Laws and regulations help protect an organization’s confidential information, such as information on its stakeholders. They can also safeguard employees’ rights, reduce environmental impact, etc. Adhering to these laws is mandatory for organizations, and non-compliance can result in hefty fines and punishments. Creating a compliance report is a great solution to avoid these consequences.
In this article, I’ll explain what a compliance report is, its benefits, and what you should include in one. I’ll also cover how you can create one and touch on how software can help you. Let’s start with the basics first.
What Is a Compliance Report?
As the name suggests, a compliance report is a document that proves your compliance with existing laws and regulations. Many compliance reports have specific structures. These structures can change depending on a specific law’s objective.
Compliance reports also come in many different types. To clarify, they can be financial, technical, operational, or security reports. Each of these types provides insights into the specific areas of operations. Some organizations even prepare reports detailing how an incident occurred and the measures taken to remedy it. Overall, these reports help executives make the right decisions regarding capacity planning, budgeting, cybersecurity, etc.
That said, let’s now take a look at which industries require compliance reports.
Which Industries Require Compliance Reports?
Different standards apply to different industries. Here’s a table showing some common standards and to which industry they apply. I also added why each of these industries must comply with those standards.
|Law/Standard||Industry/Industries to Which It Applies||Reason|
|Health Insurance Portability and Accountability Act (HIPAA)||Healthcare||Includes national standards to protect patients’ medical records and personal information|
|Payment Card Industry Data Security Standard (PCI DSS)||Businesses that store or process credit card information||Lays down the operational and technical aspects related to the storage and processing of credit cards|
|General Data Protection Regulation (GDPR)||Businesses that have customers in the EU||Regulates the handling of data related to EU residents|
|National Institute of Standards and Technology (NIST)||Cybersecurity for all organizations||Helps organizations prevent and handle cybersecurity risks|
|Federal Information Security Management Act (FISMA)||Businesses that interact with the US Government||Protects government data against natural and manmade disasters|
The above standards should give you an idea of the role of different standards and why compliance with them is important.
This discussion now takes us to the next question: what’s the purpose of creating a compliance report in the first place?
Compliance Report Benefits
As stated earlier, compliance reporting is essential to every organization’s operations. It comes with many benefits, and these alone will motivate you to start this process if you haven’t already:
Meeting Regulatory Obligations
Meeting regulatory obligations is something that every organization has to take seriously. Otherwise, an organization faces severe consequences. These consequences include heavy fines, penalties, and even inaccessibility to services such as loans. This is probably the most compelling reason to write a compliance report.
Besides meeting the mandatory contractual obligations, compliance reports are also important for a company’s stakeholders. Essentially, these reports help them understand the company’s current state of operations. Based on this information, they can then strategize on future operations.
Sometimes, those you’re conducting business with might want to know more about your company before proceeding. A compliance report can be very useful here. It can cast aside any doubts a partner or customer might have before working with your organization. In short, a compliance report boosts your trust and overall reputation in your respective industry.
Now then, what should you include in a compliance report? The next section has all the answers!
What to Include in a Compliance Report
You’ll likely show your compliance report to several parties, including senior management, external and internal auditors, and even the public. Therefore, it’s best to keep it as simple as possible.
A single report can include compliance with many laws relevant to an organization. Most times, the laws will specify a compliance report’s structure. Otherwise, it’s a good idea to include the following:
Compliance with Laws
If your organization has to comply with many provisions of a single law, you should create a section for each. Then, explain how your organization complies with each of those provisions. For instance, you can start with a statement of the provision and back it up with facts and figures to prove compliance.
Highlighting the scope of your report is also important, as it allows readers to better understand its boundaries. Specifically, the scope includes whether or not a compliance officer reviewed your report. It could include things the officer didn’t review, or things they might’ve missed during an initial review.
You should also add a section in your report that discusses the processes involved in ensuring compliance. For instance, you can explain the necessary steps taken as well as the relevant activities, such as data gathering, etc. In short, these explanations make it easy to identify gaps in your internal audits.
Finally, have an outcome summary that provides a concise idea of where your organization stands. Understanding this position is important to create future measures that can take you closer to compliance.
The above sections aren’t mandatory, but including them in your reports can provide better clarity to the readers. More importantly, it can help identify gaps and add meaning to your compliance reporting process. That said, the structure of your compliance reports will also vary depending on your target audience.
