How technology can support the global end-to-end compliance process
Global regulatory pressure continues to increase due to more stringent and onerous legal and tax compliance obligations and reporting requirements. Companies and their legal departments struggle to keep pace. At the same time, there is also an ongoing pressure to reduce the costs and improve efficiency. Technology enabled solutions can support the legal (and the tax and accounting) team with their global compliance obligations, bring control and reduce the risks of legal entities.
Legal entity management
Legal entity management is a broad concept and covers all aspects of the end-to-end compliance process of legal entities, such as all legal, tax and accounting aspects, and the management of related risks (i.e. reduction of risks). Therefore the legal, tax and accounting departments have to work closely together to ensure global compliance and reduction of risks of the legal entities in these fields. The costs of legal entity management vary per industry (i.e. regulated industries have higher costs relating to legal entity management than non-regulated industries) and per country, but is overall very expensive. Furthermore, non-compliance in one or more of the abovementioned fields can result in huge fines, liability of managing directors and/or reputational damage.
Global compliance is a challenge
Worldwide legislation is constantly changing with a focus on more transparency (for example, the ultimate beneficial owner registrations and changing tax legislation such as BEPS). This results in an increase of workload. For legal departments it is therefore a constant challenge to ensure global compliance of all legal entities in a time- and cost efficient way. According to Deloitte Legal’s global Future Trends for Legal Services survey, nearly half (49%) of all participants said that their department’s legal spend was growing in the area of regulatory compliance. In particular, global compliance is perceived as a major issue for in-house lawyers, with over a quarter (26%) saying it is the biggest challenge within their department. This pressure, combined with the inevitable commercial drivers inherent in globalisation, have been driving a growing demand from large companies for more efficient and effective global solutions to a range of legal and tax compliance and reporting challenges.
Technology enabled solutions
As legal entity management consists of several standardized processes, it can be easily automated. New tech solutions combine all the aforementioned aspects of legal entity management to support the end-to-end global compliance process.
Deloitte Legal developed “Element”, a centrally managed corporate database with a calendar with automated due date tracking, task and project management capabilities, an automated document generator, intuitive library for document storage, interactive dashboard for better insight and status checking, organisation charts, full audit trail and up-to-date knowledge about changing compliance obligations. Element can also be linked with the respective tax and accounting systems, resulting in a complete overview of your compliance obligations in one dashboard. Practice learns that using Element to support the global compliance process results in an efficiency gain between 10% and 30%.
Watch the video to learn how Element can help manage complexity and risk, giving better control of data and insight into the global compliance process:
The main advantages of using technology enabled solutions in the legal entity management process are:
- improving quality and control of legal entity data;
- streamlining project timelines and aligning resources;
- easing with administrative burden of corporate compliance; and
- managing risk, by eliminating manual intervention.
Technology enabled solutions will become more and more important to legal departments. For efficiency reasons, companies are automating standardized processes throughout the business and the same will be expected from the legal department. As legal entity management consists of a number of processes that can be standardized, automation will provide for efficiency. A legal tech solution supporting the end-to-end global compliance process will bring control and reduce the risks relating to legal entities.
For more information about Deloitte Legal’s services in the field of legal entity management, reference is made to our website.
Over de auteurs:
Martine van Oijen