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NEWSLETTER, GLOBAL

Why Are International Businesses Outsourcing Finance, Accounting, And Payroll Management Services?

April 16, 2024

In the modern business environment, you must have observed many of your competitors and successful firms outsourcing vital processes like finance, accounting, and payroll management. Well, outsourcing these services has emerged as a pivotal tool to boost organizational efficiency and foster growth, while reducing costs.

In this edition, we are going to share the strategic advantages associated with payroll outsourcing services. There’s no denying that managing an inhouse team to address these demands turns out to be a time and resource-intensive challenge. These activities divert attention from the core competencies of your business.

This justifies why an increasing number of businesses are turning to outsourcing as a strategic solution. Outsourcing finance, accounting, and payroll management services to specialized providers offers a host of benefits.

Why Outsource Finance and Accounting Services?

Now, let’s take a look at the key perks of outsourcing finance and accounting services to experts.

1. Focus on Core Competencies

Businesses entrusting experts to take care of their finance, accounting, and payroll management can channel their resources to focus on the core competencies. Given that accounting tasks can be time-consuming and need specialized attention, it’s wise to have experienced professionals on your side. This enables businesses to focus on their strategic initiatives and innovation, and foster the overall growth of their ventures.

2. Cost Efficiency

Businesses outsourcing their accounting and payroll processes can substantially save costs, compared to the ones that maintain their in-house team. For instance, you need not bear expenses like training, hiring, and retaining specialized professionals when you outsource services.

Another perk of outsourced payroll management services is the rapid scalability of the business. Companies can adjust their services based on fluctuating financial and operational requirements. Whether you are streamlining costs or expanding operations, the process turns out to be cost-effective.

3. Professional Edge

Partnering with outsourced finance and accounting firms helps businesses gain access to a pool of seasoned professionals. Competent teams hold expertise in financial reporting, tax compliance, audit preparation, and payroll administration.

Seasoned experts stay abreast of the latest regulations in the industry. They adhere to the latest accounting standards and technological advancements to ensure accurate and efficient financial management.

4. Compliance and Risk Management

Most businesses find it daunting to understand complex tax norms, financial regulations, and payroll compliance requirements. Businesses that outsource finance and accounting services habitually adhere to regulatory standards. This, in turn, significantly mitigates financial risks, penalties, and legal troubles.

5. Better Data Security

Professional teams handling outsourced financed and payroll services prioritize data security and confidentiality. With robust cybersecurity measures, encryption protocols, and secure data storage solutions in place, businesses can secure sensitive financial information. Particularly, outsourcing these services protects sensitive financial information, payroll records, and employee data.

Consult Professionals for Payroll Outsourcing Services

While the benefits of outsourcing finance, accounting, and payroll services are significant, businesses need to evaluate several factors before engaging these providers. It’s imperative to evaluate the reputation, expertise, technological edge, services, and data security measures of these experts, along with compliance protocols.

The IMC Group continues to be one of the most trusted outsourced financed and payroll service providers. Partnering with this team of experts can significantly streamline your operations.

NEWSLETTER, GLOBAL

The Role of Global Mobility Services in the Context of Tax Implications

April 15, 2024

As businesses expand globally with an international workforce operating in different countries, tax compliance challenges tend to slow their growth trajectory. For entities, it’s imperative to understand tax implications in the respective demographics and ensure compliance with local regulations. In this edition, we will explain the role of global mobility services in addressing these hurdles.

Countries like the UAE, Singapore, and India have emerged as global business hubs. Let’s take a look at the key compliance challenges foreign entities encounter in these countries, along with their viable solutions.

Tax Implications in the UAE

The UAE continues to be a focal point for global businesses, attracting companies from all around the world. This country offers a favorable environment to businesses from a tax perspective, with no personal income tax for residents.

However, businesses need to pay Value Added Tax (VAT), which was introduced in 2018. Non-compliance with VAT protocols can lead to penalties and fines. Besides, businesses operating in free zones may be eligible for certain tax benefits upon adhering to specific regulations to maintain compliance.

Tax Optimization Strategies in the UAE

While the UAE is known for its favorable tax environment for businesses, it’s imperative for to optimize tax positions through strategic planning. With professional global mobility services from experts, entities can deploy tax-efficient structures. Experienced professionals can also help businesses capitalize on available incentives and exemptions.

For MNCs operating in the UAE, global mobility solutions facilitate tactical tax planning strategies. Some of these include profit repatriation, cross-border transactions, and structuring investments to maximize tax benefits while adhering to local norms. Besides, businesses should partner with reputed teams for global mobility services for advice on VAT compliance and corporate tax obligations.

Tax Norms and Compliance in Singapore

Singapore appeals to global businesses with its favorable commercial environment and transparent tax regime. For businesses expanding their operations to Singapore, it’s imperative to understand tax considerations like GST (Goods and Services Tax), corporate income tax, and personal income tax.

In Singapore, corporate income tax is competitive, as resident companies need to pay at progressive rates. GST applies to the supply of goods and services, and businesses need to register for GST if their annual turnover exceeds the prescribed threshold. In case of non-compliance with GST regulations, businesses may invite penalties from tax authorities.

Forward-thinking companies in Singapore seek global EOR services from established professionals. These experts assist businesses in meeting their tax regulations and obligations, managing payroll tax, and ensuring compliance.

Strategic Tax Planning in Singapore

Businesses operating in Singapore need strategic tax planning to optimize their tax-filing processes while adhering to regulatory norms. With global EOR services and PEO solutions, these companies can leverage tax incentives and exceptions in the country.

For businesses, it’s imperative to take advantage of optimization strategies like intellectual property planning, using tax treaties for international transactions, and optimizing withholding tax obligations. In this context, global mobility service providers help businesses in Singapore maximize their tax benefits while minimizing risks associated with tax audits.

Tax Compliance in India

In India, the tax landscape looks complex, given that businesses need to understand several types of obligations. These include:

Corporate tax rates in India vary significantly, based on the turnover and structure of businesses. Additional surcharges apply to certain entities. GST is a significant indirect tax in the tax regime in India, impacting businesses involved in the supply of goods and services. Non-compliance with GST regulations can result in penalties, interest, and legal consequences.

Tax Efficiency Measures in India

Businesses operating in India need to optimize their tax strategies, partnering with global mobility service providers. These competent teams of professionals can help foreign entities implement tax-efficient measures, manage risks related to transfer pricing, and leverage incentives under government schemes and policies.

In India, experts recommend different tax planning strategies. These include:

With global mobility solutions from experts, businesses can address complexities in employee taxation, payroll tax compliance, and reporting requirements.

Global PEO Solutions from Professional Teams

With businesses flourishing in popular global hubs like the UAE, Singapore, and India, companies need to understand local tax regulations to ensure compliance. Successful companies venturing overseas seek professional support for global mobility, EOR, and global PEO solutions. The IMC Group continues to be one of the most reliable service providers, offering global mobility, EOR, and PEO services to forward-thinking businesses. With professional support, international firms can confidently manage tax risks, ensure compliance, and optimize the operations of their global workforces.

A proactive approach to tax optimization and strategic planning significantly helps businesses enhance their competitive advantage and drive sustainable growth in international markets.

NEWSLETTER, GLOBAL

A Comprehensive Guide to M&A Strategy from Planning to Integration

April 13, 2024

The complexity of M&A defines its strategic importance where businesses expand their footprint beyond their current market. However, there’s no denying that successful M&A transactions aren’t free from challenges. From identifying targets to carrying out due diligence to managing cultural integrations and overseeing post-merger transitions, businesses encounter several hurdles. Forward-thinking businesses partner with reputed professionals for mergers & acquisitions advisory services to benefit from their strategic foresight, meticulous planning, and financial acumen.

Considering these challenges, it’s imperative to adopt the best practices in M&A for successful deals. The recommended strategies guide companies and their development teams to maximize value, mitigate risks, and meet strategic goals. Leading businesses heavily count on CRM systems to streamline processes to improve collaboration and ensure better decision-making.

In this edition, we will explore the best M&A practices, including strategic planning and due diligence while focusing on the crucial role of technology.

Strategic Planning and Identifying the Target

Successful M&A deals begin with clear and precise strategic planning. This crucial step establishes the direction and objectives for the entire process. Businesses need to articulate their reasons for pursuing M&A, such as expanding into new markets, acquiring technologies, enhancing products, or reducing costs. This tactical intent should align with overall business goals, ensuring that M&A activities enhance competitive advantage and create value rather than being pursued solely for growth.

Significance of Clear Objectives in Target Selection during M&A

After identifying the strategic objectives, the next step involves identifying potential targets aligning with these goals. The market position or financial performance of a target company may make it look attractive, but these aren’t the only parameters to consider. The acquiring company must consider whether it fits its strategic objectives, otherwise, the merger may underdeliver on its potential.

Therefore, the acquirer must be clear with its objectives and thereby eliminate less suitable candidates from the list. The focus should lie on the ones offering the most strategic value.

Innovative Strategies for Market and Target Analysis in M&A

Once businesses have predefined goals, they find it easier to carry out market research and pinpoint potential targets. The process involves a comprehensive review of the landscape in the industry, the positions of competitors, and possible mergers with the targets.

Top companies specializing in transaction advisory services recommend methodologies like PESTEL analysis, Porter’s Five Forces, and SWOT analysis to gain valuable insights into the market and choose the target.

During this phase, data-oriented approaches such as evaluating market insights, market research, and financial evaluations prove vital. Deploying AI tools and advanced analytics, you can streamline the process with profound insights and predictive modelling to evaluate your strategic goals.

Relationship intelligence significantly helps in identifying targets. It’s crucial to understand the relationships and networks of the potential target to capitalize on potential opportunities for collaboration, mergers, and expanding the market.

Importance of Due Diligence and Planning the Integration

The success of any M&A activity largely depends on the approach of a company to due diligence and strategies after integration. These stages bridge the conceptual and practical aspects. Successful firms seek professional due diligence services to carefully scrutinize the value of the target company and identify hidden risks.

With due diligence services, businesses can examine the financials, legal standings, operations, and structure of the target company. Acquiring companies should carry out three types of due diligence processes:

Apart from these three categories, businesses should also carry out cultural due diligence to identify the organizational and cultural fit between the merging companies.

What makes Post-Merger Integration Crucial?

Experts also recommend realistic post-merger planning, which develops the structure for combining both parties into a new and cohesively operating entity. This is a proactive strategy that guides the acquirer to formulate its integration objectives, identify potential challenges, and come up with remedial tactics to address them before the deal is closed. There are several phases of integration planning, such as brand strategy, integrating systems, employee alignment, and organizational structure.

A professionally structured plan helps in establishing clear milestones and assigns necessary responsibilities for various tasks related to the integration. This includes various communication strategies that can keep stakeholders informed. This planning is crucial to realize strategic goals, retain talent, and ensure that operations continue even after the merger.

Striking the Balance between M&A Integration and Ongoing Operations

A key hurdle in M&A is striking the right balance between integration and ensuring ongoing operations without letting any disruption to interfere. Businesses need meticulous planning to achieve this balance and allocate resources strategically. This way, the integration process won’t impede the daily functions of the merging entities. This process often involves establishing dedicated teams for integration, while the rest of the staff focuses on key functions.

Structuring valuation and deals

When it comes to M&A, valuation and deal structuring prove to be crucial. It establishes the strategic and financial terms, and the process calls for strategic negotiation with accurate analytics. This helps acquirers determine the economic viability of the deal, aligning the same to the strategic goals of both parties.

Valuation is all about determining the fair market value of the target, using DCF (discounted cash flow) analysis, precedent transactions, and comparable company analysis. DCF predicts the future cash flow of the target and gets them discounted to the current value. This shows the intrinsic earning potential of the entity. Comparable analyses, on the other hand, adjust for disparities in growth, size, and market conditions, thereby finding a fair value.

Balancing strategic considerations and financial ones

It’s worth noting that the valuation should encompass both financial and strategic considerations like technological advantages, market expansion, and cost savings. While structuring the deal, it’s imperative to negotiate terms that align with these considerations, including payment methods and deal protections like escrow arrangements and earn-outs, to ensure alignment of interests among all stakeholders.

Strategies for smooth change management and cultural integration

Any merger or acquisition deal is accompanied by a cultural shift within the organization. Here are some strategies businesses must follow for managing this change.

Establishing a unified vision: Developing a shared vision for the future of the merged entity that would align the employees towards common objectives.
Promoting inclusive communication: Maintaining open and inclusive communication channels that encourage feedback and transparently address concerns.
Conducting Cultural Evaluation: Maintaining open and inclusive communication channels that encourage feedback and transparently address concerns.
Change Champions: Maintaining open and inclusive communication channels that encourage feedback and transparently address concerns.

What Role Does Technology Play In M&A?

During M&A activities, intelligent CRMs are crucial in the decision-making process. These tools enhance collaboration and efficiency and streamline operations.

The IMC Group continues to be one of the most revered groups of professionals offering vendor due diligence services along with valuable adversary services during M&A transactions. Supporting acquiring companies with sophisticated technologies and enhancing collaborations, this team of experts can streamline your operations.

NEWSLETTER, GLOBAL

Mastering Mobility: Must-Know Tips to Navigate Tax and Compliance Trends

March 20, 2024

Startups and small enterprises are increasingly adopting flexible work arrangements. A recent study noticed that 78% of startups founded in the past three years operate on a remote or hybrid basis. Furthermore, the trend towards remote work is anticipated to accelerate in 2024 expecting an uptick in virtual assignments over the coming year.

As remote work becomes more common, leaders of small and expanding businesses may find their organizations at risk of facing global mobility tax and regulatory compliance challenges.

Essential Global Mobility Trends for Small and Expanding Businesses to Monitor in 2024

For small or expanding businesses providing remote work options, gearing up for alterations in 2024 is advisable. To steer clear of issues related to remote work taxes or compliance in the upcoming year, here are several trends worth monitoring:

1. Be cautious of excessive data accumulation

For years, leaders of small businesses have been advised to gather data. Yet, accumulating abundant data without a defined objective may lead to challenges in 2024. Moreover, for businesses operating within specific regions, such as the European Union (EU), possessing personal data may conflict with stringent privacy regulations. Maneuvering through these regulations can be complex for business executives. Indeed, 55% of EU and United Kingdom executives report difficulties adapting to new privacy regulations.

Obscured Vision

An overload of unused data can lead to what can be described as an ‘obscured vision’ for tax and compliance teams. This phenomenon occurs when the sheer volume of data and its sources become so overwhelming that it hampers the ability of these teams to make informed decisions. This situation indicates a pressing need for companies to adopt more sophisticated data management and analysis strategies that can sift through the noise, enabling more precise insights and strategic decision-making.

Privacy Risk

The second major concern revolves around privacy risks. The introduction of stringent data security laws by authorities, notably within the European Union (EU), has significantly raised the stakes for data protection and privacy. Enhancing these laws aims to protect individual rights, but it presents a formidable challenge for companies, especially those operating across EU and UK jurisdictions.

The issues of obscured vision and privacy risks underscore the critical need for a strategic approach to data management. Companies must navigate the fine line between collecting necessary data for operational and legal purposes and ensuring that this data is managed in a way that is both efficient and compliant with increasingly stringent privacy laws. The key lies in implementing robust data analysis and management tools and developing clear policies prioritizing data minimization and privacy protection. By doing so, organizations can mitigate the risks associated with data overload and privacy breaches, ensuring a more secure and efficient operation that aligns with business objectives and regulatory requirements.

2. Global Mobility Tax authorities are intensifying their focus on ensuring adherence to tax laws

Around the world, regulatory bodies are leveraging technology to monitor remote workers and implement tax regulations more effectively. In the U.S., the Inflation Reduction Act is leading the charge towards using automation for more accurate audit processes. This trend is not limited to the U.S.; similar initiatives are underway globally, such as in India, where there are reports of tax officials planning to utilize artificial intelligence to spot mistakes in tax filings.

This increase in regulatory scrutiny could significantly impact the leaders of small businesses. The complexity of managing employees who work in various countries or states could lead to corporate and payroll tax responsibilities in new jurisdictions or result in tax fines for both the business and its employees. Thus, Global Mobility Services supports the international tax needs of global companies, startups, and their globally mobile workforce.

3. Recent changes in tax legislation

Recent changes in tax legislation are emerging as lawmakers concentrate on revising tax regulations to accommodate remote employment, potentially imposing significant challenges on small enterprises in 2024. Within the United States, remote employees can face taxation from multiple jurisdictions. States are in the process of examining their tax codes and introducing modifications like the adoption of employer convenience rules to offset the decrease in tax revenue from remote employees. Globally, countries are reconsidering their tax policies regarding remote workers.

4. Handle the risks associated with the company and its employees

The presence of remote workers and employees who travel for business can pose tax risks to the organization and its employees. Without a well-defined plan and procedure for communication, comprehending and preparing for these risks might be challenging. Specifically, uncovering and addressing concealed payroll tax obligations becomes increasingly complex without precise data regarding employees’ residential and work locations.

Grasping the nature of these risks is crucial yet addressing them can be challenging without consistent dialogue with your team. Prompt communication aids your organization in:

Monitoring the growing number of remote workers and business travellers, including those in new locations
Instructing staff on procedures, policies, and expectations, thus alleviating pressure on internal resources and reducing the frequency of repeated inquiries
Handling organizational risk and fulfilling responsibilities towards employee welfare
Developing new guidelines to meet evolving business and talent management requirements
Informing mobile workers about potential tax pitfalls and guiding them on tax planning strategies

Recognizing these risks and challenges is the first step. Following this, it’s vital to set up a system to keep tabs on your employees’ work locations and to communicate their duties in overseeing this system. It is essential to provide explicit instructions to managers and employees to ensure uniform application across your workforce. Mobile workers should be made aware of their obligations and the extent of support that the policy does or does not offer.

Consistent communication is important to ensure that employees comprehend their compliance responsibilities. Frequent interaction guarantees that employees are aware of their responsibilities regarding compliance.

5. Ensure your workforce's well-being

After developing suitable guidelines and policies, it’s essential to effectively communicate them to your employees and establish processes for reviewing and approving new instances. Without adhering to these policies, your organization will fail to fulfill its responsibilities and will not uphold the necessary standards of care for your employees. Global employee benefits solutions can be beneficial in supporting employees around the world.

When determining the level of support for their employees, employers must consider their responsibility for care. This can involve various aspects, such as:

In the past, employers typically offered more significant support to employees travelling for business than those travelling for personal reasons but working during their trip. However, the evolution of remote work has blurred the boundaries between professional and personal time, necessitating employers to reconsider their care obligations to their employees.

The concept of duty of care is broad, and interpretations regarding the support extended to employees may vary across different organizations. As an employer, you must maintain a standard of care for your employees and be aware of and comply with any tax and legal requirements for the company.

6. Communication Regarding International Relocations

It’s widely believed that permanent relocations (employees moving to a new country permanently for work) do not present as many challenges as those faced by tax-equalized expatriates (temporarily moving for work). Yet, issues such as trailing financial obligations in the original country, mainly concerning bonuses and equity compensation, can lead to significant financial complications for those moving permanently. It’s common for compensation related to bonuses or equity from previous years to be taxed entirely in the new country of work, potentially leading to insufficient tax withholding in the original country.

The global mobility, payroll, and stock administration teams ensure these financial obligations are accurately accounted for in the origin and destination countries.

To mitigate these issues, it is recommended that the global relocation service company and the global mobility team actively communicate with employees about relocating permanently. They should be informed about the need for continued global mobility tax withholding in their original country, allowing them to anticipate and address any concerns proactively. Additionally, arranging tax counselling sessions with a specialized tax firm in the countries of origin and destination can help transferees understand their tax obligations and explore potential planning strategies. Global Mobility Tax support for the first year can also facilitate compliance with departure regulations and ensure a smooth transition for the employee in their new country.

Adhering to these best practices in communication can reduce tax-related issues and confusion for your mobile and remote workforce, ensuring that you deliver the outstanding employee experience your team anticipates and merits.

7. Tax authorities are leveraging AI and Automation

Previously, companies might have been able to adopt more relaxed policies regarding remote work and business travel, permitting employees to work from any location without much oversight. However, this flexibility is becoming a thing of the past. This change is due to tax and regulatory bodies utilizing AI and automation to tighten regulation enforcement.

Technological advancements in India: India has embraced AI and machine learning to detect tax infractions. Recent reports indicate that India is developing AI algorithms to spot inaccuracies or anomalies in tax filings. For companies employing remote workers or those sending employees on business trips to India, this means an increased responsibility for ensuring tax compliance within the country.

8. New regulations for remote taxation are emerging

New developments are emerging in tax regulations for remote work as these laws gradually adapt to the evolving nature of work arrangements. Despite the existence of tax laws designed to simplify the tax situation for individuals working temporarily outside their home country, the original drafting of these laws falls short of adequately covering contemporary work patterns.

For instance, remote employees who work from locations outside their home country and tax jurisdiction might find themselves liable for social security taxes in their temporary work location. While numerous countries have social security agreements to mitigate such issues, these pacts often fail to comprehensively cover remote working arrangements, potentially leading to a loss of social security contributions in their home country and imposing new contribution requirements in the temporary work location for employers and employees.

The approach to social security taxes varies significantly from one country to another. In summary, companies not actively managing tax issues associated with remote work and business travel might encounter new tax liabilities for the corporation and its employees, face the dangers of inaccurate tax filings, or trigger tax audits.

Keep ahead of 2024 trends in Global Mobility Tax

Corporate executives adopting a standard approach to managing their increasingly mobile workforce may find their companies at greater risk for tax and compliance breaches, penalties, potential employment law conflicts, and damage to their reputations. To navigate the evolving regulatory landscape and safeguard their enterprises in 2024, business leaders can:

By proactively addressing remote or global mobility tax issues, reevaluating their data management tactics, and informing their workforce about emerging tax duties, small enterprises can ensure the well-being of their staff and their organization for the future.

NEWSLETTER, GLOBAL

The Next Phase in GRC and Regulatory Risks: 10 Principal Areas of Focus for 2024

March 7, 2024

According to Thomson Reuters, in 2022, there were over 230 daily alerts for regulatory updates. This figure is unsurprising given the increasing regulatory focus on Operational Resilience, Artificial Intelligence (AI), Cyber Security, Data Privacy, and Environmental, Social, and Governance (ESG) criteria.

In 2023, significant cyber security and digital operational resilience policies took shape in the U.S. and the European Union, establishing a benchmark for other areas. This trend of regulatory development observed in 2023 is expected to persist and intensify in 2024.

What can we anticipate for 2024, and what preparations are necessary? Below are ten critical regulations and areas of emphasis on our radar.

1. Regulatory Attention on AI

The recent increased regulatory analysis on artificial intelligence (AI) is understandable, given the rapid expansion of AI and generative AI (GenAI) use across multiple sectors. This focus is anticipated to persist into 2024 and onwards.

In January 2023, the National Institute of Standards and Technology (NIST) unveiled the NIST AI Risk Management Framework (AI RMF 1.0). Its goal is to enhance the integration of trustworthiness in the design, development, deployment, and assessment of AI products, services, and systems. Furthermore, a significant move by the White House involved issuing an Executive Order to ensure the safe and trustworthy creation and application of AI.

The European Union is actively working towards AI regulation as well. In December 2023, EU representatives agreed provisionally on extensive rules for the secure and reliable application of AI. A BBC report indicates that the EU Parliament is slated to vote on these AI Act proposals within the year, with the laws expected to be implemented by 2025. Other countries, including China, Canada, Brazil, South Korea, Singapore, the UK, and the UAE, are at different stages of implementing AI-specific regulations, poised for adoption shortly.

As AI technology advances and finds new applications within the Governance, Risk Management, and Compliance (GRC) sector, these regulations are also anticipated to advance and adapt with technological progress.

2. SEC Cyber Security Regulations

In today’s digital age, cyber threats pose one of the most significant risks to organizations, with the advent of AI technology further escalating the potential for cybercrimes through its availability for executing large-scale attacks. Regulatory bodies are diligently working to ensure that companies adopt adequate security measures to safeguard their assets and the interests of stakeholders.

