UK: How Do Financial Compliance Challenges Impact The CFO's Agenda?

In a global environment, Chief Financial Officers are mainly concerned about maximising revenues and reducing costs. But compliance is an ever-present element that will influence your choice of growth strategy – and the outcome.

Performance management is of course, a key area of focus for a Chief Financial Officer. But increasingly underlining the need for real-time, accurate and relevant data by which to gauge financial performance, is the issue of compliance. The same can be said when it comes to the CFO's key focus areas of growth/growth strategy and process optimisation.

High, double-digit growth inevitably involves expansion into new jurisdictions, often through mergers and acquisitions, and with this comes critical local compliance factors. Likewise, while the CFO is looking to increase the efficiency of company operations and reduce costs, he or she must also be examining how this can be done while meeting all necessary rules and regulations.

To successfully achieve this trifecta of strong company performance, growth and efficiency, the CFO needs to have the right level of information; including the right information on the often very unique financial compliance requirements in every jurisdiction in which they operate.

Compliance impacts the cost of doing business

As part of TMF Group's research for its 2018 Financial Complexity Index, accounting and tax experts in 94 jurisdictions globally were asked to rank, in order of importance, a number of complexity issues faced by international companies when setting up in a new jurisdiction.

At a global level, the top three issues were deemed to be:

  1. Risk of non-compliance with local regulation
  2. Accounting complexity
  3. Tax rules and procedures.

These three items impact not just the decision to set up in a new jurisdiction, but also the extent to which the CFO can achieve expected targets.

When you are setting up in a new jurisdiction, you need to make sure you are operational within the right time frame, within the costs established in your business plan, and sometimes the details make all the difference.

Details such as:

  • the amount of time it takes to incorporate locally
  • how long it will take to become registered from a tax perspective
  • whether tax registrations are completed as a separate process from entity incorporation
  • document preparation time
  • local directorship requirements.

In some countries such as Australia for example, an Australian citizen must act as director of the local company. All the aforementioned items contribute to a potential increase in the initial setup estimates because it takes time, in most cases requires specialist advice, and could increase overall budgets - due to numerous processes and administrative items.

Compliance impacts timelines

The finer points often have the most pronounced impact when it comes to setup costs and timeframes, and they can very easily see you deviate from your initial business plan.

Accounting in particular often has very localised requirements that the CFO must factor in. For example, local compulsory chart of accounts and the prescribed format of the accounting report. If you are establishing operations in France, there is a compulsory local chart of accounts that you must follow; the format of the trial balance, the general ledger format is prescribed by law, and you need to be able to prepare an electronic file of all accounting transactions. In Mexico and Brazil there are also particular accounting reporting requirements, including unique specifications with regard to how reports should be prepared.

All of these compliance specifications have time and cost consequences if not addressed correctly. You might not be able to use your global ERP, or if you are still able to use it, you discover that you need to make additional investments to localise it and ensure it adheres to local regulations. If you decide to use a different software in-country, you may need direct reconciliation of local and corporate accounts. Additional effort, resources and tight internal controls are required to ensure alignment.

Compliance impacts technology and processes

Tax authorities in many jurisdictions are now embracing technology and either have plans for - or are already rolling out - solutions in more and more compliance areas.

Brazil is a very good example with their digitisation program. Moves by authorities to digital platforms for the collection and analysis of tax data is a trend that we see across the world. In Europe, more countries are introducing technology to collect VAT data. The UK has announced a program called 'making tax digital' from 1 April 2019. And in Asia Pacific, technology is increasingly being adopted for invoicing.

Not complying with local regulations, especially from a tax perspective, comes with a price – a financial one in terms of fines and penalties that can affect the company cash flow. But it could also be as severe as having your operations discontinued in a country, and the reputational loss that comes with it.

It therefore comes as no surprise to see CFOs increasingly preoccupied with mitigating such potential operational losses. They want to take all necessary steps to ensure their operations align with local rules.

Compliance should be at the heart of all decisions by a CFO – from those pertaining to process optimisation to growth and expansion. Companies must assess the impact of their plans on local compliance processes and the extent to which potential changes may increase any risk of non- compliance.

Talk to us

Particularly when entering a new market, it's essential to understand the frequency of local financial rule changes and their impact. The way in which authorities provide notifications is not always optimal for companies, with short turnaround times to implementation.

Working with a team of experts on the ground, who speak the local language and understand the local nuances can be key to business success.

Need more information? Get in touch with us today.

Find out how our accounting and tax services help our global clients to focus on their core business.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions