What Compliance Professionals can learn from Accountants

In 1494, Luca Pacioli published “Particularis de Computis et Scripturis,” which is widely regarded as the first written treatise on bookkeeping. In the 600+ years since that event, we have become completely accustomed to the concepts of ledgers, journals and double-entry bookkeeping. Whenever there is a need for detailed, defensible records of the financial state of affairs (such as a company balance sheet or a profit and loss statement), we employ Pacioli’s concepts without even thinking about them anymore.

Governance Risk & Compliance

Now let us turn to the world of governance. Is the world of governance, risk and compliance really so different from the world of financial accounting? Numerous regulations require that financial institutions are capable of demonstrating historic compliance programs “promptly upon request” (AML Programs, Regulation of Swaps, Volcker Rule Compliance Programs….). Financial institutions need to be capable of providing evidence that they were compliant with regulations at any point in time to reduce legal costs and penalties.

”Records sufficient to demonstrate compliance….promptly provide upon request… for a period of no less than 5 years or such longer period required by the Agency”
The Volcker Rule
12 CFR 44.20           

Demonstrating Compliance

Accounts ledgers maintain a full audit trail of transactions. Using accounting systems, accountants can navigate journals and retrieve back up documentation using transaction references.  A complete view of financial performance, principally the profit & loss and balance sheet can be viewed as at any point in time. Is this proven system pervasive in the world of compliance in 2014?"

The answer is “no”. Prior to TimeArc, legal counsel and compliance executives have expended significant time in retrieving and researching historic regulations to demonstrate compliance. In an environment where regulatory reviews are increasing, compliance executives need to be supported in meeting increased demand to demonstrate compliance to regulators, auditors and the board.

In the accounting world, a company cannot simply announce a Gross Revenue figure to tax officials or to investors, without having the transaction ledgers to back it up. Isn’t it interesting that the same ledger-based approach has not generally been used in compliance?

TimeArc®

 

TimeArc is a GRC platform that operates in a similar manner to accounting systems. TimeArc implements a systematic approach to managing regulatory change and significantly reduces time and costs consumed during regulatory review. TimeArc links internal compliance programs to the external regulatory framework. These links provide an audit trail or ‘ledger’ of how a firm has implemented regulations through policies and procedures (similar to double entry and journal referencing principals in accounting). These links remain permanent. By navigating to a selected date within TimeArc, compliance professionals and general counsel have instant access to the exact version of regulations and linked internal policies in effect at the selected date.

Senior executives are provided with complete visibility of the state of compliance (‘The Compliance Balance Sheet’) at any selected date and the relationships with changing regulations. Reports provide insights on how the firm is implementing regulations through compliance programs over time. Innovative reports support executives in assessing the risk of non-compliance.

By linking internal compliance programs to regulations and legislation, TimeArc implements a systematic approach to managing regulatory change. TimeArc reports compliance programs that require review following updates to linked regulations. These reports streamline the process of managing regulatory change to reduce compliance costs and the risk of non-compliance.

At Propylon, we believe that the ledger-based concepts of Pacioli are a perfect fit with today's regulatory change management challenges. With TimeArc and its proven point-in-time technology, we are moving forward the state of the art in compliance. Someday, it will appear obvious. Just as today, accounting ledgers appear obvious.

Breiffni O Domhnaill

As a qualified auditor and tax consultant, Breiffni understands the challenges faced by organizations in maintaining compliance in the current regulatory environment. Coupled with experience of working in a process driven environment, Breiffni has the required skill set to develop efficient and innovative solutions for managing Governance, Risk and Compliance.

Breiffni is currently working with Propylon in implementing TimeArc, an innovative GRC Solution supporting financial institutions to meet current regulatory challenges.

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Indiana Hackathon using Propylon developed API

The MyIGA civic hacking event held recently in West Lafayette Public Library utilzed the MyIGA API developed by Propylon for the state of Indiana.

Speaking about the event Propylon CEO, John Harrington, adds: "This is fantastic to see how data that we are making available programmatically can be built on for value added services. For me this is the essence of open data. It is impressive to see how our core technologies and methods for making the data available are being used by an ever more advanced user community.

This follows on from the Kansas Legislature’s RESTian interface that earned the Kansas State Legislature a glittering A on the Sunlight Foundations - Open Legislative Data Report Card."

Regulatory CMS running on cloud

Propylon has completed a major upgrade of a specialized Content Management System for A Big Four Accounting firm. The upgrade consisted of extensive new functionality to the system as well as the migration of the entire platform to the cloud. The system has also expanded it's user base from several European branches of the firm to other territories including North and South America, Asia and Australia.

A major new feature of the system is integration with TimeArc, facilitating time-aware access to the system.

Find out more about TimeArc's unique point-in-time technology.

Smart Vote Live in Indiana

The Indiana State Legislature completed their 2014 session utilizing Smart Vote for both House and Senate chambers. Smart Vote is a secure, tablet based, voting system and has been delivered as part of a larger project that will deliver a wide range of new and improved services for the Indiana Legislature.

Smart, Practical Technology.

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