In July 2023, the U.S. Securities and Exchange Commission (SEC) introduced the Cyber Security Risk Management, Strategy, Governance, and Incident Disclosure rules for public companies. These regulations mandate that:

Companies establish a comprehensive incident response mechanism, including immediate reporting to the SEC. Companies regularly disclose the cyber security expertise of their board members and senior management and the cyber security risk management practices they have adopted. For risk management, strategy, and governance disclosures, public companies must start including this information in their annual reports for fiscal years ending after December 15, 2023.

3. Cyber Security Maturity Model Certification (CMMC)

The Cyber Security Maturity Model Certification (CMMC), created by the U.S. Department of Defense, represents another significant cyber security standard and certification framework. It aims to ensure the secure handling of sensitive, yet unclassified information shared between the Department and its contractors and subcontractors.

This year, anticipation grows for the final rule of CMMC. In 2023, the proposed revision, CMMC 2.0, was forwarded to the Office of Information and Regulatory Affairs (OIRA) at the White House for evaluation. This updated version offers a robust scheme to safeguard the defense industrial base’s (DIB) critical unclassified data against sophisticated cyber threats. Expected modifications in the final rule are set to streamline the compliance process, lower the costs associated with assessments, and boost accountability, among other improvements.

4. NIST Cyber Security Framework (NIST CSF)

Beyond regulatory mandates, standard-setting entities also provide guidelines and frameworks to aid organizations in effectively managing cyber security threats. The NIST Cyber Security Framework stands out as a tool that organizations highly adopt. Initially released in 2014, this framework offers “a framework that can be utilized by organizations, regulatory authorities, and customers to establish, guide, evaluate, or enhance comprehensive cyber security strategies.”

The National Institute of Standards and Technology (NIST) unveiled a revised version of the framework for public feedback in the second half of 2023. This updated draft, or Framework 2.0, is designed to “mirror the evolving cyber security environment and streamline the application of the CSF across various organizations.” The NIST has announced that the definitive edition of CSF 2.0 is slated for release in early 2024.

5. Cyber Security Mandates for the Financial Industry

The financial industry, a prime target for cyber threats due to its significant data and monetary assets, is under increased regulatory scrutiny.

The New York Department of Financial Services (NYDFS) has updated its pioneering Cyber Security Regulation as of November 2023, initially established in 2017. This regulation mandates that entities under its jurisdiction, such as banks, insurance firms, and various financial services providers, implement robust cyber risk management and governance practices. This includes establishing a comprehensive cyber security program to safeguard consumer data, drafting detailed policies, appointing a Chief Information Security Officer (CISO) for data and system security, and enforcing strong controls.

The revised regulations introduce stricter governance protocols, more frequent risk evaluations, enhanced safeguards against unauthorized system access, improved incident reporting procedures, and more. These changes underscore the importance for organizations to closely monitor the evolving NYDFS Cyber Security Regulation, which is likely to influence similar standards across other regions.

Entities governed by these regulations must ensure compliance by April 29, 2024.

6. Data Protection

The safeguarding of Personally Identifiable Information (PII) remains a critical concern for regulatory bodies around the globe.

In the United States, the implementation of the new California Consumer Privacy Act (CCPA) regulations has been postponed to March 29, 2024. The California Privacy Rights Act (CPRA), approved by California voters in 2020, has revised the CCPA, introducing enhanced privacy measures. It sets new benchmarks for collecting, storing, and utilising consumer data and introduces “additional responsibilities for handling personal information, including enabling consumers to opt out of their data being shared.”

The CPRA also led to the formation of the California Privacy Protection Agency (CPPA), tasked with the law’s implementation and enforcement starting July 1, 2022. However, enforcement was scheduled to begin on July 1, 2023. Nevertheless, the agency only finalized its initial regulations under the CPRA by March 29, 2023.

Following this delay, a California court extended the deadline for enforcing these new rules by a year. However, legislative amendments under the CCPA were activated on January 1, 2023, and are currently effective.

In November 2023, the CPPA proposed a novel regulatory scheme for “automated decision-making technology” (ADMT), establishing necessary safeguards for how businesses employ these technologies. Additionally, the agency has released updated draft regulations concerning risk assessments and cyber security audits.

7. Focus on Operational Resilience

The attention and measures regarding operational resilience in the financial industry continue to escalate. In the United Kingdom, the Bank of England, the Financial Conduct Authority, and the Prudential Regulation Authority have collaboratively issued a consultation document titled “Operational resilience: Critical third parties to the UK financial sector (PRA CP26/23 and FCA CP23/30)” in the previous month. The final date for submitting feedback is set for March 15, 2024. Furthermore, these regulatory bodies plan to propose a joint policy statement on applying their enforcement powers on essential third-party service providers.

In the EU, the Digital Operational Resilience Act (DORA) is designed to bolster the management of information and communications technology (ICT) and digital risks, especially regarding third-party involvements, thereby enhancing digital operational resilience within the region’s financial sector. It mandates a comprehensive set of requirements covering areas such as a risk management framework, handling and reporting incidents, and implementing a digital operational resilience testing program, among other aspects. Passed by the European Parliament in November 2022, the act sets a compliance deadline of January 17, 2025, for regulated bodies. This initiates a critical one-year period for financial sector entities to align with DORA’s stipulations.

As operational resilience becomes increasingly crucial across various sectors, DORA is a pivotal regulation, signalling a potential trend for similar initiatives to be adopted by other sectoral and federal regulatory bodies. In September 2023, the UK’s Department for Science, Innovation and Technology issued a legal document to modify the term ‘fundamental rights and freedoms’ in the data protection laws. This revision aims to align the language with rights acknowledged by UK legislation, moving away from the rights preserved under EU law. Should the UK Parliament endorse this change, it is anticipated to be enacted at the beginning of 2024.

8. The Gramm-Leach-Bliley Act

The Gramm-Leach-Bliley Act (GLBA) is a crucial regulation aimed at safeguarding consumer financial privacy by mandating that financial institutions disclose their practices regarding information sharing with their customers and protect sensitive information.

In a significant update in October 2023, two decades following the initial implementation of the GLBA Safeguards Rule, the Federal Trade Commission (FTC) revised this rule. The revision stipulates that non-bank financial companies must inform the FTC about data breaches impacting at least 500 consumers. These notifications must be made to the agency as swiftly as possible, 30 days after the breach is discovered.

