A news release said the P ricewaterhouseCoopers Management Barometer Survey found that American executives were more optimistic that their compliance programs were effective with 55% of European officials confessing a need for improvements versus 44% among US firms.
But that doesn’t necessarily mean companies have a good handle on how much they have to shell out to toe the regulatory line. Nearly half (48%) of executives on this side of the pond say their corporate colleagues don’t know how much it is costing for compliance. In Europe, the figure is 38%, according to the survey.
Even though so many companies don’t have a good handle on their compliance spending, many say they’re going to up their outlay in the coming year or two. More than half of US and European multinational companies (51%) will increase compliance spending by an average of 23% during the next 12 to 24 months.
However, the survey showed most of the companies that have a clear view of spending still do not include remediation costs, penalties, fines, lost revenue and lost management time when tracking the subject. Commented PwC researchers: “These findings suggest that the ability to accurately track costs and measure value, even by companies with a clear view of the costs involved, is incomplete at best.”
“Companies are spending significant sums of money – even more than they realize – in order to improve compliance effectiveness and efficiency, but executives are finding that they are not receiving the return on investment they expected,” said Dan DiFilippo, PricewaterhouseCoopers Global Leader for Performance Improvement and US Leader for Governance, Risk and Compliance, in the news release “The risks are just too great for companies to operate with ineffective compliance programs.”
According to the survey, 59% of executives say their compliance programs are “somewhat inefficient” and that aspects can be streamlined, while an additional five percent say their programs are inefficient and their company spends more than it needs to. Only just over a third consider their compliance programs “very efficient.”
But not to worry. During the next 12 to 24 months, nearly all respondents (90%) are going to beef up their company’s compliance efforts. These steps will include improving risk management, strengthening programs to reduce compliance costs and streamlining cost efficiency.
PricewaterhouseCoopers’ Management Barometer is a quarterly survey of top executives in a cross-section of large, multinational businesses. It is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc.