Accounting Compliance: What You Need to Know in [2025]

Accounting compliance is the legal framework created by regulatory bodies that business firms must follow by the ordinances, regulations, and ethics of reporting and bookkeeping. In the United States, companies must follow certain compliance rules to record all financial transactions accurately and transparently.

For businesses of all sizes, accounting compliance involves following standards set by the regulatory bodies, showcasing the pattern in which they need to record and present information to investors, government bodies, and the public.

Failure to comply with accounting regulations leads to huge legal or financial repercussions. Moreover, businesses that have not followed compliance regulations face a cost of $5.05 million for data breaches, which is 12.6% more than the general cost of a data breach.

Types of Accounting Compliance in the United States

Generally Accepted Accounting Principles (GAAP) for Financial Reporting Compliance

GAAP is the rule book that comprises policies regulated by FASB (Financial Accounting Standards Board). It sets the standards for financial reporting in the United States. It acts as a framework for public firms operating in the U.S. Securities and Exchange Commission (SEC) to document and submit financial records and data, making it easier for investors and stakeholders to assess the firm’s performance.

Sarbanes-Oxley Act (SOX) for Internal Controls Compliance

The Sarbanes-Oxley Act (SOX) establishes a process for internal control over financial reporting and recording. Enacted on July 30, 2002, the law mandates all public sector firms to assess the economic processes to defend the public from dishonest or malicious business methods.

Under this act, public business firms must comply, whereas private firms are encouraged but not mandated. It is a critical regulation that focuses on preventing hostile tampering with accounting data and keeping event logs ready for audit.

Internal Revenue Service (IRS) for Tax Compliance

Internal Revenue Service (IRS), generally known for tax compliance, now enforces accounting conventions for filing taxes. These rules impact how companies record certain transactions for tax purposes, requiring alignment with accounting and tax regulations.

General Data Protection Regulation (GDPR) and State Privacy Laws for Data Protection Compliance

The General Data Protection Regulation (GDPR) covers comprehensive guidelines specified by the European Union (EU). It was enacted in 1995 and stated that any firm doing business or attracting clients from the European continent must comply with GDPR.

By State privacy law, we imply the California Consumer Privacy Act (CCPA), which is quite well-known in the U.S. Under this law, the users have higher control over the shareability of the data. They have full leverage to decide whether they want to share or opt-out instantly.

Why Do We Need Accounting Compliance For Your Business?

Accounting compliance is not just for legal purposes but to gain client trust. Let’s understand the need for accounting compliance in depth:

To Maintain Accuracy

The main motive behind accounting compliance is to ensure that all financial transactions are recorded consistently and securely in the same manner across branches. When the data is transparently available, it provides the utmost level of trust across different stakeholders, such as investors and creditors.

However, if you don’t comply with industry standards, it might be difficult to lure good clients as their data is at risk.

To Safeguard from Legal Penalties

It is seen that regulatory bodies like the Federal Reserve Board (FRB) and the Securities and Exchange Commission (SEC) have made accounting regulation compliance compulsory for firms. If not followed, these regulatory bodies impose hefty penalties, revoke business licenses, and breach of contract claims.

To Gain Investor Confidence

Public sector firms have a lot of sensitive data, so does the pressure to safeguard it. When you comply with ethical standards, reporting, and bookkeeping practices, you gain investors’ trust in accessing their capital market or stock exchange.

Top Compliance Challenges for U.S. Businesses and How to Address Them

When a business tries to meet accounting regulatory compliance requirements per U.S. laws, it is challenging for business firms. Let’s have a quick look at some of the biggest challenges and practical ways to handle them:

How Managed Security Providers Can Enhance Accounting Compliance

If you hire third-party managed security providers (MSPs), it can do wonders for you. As we know, regulatory compliances are associated with maintaining data security, and MSPs are experts in this area. When you hire a security provider who has compliance certificates, it can provide you with multiple benefits such as:

Data Protection and Privacy

One of the key elements of accounting compliance is safeguarding your financial data in rest and transit. Managed security providers such as Ace Cloud Hosting utilize best-of-the-industry security measures such as access control at a granular level, advanced firewall, zero-time threats prevention, and web traffic filtering to ensure compliance with specific laws, including GDPR and industry-specific standards such as PCI-DSS for payment card information.

Compliance with Financial Regulations (SOX, GAAP)

Hiring MSPs ensures compliance with regulations by maintaining all financial records and restricting access to authorized personnel.

Secure Cloud Hosting for Financial Data

With managed security services, you can ensure your data is secure on cloud servers. It is beneficial to host your accounting applications and other applications in the cloud, with specific regulatory requirements met.

Regular Security Audits

Typically, you get regular audits as a part of managed security services wherein they identify vulnerabilities and gaps in your security environment. It helps you address the issues before they result in non-compliance.

Threat Detection and Response

Exploiting financial data is the prime target for cybercriminals. MSPs detect, prevent, and respond to potential security threats in real time, which helps avoid data breaches and ensures compliance with cybersecurity laws like HIPAA and FISM.

The Bottom Line

Compliance in accounting is essential for businesses. Businesses must pay attention to data security, tax obligations, and ESG goals. While compliance brings long-term benefits such as client trust and firm market value, it is also expensive for small businesses. By proactively addressing common compliance issues and implementing the right solutions, businesses can meet regulatory demands and create a resilient operational foundation.

Embracing a strong compliance culture ultimately safeguards business integrity and contributes to sustainable growth, allowing companies to thrive in an increasingly complex regulatory landscape.