This updated regulation is scheduled to be enforced 180 days following its announcement in the Federal Register, with expectations pointing towards a 2024 enactment.

9. Payment Card Industry Data Security Standard (PCI DSS) Compliance

The Payment Card Industry Data Security Standard (PCI DSS) is a crucial benchmark for safeguarding cardholder information. This internationally acknowledged framework is essential for entities that handle, process, or transmit cardholder information, offering detailed technical and procedural guidelines to ensure data protection.

The newest iteration, PCI DSS version 4.0, is set to be enforced starting March 31, 2024. This version, released by the PCI Security Standards Council in March 2022, provides a two-year window for organizations to adapt to and incorporate the revisions.

As stated in the official announcement, the update to version 4.0 from 3.2.1 is designed to counteract evolving security threats and leverage new technologies for enhanced threat mitigation.

Discover the journey with Corporater to achieve and maintain PCI DSS compliance.

10. Equity and Environmental Sustainability

The commitment to diversity, equity, inclusion (DEI), and environmental sustainability is becoming increasingly critical for businesses and regulatory bodies worldwide. Notably, 22 states adjusted their minimum wage rates in the United States at the start of 2024. Moreover, anticipated in April is the Department of Labor’s (DOL) finalisation of amendments to regulations concerning exemptions from the Fair Labor Standards Act’s (FLSA) overtime and minimum wage mandates for certain salaried employees.

Additionally, a new DOL rule came into effect at the beginning of 2024, mandating businesses with 100 or more workers in specific high-risk sectors to electronically report incidents of injury and illness to the Occupational Safety and Health Administration (OSHA).

In Europe, the European Parliament endorsed the Corporate Sustainability Reporting Directive (CSRD) in November 2022. This directive mandates member states to adopt enhanced sustainability reporting standards within 18 months, aiming to improve transparency and decision-making regarding sustainability for investors and stakeholders. This directive emphasizes the need for large corporations and publicly traded small and medium-sized enterprises (SMEs) to disclose information on various sustainability aspects, including environmental, social, human rights, and governance issues, as noted by the European Council.

The directive’s enforcement will be phased in from 2024 to 2028, starting with entities already under the non-financial reporting directive (NFRD) reporting in 2025 for the 2024 fiscal year.

Here are a few important rules businesses should keep an eye on this year. Companies need a simple, smart, and tech-based way to handle compliance to keep up with the quick changes in rules and regulations. This method helps them stay updated with new regulations, cut down costs, and have a clearer view of their compliance situation. IMC Compliance Management makes it easier for companies to start and stick to their compliance plans, making sure they follow the necessary rules and standards.

Thus, IMC, an implementation partner of Corporater, helps assist in GRC solutions. Corporater is a global software company that enables medium and large organizations worldwide to manage their business with integrated solutions for GRC built on a single platform. Find out how IMC can make your compliance efforts better – book a demo tailored just for you today!

NEWSLETTER, GLOBAL

3 Key Areas to Focus on Accounting and Finance Outsourcing In 2024

February 14, 2024

Forward-thinking businesses habitually outsource finance and accounting services to streamline their operations and focus on their core competencies. As we stride into 2024, the accounting and finance sector continues to evolve. In this edition of our newsletter, let’s delve into three key areas to focus on accounting and finance outsourcing in 2024. With a detailed insight into these trends, global businesses can tweak their approach and stay on track with their growth trajectory.

Access to a Global Talent Base

Recruiting and retaining skilled finance professionals has turned out to be an arduous task for many organizations. Studies reveal that 91% of senior managers faced challenges in finding skilled accounting and finance talent in 2022. The most difficult part for them was to find skilled professionals to tackle bookkeeping, analysis and budget, accounts receivable and payable, planning and analysis.

With remote work environments appealing to professionals, along with issues like inflexible work arrangements and burnout prompted a sizable section of professionals to look out for alternative opportunities for employment.

Outsourcing accounting and finance presents a compelling solution amidst this challenge. Successful businesses are tapping into outsourced professionals, ranging from entry-level accountants to seasoned CFOs. This empowers businesses with the power to assemble a tailored team to address their specific needs. The cost-effectiveness, flexibility, and cost-effectiveness that outsourcing brings to the table make it an attractive option for organizations looking forward to streamlining their financial capabilities.

Focus Shifts to Cybersecurity

Do you know that the financial services sector is 300 times more susceptible to cyberattacks compared to other sectors? The escalating threat from adverse actors makes it imperative to adopt robust cybersecurity measures in the financial services sector. Cybercriminals largely target financial data, which justifies why businesses should prioritize securing their finance and accounting operations against malicious players.

Outsourcing finance and accounting services to responsible teams of professionals serves as a proactive defence system against evolving threats. Thanks to their expertise, organizations gain access to sophisticated security solutions while optimizing their internal resources. This is a strategic approach that enhances data protection and helps your employees focus on the core competencies without compromising security.

Enhancing Technology

The rapid advancement of technology continues to revolutionize accounting practices, offering lucrative opportunities for automation and better efficiency. However, many organizations struggle to explore the complexities of technological integration and upgrade their systems.

When you outsource technology consulting services, you can seamlessly adopt technology. Experienced professionals can guide businesses through the process of selecting and implementing accounting systems, leveraging cloud-based solutions, and optimizing technological infrastructure. This explains why successful organizations entrust these responsibilities to external specialists and stay ahead of the technological curve.

Outsource Accounting and Financial Operations to Experts

It’s imperative to carry out a close evaluation of internal capabilities and external requirements before outsourcing finance and accounting operations. In the first place, you need to scrutinize your existing processes, technological readiness, and talent pools. Before you outsource finance and accounting services, carry out thorough research, get recommendations, and evaluate their compatibility with your organizational culture.

The IMC Group continues to be a reliable partner for outsourcing accounting and finance services. For further insights or assistance with outsourcing solutions tailored to the needs of your business, feel free to reach out to our team at IMC Group.

