“State of Compliance: 2012” Study Provides a Lens into the Changing Practice of Compliance Risk Management

Benchmark data from PwC and Compliance Week gives compliance officers a comprehensive view of how they and their peers work, what their responsibilities are, and what resources they have

NEW YORK AND WASHINGTON, DC, June 4, 2012 – Chief compliance officers (CCOs) who are overseeing an ever more complex regulatory environment want to be more efficient and effective, according to preliminary results of the second annual “State of Compliance: 2012” Study, a joint effort between PwC US and Compliance Week released today at the Compliance Week 2012 annual conference in Washington, DC. Data collected from senior compliance officers at leading organizations representing a cross-section of leading U.S. companies sets a baseline understanding of the state of compliance today and how the compliance function can position itself for the future.

According to initial results of the report, the compliance department is involved to some degree in evaluating or overseeing virtually every risk or regulatory issue, including anti-trust, anti-corruption, ethics, import-export, supply chain, social media, and codes of conduct. PwC and Compliance Week found, however, that several challenges remain before compliance officers can move toward a fully integrated, proactive function. These challenges include fragmented IT systems, tight budgets, shifting and growing regulatory requirements, and the ongoing challenge of proving 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.”

According to the Study, compliance officers still have much work ahead of them to harness existing IT systems and to build new ones that will provide a more holistic view of risk and compliance. Nearly half (46 percent) of compliance officers say they plan to spend more money on compliance-related technology and tools in the coming 12 months, although that also means a majority of compliance officers do not.

“Technology is still not enabling governance, risk, and compliance the way it could,” says Sally Bernstein, principal in PwC’s Advisory practice. “Many companies are still not leveraging for efficiencies. Even worse is that at the same time, technology—social media and the explosion of data and devices—is making compliance more complex.”

Each participating company will receive the summary results of the Study as well as a complimentary benchmarking report that compares the company’s specific survey responses with those of other participants. Thirty-five questions are grouped into four broad categories: the scope of responsibilities compliance departments have; the metrics they use to gain assurance that the compliance program is effective; the technology compliance departments use; and the staffing, resources, and oversight they have.

While the results presented at the upcoming conference were drawn as of April 2012, the survey itself remains open until December 31, 2012 and is available for companies to participate in.  Companies who wish to participate in the Study and receive the complimentary benchmarking report can do so by going to www.pwc.com/us/compliancebenchmark2012. 2012 benchmarking reports are available to all participating companies until the close of the survey. Other preliminary key findings from PwC and Compliance Week include:

  • Most companies now have a compliance committee (71 percent, up from 57 percent last year)
  • While 78 percent of respondents anticipate increased board and audit committee demands for evidence of effective compliance; only  35 percent are currently “very satisfied” with the assessment of the effectiveness of their compliance programs
  • Budgets are moving in positive directions – 21 percent of respondents are reporting budgets of $3 million to $10 million (up from 14 percent in 2011)
  • Staffing levels are increasing – nearly 80 percent of respondents said their compliance departments grew at least modestly in the last year
  • Reporting relationships are moving in the right direction – more compliance officers (32 percent) formally report to the board; however, reporting to the general counsel (GC) is also still quite prevalent (33 percent of respondents report formally to the GC)

“Despite the positive changes in many areas, there is still room for improvement. Eight percent of companies have no formal Chief Compliance Officer at all,” added Matt Kelly, editor-in-chief at Compliance Week. “We are indeed moving in a good direction, but much remains ahead to achieve a truly strong, flexible, and effective compliance program.”

Please visit www.pwc.com/us/compliancebenchmark2012 for more information. To take the State of Compliance survey and receive a complimentary report that compares your answers across all 35 questions against the norms, go to www.globalbestpractices.pwc.com/compliance2012.

 

About Compliance Week

Compliance Week, published by Haymarket Media Inc., is an information service on corporate governance, risk and compliance that features a weekly electronic newsletter, a monthly print magazine, proprietary databases, industry-leading events, and a variety of interactive features and forums. It reaches more than 26,000 financial, legal, audit, risk and compliance executives, and is based in Boston, Mass.

About the PwC Network

PwC firms help organizations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.

© 2012 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.

PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

 

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

 

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Suzanne Dawson
Linden Alschuler & Kaplan
sdawson@lakpr.com
(212) 329-1420

Matt Kelly
Compliance Week
mkelly@complianceweek.com
(888) 519-9200