In a survey of 1,000 CFOs in companies with revenues greater than $500 million, Ernst & Young discovered that confidence is waning, particularly when it comes to the effectiveness of their compliance efforts. In fact, only 55% of the CFOs responding said that they are at least somewhat confident in their degree of compliance. That’s a sharp decline from 2014, when the confidence level was at 84%.
The most common challenges cited in the report will come as no surprise to companies operating in Latin America.
- Globalization: Increasingly globalized operations and supply chains mean more regulations that companies must comply with, each with their own variations and complexities.
- Pace of change: As we’ve frequently discussed, compliance legislation changes rapidly in Latin America, and similar measures are being introduced worldwide as governments combat tax loopholes and fraud.
- System integration: Almost half of the CFOs in the survey (47.5%) cited the need to adapt IT systems as the area most impacted by regulatory requirements, followed by training and resources.
- Efficiency: Multiple systems, lack of automation and inconsistent data formatting plague many companies, making reporting and associated processes cumbersome and needlessly complex.
Nowhere are these challenges more evident than Latin America, where strict e-invoicing and e-accounting measures demand 100% accuracy. Unprepared finance teams with operations in this region are often faced with resource-intensive implementation challenges, fines, penalties and even operational shut downs. But as the Ernst & Young report goes on to suggest, those employing connected reporting that links operational processes from logistics to HR are better poised to address today’s challenges, minimize risks and realize efficiencies. As Peter Wollmert, Global and EMEIA Financial Accounting Advisory Services Leader for Ernst & Young, suggests in his introduction to the report, with integration, automation and increased efficiencies, “reporting can move beyond compliance to serve the strategic vision of the company.”
The report is clear that this vision is not a reality for most companies, at least not yet. A minority of the respondents rate the “timeliness, cost, level of compliance and efficiency of production of reporting as highly effective,” but that is an issue that Sovos is helping companies address head on. By maintaining compliance within your existing ERP, automating approvals and reporting in real time, and creating internal procedures to streamline operations – all at a fixed fee – Sovos clients are eliminating these common compliance challenges.
Visit our resource center to learn more about how the challenges addressed in Ernst & Young’s report are amplified in Latin America’s complex regulatory environment.