NEWSLETTER, GLOBAL

Exploring Opportunities in Private Equity: Wealth, Markets, and Potential Growth

February 5, 2024

The private equity sector has weathered unprecedented headwinds over the last year, as evident from reports and market trends. In this post, let’s explore the challenges and triumphs of the private equity sector. A global economic slowdown and rising interest rates have overshadowed traditional avenues. This calls for a re-evaluation of strategies to look out for further resilience in the investment market.

Insights from a research reveal a promising future for the private equity market. By the fiscal-year 2028, the overall assets under management are likely to surge to 8.5 trillion. This is likely to be driven by a compound annualized growth rate of 10%. With this trend, a larger number of individuals will be seeking professional assistance from private client and family advisory service providers.

A surge in the participation of affluent families and individuals is one of the predicted reason this expected growth. With family offices participating in equity investments in large numbers, the focus shifts to the investment landscape and alternative investments.

Shift Towards Retail-Friendly Platforms

According to research, despite a challenging start to the year with a negative 4.5% one-year net internal rate of return, private equity remains resilient. Industry leaders have recognized an inflection point and have been successful in embracing private wealth as a crucial source to raise capital.

The shift towards retail-friendly platforms has been a crucial trend in recent years. Top platforms have lower minimum investments that start from $25,000. Thus, these platforms ensure access to exclusive opportunities that were reserved for institutional investors traditionally.

With the investment landscape evolving, wealth managers are re-evaluating their recommended allocations. Top wealth management companies are largely recommending alternative investments to wealthy clients. Another survey revealed that for the wealthiest families, private equity holdings have soared to 26% of their portfolio assets. As much as 41% expressed their intentions to expand their private equity exposure in the following year.

Experts have rightly pointed out that private equity looks lucrative, since investors can access promising companies in the early phase of their lifecycles. Thus, they can perform better than historical records. This explains why such companies appeal to hungry investors.

The forecast reveals that although returns have been lower in recent years, there’s a divergence between managers. This explains the importance of exploring economic headwinds adeptly. Successful managers will look forward to driving operational improvements, setting themselves apart from the ones heavily reliant on favorable conditions for financing.

How The Private Equity Market Stands In The Coming Years?

A resurgence awaits the private equity market in the coming years. Experts identified two key factors in this regard: stabilizing rising interest rates and a shift in the exit environment. The recent slowing down of global economies will make leading markets look more promising, leading to smoother closures of deals in the coming years.

The resilience of private equity is worth noting, considering the lucrative returns that the market holds for investors. Wealthy individuals and single family office in Dubai need to embrace these opportunities. With adapting strategies to explore market dynamics, the IMC Group remains at the forefront of shaping a prosperous future of its esteemed clients.

NEWSLETTER, GLOBAL

Shifting Trends and Risk Appetite in Asia’s Family Offices

January 23, 2024

A recent survey sheds valuable light on the shifting risk appetite for family offices in Asia. The hunger for risks for these family offices used to be bigger compared to other global counterparts, but there has been a change of late. While a general trend was observed of family offices moving away from cash and towards risk assets, Asia stood out as a unique exception to this pattern.

A family office serves as a private client and family advisory firm that high-net-worth individuals often count on. They are different from traditional wealth managers as they offer exclusive services to affluent families or individuals.

The survey, encompassing family office clients with a collective net worth of $565 billion, revealed an interesting trend that merits our attention. Around two-thirds of the surveyed individuals were based outside North America.

According to experts, family offices in Asia chose risky assets to allocate more funds compared to low-risk assets in the initial part of the year. A notable 44% of their assets are allocated to private and public equity, a stark contrast to the 30-33% held in cash and fixed income. Compared to the family offices in Europe, the US, or Latin America, this difference looks much bigger.

Factors Fuelling the High Risk Appetite for Asian Family Offices

Different factors shaped this risk appetite for family offices in Asia. These include early bets on post-Covid recovery in China and historically low rates of interest. While these factors sparked the initial appetite for risk, the trend evolved with the potential slowdown in China and disruptions in global supply chains. This explains the motive of family offices re-evaluating portfolio allocations.

The contrasting performance of equity markets makes the trend more interesting. While Asian markets, led by Hong Kong’s Hang Seng index and mainland China’s CSI 300, experienced declines, the S&P 500 and Europe’s Stoxx 600 demonstrated robust growth.

Singapore emerged as the global hub for family offices, occupying a prominent place in the evolving market. According to reports, Asia houses 9% of the global family offices, with Singapore leading the list. This country has around 59% of Asia’s family offices, as of 2023. This serves as a testament to the city-state’s proactive regulatory stance and attractive tax environment. While Hong Kong has 14% of Asia’s family offices, around 13% are located in India. Thailand, Malaysia, and Pakistan host the remaining family offices.

Many experts consider Singapore to be a preferred destination for global family offices. This makes it a strategic place from where high-net individuals can access different investment opportunities across Asia.

Seeking Professional Financial Advice from Experts

The shifting dynamics of family offices in Asia demonstrate the resilience and adaptability of wealth management strategies. While global trends indicate a move towards risk assets, Asian family offices are re-evaluating their portfolios in response to regional and global economic shifts.

The IMC Group continues to be a trusted partner for family advisory services. With professionals to assist you in handling finances, you can invest in the right avenues to maximize your returns.

NEWSLETTER, GLOBAL

Trends to Watch: Governance, Risk, and Compliance in 2024

January 10, 2024

Now that we are already into 2024, it’s time to have a look at the significant transformations in Governance, Risk, and Compliance (GRC). With global end-user spending on risk management and cybersecurity projected to reach $215 billion, the dynamics of GRC programs are evolving rapidly. As a forward-thinking business, you would be interested to know about governance risk management and compliance trends and seek professional solutions from experts.

It’s time to explore the key trends that will shape the GRC landscape this year.

AI Revolutionizing GRC

2023 was a year marked by the mass adoption of generative AI. Now, the spotlight shifts to the integration of AI into GRC practices. In GRC, AI is set to play a crucial role in risk assessment planning, threat intelligence, fraud detection, and regulation monitoring. Besides, AI is likely to streamline control rationalization, facilitate ‘Dynamic Strategic Decision Making’, and automate testing with risk modelling at its core.

Connected GRC Strategy for Enhanced Visibility

Risks transcend traditional boundaries in an interconnected world. For organizations, it’s imperative to evolve from having isolated approaches to a connected strategy for GRC. However, just 20% of organizations currently have fully integrated functions. For effective risk management, the urgency of having a unified GRC platform encompassing audit, cyber, risk, compliance, and ESG functions is more critical.

Turning Risks to Rewards through Continuous Control Monitoring

Traditional control testing and monitoring fall short in the face of evolving organizational complexities. A study involving 500 risk leaders revealed that 70% consider access to optimized real-time alerts to mitigate the effect of serious risk events significantly. The evolving complexity of organizations renders traditional control testing and monitoring insufficient.

Operating in 2024, businesses need to prioritize real-time risk visibility and continuous control monitoring. This approach strategically monitors and tests security controls, detecting risks, issues, and potential threats automatically from diverse sources of data.

Proactive Compliance as a Business Imperative

The True Cost of Compliance report highlights an 18.8% surge in financial crime compliance expenses since 2020. Tackling such regulatory changes accompanied by compliance costs requires organizations to adopt a proactive stance. This involves leveraging AI on a centralized platform to automate recommendations and integrate enterprise systems with effective compliance and risk management systems to uniformly view compliance.

Cyber Risk Optimization for Resilient Enterprises

With the global cost of cybercrime expected to reach $9.5 trillion in 2024, organizations, especially in critical sectors, are bracing up for the battle. Integrating analytics, automation, continuous control monitoring, and AI into cyber risk management strategies can help. Businesses should vouch for initiatives like quantifying cyber risk exposure, and implementing continuous, and harmonizing controls.

Third-Party Risk Management Takes Center Stage

Amidst global threats, third-party risk management will gain prominence in 2024. For organizations, it’s imperative to have a unified source of truth to navigate multi-tiered risks. Continuous third-party risk identification and monitoring are crucial for a resilient third-party ecosystem. This requires better coordination across functions.

Better Resilience Can Define Risk Management

Better resilience and risk management defines the line of defense for companies in risk management. It’s imperative to establish tolerance levels and establish risk appetite to manage risks and rebound quickly in case of an incident. The business strategies of organizations largely revolve around this in 2024.

Gaining strategic advantage by quantifying non-financial risks

Non-financial risks, including misconduct and cybersecurity breaches, continue to be potential threats. Organizations need to calculate the expected value of risks in monetary terms to quantify the challenge. Businesses should use quantitative methods to get a strong network for risk modelling.

Integrated Platforms for Simplifying GRC

Modern cloud platforms go a long way in simplifying GRC with intuitive interfaces. This offers adequate scalability and elasticity. Such platforms are capable of unifying risk and compliance practices into a single source of truth. It fosters faster decision-making and enhances the trust of stakeholders. Low-code/no-code platforms empower GRC teams, offering agility, productivity, and innovation.

Empowering The Frontline in Risk Management

With the spotlight shifting to the frontline in risk management, it’s crucial to delegate more responsibilities to the frontline along with comprehensive training and tools. Advanced GRC technologies, including conversational interfaces and AI/ML, will streamline frontline engagement.

The IMC Group remains committed to empowering organizations with governance risk management and compliance solutions to explore the ever-evolving GRC landscape. With professional assistance on the side, businesses can secure their operations as they stride ahead.

NEWSLETTER, GLOBAL

Insights from COP28: Shaping the Future of Global Climate Action

January 10, 2024

As we reflect on the conclusion of COP28 in Dubai, it’s imperative to take a look at the key takeaways that are likely to shape the future of global climate action. This event was hosted under the CEO of a prominent UAE-based state-owned oil company, Sultan Ahmed Al Jaber. The insights are likely to shape strategies governing ESG for Businesses in the coming years.

Here are the key insights from COP28 that readers would be interested to know.

The Move Towards Sustainable Energy Sources

In a historic move, around 200 countries decided to sign a new climate deal. This strategy is to emphasize a shift “away from fossil fuels in energy systems in a just, orderly and equitable manner”. While the demand to “phase out” fossil fuels faced opposition, this agreement encourages countries to contribute to global efforts to achieve net zero by 2050. The new strategy involves a shift away from fossil fuels and embracing sustainable energy.

Debate over the Climate Deal

The agreement can be deemed as imperfect, with critics voicing their concerns about the loopholes that still allow the production of fossil fuels. Eyebrows were raised on the inclusion of carbon capture and storage technology. Critiques questioned the global effectiveness of this technique. A strong plea was raised to re-evaluate the extensive approach of planting trees, as the focus lay on genuine efforts to reduce emissions rather than going for greenwashing tactics.

Challenges with Climate Finance

The conference opened with a focus on the financial challenges of climate change, particularly in developing countries. Although a climate damage fund is necessary, the pledges received are far from satisfactory. Notably, $17 million was committed by the US, while Germany and UAE promised $100 million each. This marks the urgent need for larger financial contributions, particularly from key players like China.

Commitment to Renewable Energy

More than 100 nations have committed to grow their renewable energy capacity three-fold by 2030. This is an ambitious goal that calls for faster development of solar and wind-powered projects. These projects are largely encountering local opposition and supply shortages. The growth trajectory of the industry looks promising despite these challenges.

Reducing Methane

The Global Methane Pledge gained support from over 150 countries, aiming to reduce methane emissions by 30% by 2030. Major countries emitting methane outlined viable strategies. The involvement of the public sector was significant, with gas and oil companies pledging to reduce methane generation to near zero by 2030. A substantial fund was also announced to support methane abatement projects in developing economies and emerging markets.

Failure of Carbon Offset Negotiations

Efforts to establish new rules for carbon offset trading faced a setback. The deal was rejected by the Latin American Ailac bloc, Mexico, and the EU. Talks will resume in 2024, presenting a critical opportunity at COP29 in Azerbaijan in 2025.

Why Do Companies Need ESG Services?

Post-COP28, national policymakers are likely to translate these climate priorities into legislative actions. Beyond oil and gas, other industries will be closely monitoring and adapting to the evolving regulations, considerations on supply change, and ESG norms. Forward-thinking businesses consult professionals like the IMC Group for ESG Services. With dedicated assistance, businesses can avoid reputational and legal challenges, embracing sustainability practices in every department.

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