Do your compliance efforts meet today’s needs?
June 25, 2012
Article courtesy of SBAM Approved Partner ASE
By George Brown
Your compliance department needs to manage the growing demands of more and more stakeholders, while positioning itself for the future. A recent survey sets out to provide insight to support that goal.
Before 2002—or what some refer to as “pre-SOX”–companies left compliance issues to the accounting department to handle after payroll, month-end and a laundry list of other chores. In 2002, when scandals cut into public confidence in the financial system, oversight became much more popular. It raised the expectations of companies that had a compliance officer. And it made a lot of other companies hire one.
The “State of Compliance: 2012 Study,” an effort between PwC US and Compliance Week, was recently released at the Compliance Week annual conference in Washington, D.C. The study found that Chief Compliance Officers (CCOs) want to be more efficient and effective as they confront a more complex regulatory world.
The data collected paints a basic picture of the state of compliance today, and how the compliance function can position itself for the future. According to the data, the compliance team is involved to some degree in evaluating or overseeing virtually every risk or regulatory issue. These would include anti-trust, anti-corruption, ethics, import-export, supply chain, social media, and codes of conduct.
The data uncovered a number of challenges: fragmented IT systems, tight budgets, shifting and growing regulations, and always having to prove that the compliance program is effective.
“Few elements of corporate compliance are as elusive as the art of confirming that your ethics and compliance program is effective. Compliance officers today know that just tracking calls to the hotline isn’t enough. The question is what is enough.” said Bobby Kipp, partner in PwC’s Assurance practice. “Compliance officers really need overall assurance that their program is effective. Getting that assurance requires a combination of multiple metrics and insights.”
Nearly half (46%) of the CCOs surveyed say they plan to spend more money on compliance technology and tools in the coming 12 months.
Other key findings include:
- Most companies now have a compliance committee (71%, up from 57% last year).
- Seventy-eight percent of respondents anticipate more board and audit committee demands for evidence of effective compliance.
- Only 35% are currently “very satisfied” with the most recent assessment of their compliance programs.
- Budgets are moving in positive directions — 21% are reporting budgets of $3 million to $10 million (up from 14% in 2011).
- Staffing levels are increasing — nearly 80% said their compliance departments grew at least modestly in the last year.
- Reporting relationships are moving in the right direction – more compliance officers (32%) formally report to the board. Reporting to the general counsel (GC) is also still quite prevalent (33% of respondents report formally to the GC).