Use Case | Compliance with Reporting Regulations in the Financial Area

Use Case: Compliance with Reporting Regulations in the Financial Area

General Description:
In the financial area, ensuring that reports comply with local and international regulations is essential to avoid sanctions, improve transparency, and ensure stakeholder trust. This generative model allows the analysis and validation of financial reports, identifying discrepancies or non-compliance with regulations such as IFRS, GAAP, or other country-specific rules. Additionally, it automates the generation of observations and recommendations, ensuring compliance in reports sent to regulatory authorities or investors.

How It Works:

1. Uploading Financial Reports:
   • Users upload financial documents, such as income statements, balance sheets, or annual reports, in PDF or Word formats.
2. Semantic Content Analysis:
   • The model examines the reports to identify and verify:
     • Compliance with applicable regulations (e.g., IFRS or GAAP).
     • Correct breakdown of income, expenses, assets, and liabilities.
     • Required statements, explanatory notes, and annexes.
3. Detection of Inconsistencies and Errors:
   • Identifies discrepancies such as:
     • Omission of required sections.
     • Errors in calculating key indicators.
     • Lack of transparency in certain areas of the report.
4. Generation of Compliance Reports:
   • Provides a clear report with:
     • Sections that comply with regulations.
     • Areas requiring adjustments or clarifications.
     • Recommendations to align the report with current regulations.
5. Multilingual Validation:
   • Translates and validates reports in different languages to meet international regulations when information must be presented in multiple jurisdictions.

Practical Example:
Scenario:
An international corporation prepares its annual report and needs to verify compliance with IFRS before presenting it to shareholders and financial regulators.
Process with the Model:

1. Report Upload:
   • The company uploads its annual report in PDF format to the system.
2. Analysis and Validation:
   • Verifies that the report includes:
     • Income statement, balance sheet, and cash flow statement.
     • Explanatory notes on changes in accounting policies.
     • Key indicators, such as EBITDA and ROE, correctly calculated.
   • Detects that a required explanatory note on asset depreciation, required by IFRS, is missing.
3. Detection of Inconsistencies:
   • Identifies that the breakdown of income does not match the sector-specific standards for the company.
4. Generation of the Report:
   • Report Summary:
     • Overall Compliance: 95%.
     • Observations:
       • Missing explanatory note on depreciation.
       • Correction needed in income breakdown.
     • Recommendations:
       • Add the required explanatory note.
       • Adjust income breakdown according to applicable standards.

Benefits of the Model in Compliance with Reporting Regulations:

1. Automated Validation:
   • Analyzes financial reports quickly and accurately, reducing the time required for manual reviews.
2. Ensured Regulatory Compliance:
   • Verifies that all mandatory elements are present and aligned with applicable regulations.
3. Prevention of Financial Risks:
   • Identifies errors and omissions before reports are sent to regulators, minimizing sanctions or legal issues.
4. Clear Report Generation:
   • Provides specific recommendations to address detected issues, facilitating alignment with regulations.
5. Multilingual Support:
   • Ideal for international companies that need to prepare reports in different languages to comply with local regulations.

Additional Applications:

1. Internal Audits:
   • Automatically checks reports to ensure proper preparation before being reviewed by external auditors.
2. Investor Reports:
   • Validates that reports presented to shareholders meet transparency and clarity expectations.
3. Tax Compliance:
   • Ensures that reports include all required tax information for authorities.
4. Multinational Preparation:
   • Translates and adjusts financial reports to comply with regulations in different jurisdictions.
5. Optimization of Financial Processes:
   • Automates the review of recurring reports, reducing the operational burden on financial teams.

Additional Practical Example:
Scenario:
A multinational company needs to submit financial reports in French and German to comply with local regulations in both countries.
Without the Model:

• Manual translation and review take weeks, increasing the risk of errors and omissions.
  With the Model:
• Automatically translates and analyzes the report:
  • French version: Verifies compliance with local regulations, highlighting an omission in the deferred tax statement.
  • German version: Detects the absence of an explanatory note on intangible assets, required by German regulations.
• Generates a report with observations and specific recommendations for each language and regulation.

Conclusion:
Validating reporting regulations with this model ensures that financial documents comply with local and international regulations. Its ability to analyze documents, detect errors, and generate clear reports makes it an indispensable tool for financial departments aiming to ensure transparency, minimize risks, and optimize regulatory compliance. Ideal for companies operating in multiple markets that need to prepare reports tailored to different jurisdictions.