According to research from Deloitte, nearly a quarter of all spreadsheets contain errors, meaning boards are potentially exposing their companies to financial and reputational damage.
A first fundamental factor for increasing the positive impact of any governance and compliance function is a solid foundation of good data. All essential governance and compliance teams rely on an accurate corporate record. Articles of incorporation detail a corporation’s birth and bylaws, and, in part, explain the rules by which they are governed. From the point of creation until the point of dissolution, merger, bankruptcy, etc., a variety of documents track each step of a company’s existence.
However, some companies don’t have the resources to keep up with digital transformation. Many issues and errors can arise when companies outgrow their current processes and don’t prepare for risks, or unforeseen crises such as COVID-19. Maintaining these records and the importance of this duty has never been more critical than right now. Therefore, we need a more strategic approach to entity governance.
Diligent has found that many organisations face four fundamental challenges in their pursuit of good governance practices and a pristine corporate record.
- Lack of trust in data
Legal teams lack confidence in the accuracy and completeness of the information in their corporate record due to poor data maintenance processes. Poor entity and compliance management practices result in bad data, and bad data causes operational inefficiencies. - Uncertainty over compliance status
Tracking regulatory change and complying with regulatory requirements, internal policies, and external obligations are difficult as the pace of change accelerates. This can lead to financial penalties and reputational damage that destroy shareholder value. - Reporting deficiencies
Without adequate governance, risk and compliance information, multiple stakeholders are at risk of making bad decisions that will adversely affect their organisation. Reputational damage as a result of a compliance or governance failures can ultimately result in the destruction of shareholder value. - Inefficient processes
Legal teams are being asked to do more with less, and they need to find a way to increase output without increasing headcount. Bad entity and compliance management practices result in bad data, and bad data causes operational inefficiencies leading to increased data maintenance costs, heightened corporate risk and loss of internal credibility.
Good governance looks different for companies depending on their size and industry. The role that good governance plays in compliance, risk management, business performance and sustainable growth is critical to all. Good governance cannot happen without an accurate corporate record where all essential governance and compliance teams can reliably and securely access the latest entity and subsidiary information.
Investment in the governance and compliance function, and software that helps accelerate its maturity and operational efficiency will enhance an organisation’s ability to achieve the three most important goals of any business: growth, profitability and brand reputation.
Andrew Harker, Regional Sales Director of Diligent Entities
To learn more about Diligent Entities, visit here.
For more information on entity governance and how to overcome challenges, you can download Diligent Entities unique whitepaper here.
In our webinar with Diligent, we will explore further why spreadsheet risk continues to be an issue and reflect on the implications of not centralising corporate record. We draw upon some real-life stories of organisations who disregarded this risk and got their fingers burned. We also examine how the biggest companies in the world are taking a new approach by implementing a single source of truth to gain a competitive edge.
Watch the webinar here.
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