I think it’s time to talk about the actual report creation process!
Creating a Compliance Report
Creating a compliance report is time-consuming and could take weeks or months, depending on the standards. Some organizations even have a dedicated compliance team headed by a Chief Compliance Officer (CCO) to work on compliance all year round. Regardless, here are some things that will help you create a compliance report:
Consider Your Audience
Who’s your audience? The answer to this question determines the tone and language you’ll use in your compliance report. For example, if you’re preparing a report for an industry expert or compliance auditor, you can include industry-specific technical terms. On the other hand, reports for the public should be simple and easy to read.
Define Roles and Responsibilities
As mentioned before, some organizations have dedicated teams to manage compliance. In contrast, other organizations might use a temporary team of employees from different operational areas. In any case, you should assign specific responsibilities and performance indicators for better results and accountability.
Specify Report Frequency
How often do you have to prepare reports? This could be monthly, quarterly, or even annually, depending on the standards and purpose of the reports. This is why you should stay on top of the report frequency and assign necessary resources when applicable.
Determine Report Content
Simply put, the content in the report should match what the standards need. As for an internal report, you can provide as much content as necessary for it to achieve its purpose. However, all of these reports require extensive data. Therefore, you must have a robust data gathering and analysis process in place beforehand.
As you can see, the above processes require tons of time and effort. It’s also inevitable that you might have some human errors now and then. In turn, this can lead to violations and non-compliance. To avoid these issues and to speed up the overall reporting process, you should consider using automated software.
How Software Can Help You Stay Compliant
Software solutions can help you automatically prepare accurate compliance reports before deadlines. As a result, you can easily avoid the implications of non-compliance or delayed reporting. Here are some benefits that come with using software for automatic compliance reporting.
Reporting software has web-based reporting features that employees can access from anywhere. This allows them to create organizational charts, custom reports, and more, to better understand the current state of operations. You can also use software to easily compare reports for a more in-depth analysis. In turn, you can fix any gaps to improve overall compliance.
Much like the reports, you can find highly customizable and intuitive dashboards in many reporting software solutions. You can view changes, configurations, statuses, and more. Additionally, you can drill down information from broad areas to better understand your operations.
Several software solutions also come with vulnerability management and compliance reporting features. These features ensure automatic compliance with standards such as PCI DSS, HIPAA, and others. The software solution can also notify you of the areas that require improvement. In short, this automated compliance saves time, effort, and resources in the long run.
Compliance software can provide a single source of truth that anyone across your organization can access. This software can also break down silos, enhance collaboration, and increase team efficiency.
The above reasons clearly show the benefits of using software for compliance reporting. But now, it’s time to wrap things up.
To conclude, compliance reports help organizations comply with the existing laws and regulations governed by local governments, federal agencies, and industry bodies. However, creating these reports is arduous and complex and entails enormous resources. To ease this process and to improve overall efficiency, consider using software tools to help you. These tools come with many features for compliance reporting, including vulnerability management and web-based reporting.
Do you have more questions about compliance reporting? Check out the FAQ and Resources sections below!
What are the different types of compliance?
Compliance has four broad categories: regulatory, data, human resources (HR), and health and safety. Each category has standards. Depending on the nature of your operations, your organization must ensure compliance with these categories.
Is regulatory compliance mandatory?
Yes, regulatory compliance is mandatory. The government often lays out these mandatory compliance laws to ensure your operations don’t negatively impact your stakeholders and the environment. Non-submission or delayed submission of compliance reports can lead to fines.
Do I need a compliance audit?
Yes, compliance audits are internal assessments that evaluate your organization’s compliance with specific standards. Specifically, they evaluate your current reporting processes to identify deviations so you can fix them to ensure compliance. Furthermore, these audits can help you identify gaps that could result in delays or non-compliance.
How can I ensure my organization’s compliance with specific standards?
A methodical approach is key for compliance with any standard. Firstly, start with a good understanding of the laws and regulations you want to comply with. Then, create a set of processes for compliance reporting and assign responsibilities to the necessary individuals or teams. Lastly, generate compliance reports and audit them to identify gaps in your reporting process. Accordingly, fix these gaps before submitting your final report, or reports, to the concerned parties.
Do I need compliance software?
Yes, compliance software such as GFI LanGuard eases the time and effort needed for generating compliance reports. Using compliance software isn’t mandatory, but it greatly increases efficiency and collaboration.
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