Orchid Top 10 Series #2 – Real-time Compliance Monitoring

Orchid Advisors is transforming the Compliance Ecosystem™ with technical innovation. Over the next few weeks, we’ll share a few operational best practices to reduce your ATF compliance risk. This week’s focus is on a concept that we call “Real-time Compliance Monitoring.”

In our last Advisory, we talked about “Dual Blind Entry” technology. We emphasized that this innovative control feature is one of many ways to enhance the accuracy of your electronic record keeping. However, accuracy is not the only quality of compliant records. In accordance with prevailing rulings such as ATF 2008-2, an electronic Book of Acquisition and Disposition must, amongst other attributes of that ruling,
– Meet the regulatory requirements for recording pertinent information.
– Be limited to only the information required and specified by regulation.
– Be recorded into a database, not capable of being edited at a later date without an audit trail. Must retain corrections as entirely new entries, without deleting or modifying the original. May allow for entries in a notes column to explain any correction. 
– Allow for queries by serial number, acquisition date, and name of the manufacturer or importer. 

[paraphrased, reference actual ruling for the exact requirements]

One of the first requests made by an ATF inspector is to provide a copy or download your records. If the records were in electronic form, the download would have to meet the aforementioned requirements. While software systems vary, the requirement to “query by serial number, acquisition date, and name of the manufacturer or importer” does not.

Think of the varied scenarios. When the ATF comes-a-knocking:

1. Your cross-functional IT/business team needs two days to pull the records out of your legacy system; or
2. Your team provides the ATF with a printout, thumb drive or remote access through a read-only portal. 

Back in the day, records were for “Compliance people only.” Not any more. An organization that has adopted compliance as an active part of its culture makes such information available to those who need it on a real-time basis. Think about it, if your Receiving Clerk needed to check the status of your inventory balance after receipt, they could, right?  So, why not the same with your Book of Acquisition and Disposition? 

One or more industry leaders are using Orchid designs to provide cross-functional ownership and review of records. Now…think about this. After receiving a serialized item, your Receiving Clerk, Compliance Manager and Accounting Controller can simultaneously pull reports on financial inventory balance and recent acquisition status.

As you might expect, delays in your ability to respond to an inspector or your ability to reconcile financial, operational or regulatory records could signal a problem that may or may not exist. Orchid Advisors addresses this issue with innovative technology designs. That is, the ability to query by serial number, acquisition date, and name of the manufacturer or importer, and many other data elements on a real-time basis. Received something 5 seconds ago? It’ll be there…ready to query, download or audit.

Orchid Advisors provides electronic newsletter (“Advisory and Alert”) and blogs for general informational purposes only. It should not be considered a formal or informal interpretation of law. It is not intended as professional counsel, should not be considered legal advice and should not be used as such.