Executives are concerned that an increase in government intervention coupled with higher compliance costs will hurt business. Despite this growing concern, half of the respondents say that such changes are inevitable and may offer a net positive in the future, according to the KPMG Regulatory Reform Survey .
Of the 126 C-suite executives primarily from Fortune 1000 companies polled, nearly 94 percent expressed a level of concern about the impact that reform legislation could have on their business’ bottom line.
Among the issues of highest concern:
- Cost of compliance: 68 percent
- Government intervention in business: 52 percent
- Difficulty planning while awaiting reform passage: 42 percent
Nearly all executives agreed that risk management will be a focal point. The uncertainty surrounding reform is believed to negatively affect long-term planning. Executives believe that Congress will continue to expand reform beyond the financial services and healthcare sectors. Thirty-two percent of financial services executives and 30 percent of healthcare executives cited government intervention as their greatest concern. Executives outside the financial services and healthcare industries told KPMG that “reform would slow growth and threaten economic recovery.”
“A perception among these top executives that reforms are potentially a net positive suggests an acceptance that the old rules are out and a new playbook is coming from Congress,” said Henry R. Keizer, vice chair-audit for KPMG LLP. “It’s likely this is an acknowledgement that some amount of regulatory reform is appropriate to further restore trust in the financial system.”
While executives expect regulatory reform, 66 percent believe accounting standards should be left the same and 67 percent of executives polled feel disclosure requirements should be left the same.
In 2010, 57 percent of executives reported that regulatory reforms have already had an impact on their business plans for the year. Of those making proactive changes in anticipation of increased regulation, 71 percent are making changes to risk management policy while 24 percent are either changing product approval and/or disclosure practices.
Click here for the full report.
The KPMG Regulatory Reform Survey was conducted in March 2010 among 126 C-suite executives from a cross-section of industries, with the heaviest representation from the healthcare and financial services sectors. About 59 percent of the respondents represent Fortune 1000 companies and about 80 percent of respondents represent companies with annual revenues exceeding US $1 billion.