of data analytics, and their skills can actually help understand” in detail the behavior of employees, said Kelly Richmond Pope, IMA research fellow for corporate governance and ethics in an interview with CFO Dive.

Dive Insight:

Robust compliance programs are essential for an organziation aiming to limit its exposure to risk, the IMA said in its report. 

The creation and maintenance of compliance programs traditionally falls under the purview of legal departments, but shifting this duty to CFOs allows organizations to take a more analytical approach. 

“There are two pieces to compliance — regulatory and non-regulatory,” Pope said. “You don't want employees to only follow the rules because they are supposed to, you want employees to follow the rules because they know they should. And so I think we need to remind organizations how important non-regulatory screening actually is.”

The “check-the-box” approach to compliance program design can inhibit its effectiveness, accordig to the IMA.

“We've learned from the research that incentivizing people changes behavior,” prompting them to more actively advance the organization’s goals, Pope said. 

Compliance programs usually focus on risk assessment, prevention and detection, the IMA said. Creating a culture built on sound ethics is imperative for averting compliance violations.

“Incentivizing people to do the behavior that you want, monetarily, I think is really key,” said Pope. 

The report outlined the most important characteristics of a robust compliance program — written standards of conduct, board oversight, a designated compliance officer, training sessions, internal monitoring and auditing, anonymous reporting and consistent enforcement. 

With a data-savvy eye, a financial executive often upgrades compliance programs, Pope said. “They have a unique view of the internal workings of an organization that other executives don’t.”