Regulatory Burden Prevents CFOs Increasing Strategic Value
Atos Consulting survey indicates that the regulatory burden, even in the areas of corporate governance and risk reduction, is not helping seven out of eight European CFOs increase the strategic value that they add to their companies.
CFOs of major European companies feel that the increased regulatory burden taken on by the finance function, has impacted on their ability to increase their strategic value to the business, according to a survey by Atos Consulting, the global consulting practice of Atos Origin.
Even though many consider that the new regulations have a positive impact upon finance and IT controls, CFOs appear to be losing their place at the table when it comes to influencing reputation and strategy. The survey found that four out of ten European CFOs believe that compliance burdens actually reduce their own strategic business involvement.
“Whilst there are some clear benefits emerging from the implementation of compliance programmes, there’s no doubt that increased workloads have resulted in CFOs having less time to focus on the value-add aspect of their roles,” said Fred van der Waa, partner, financial services, Atos Consulting. “The finance function recognises the importance of its position in promoting public confidence in a company’s stewardship, for example, or in implementing business strategy, but it appears that finance is ‘rolling backwards’ in terms of being able to make a real impact in these key areas.”
The European survey looked at CFOs’ attitudes towards a raft of recent and forthcoming financial regulations: IFRS, Sarbanes-Oxley, Basel II, MiFID, LSF and Tabaksblat . Interestingly, despite all the criticism surrounding Sarbanes-Oxley, 59% of those questioned see it as having a positive impact on financial controls. One potential benefit could be the increased transparency around controls and procedures within the business as usual Sarbanes-Oxley environment, which should reduce ongoing audit costs.
To a lesser extent, IFRS was also regarded as being very helpful in ensuring tighter controls: 34% of CFOs see it as being a positive benefit in promoting this and an alarming 77% of finance departments are still performing some degree of manual intervention to produce results. Basel II scored very highly with those working within the financial services sector when questioned about its impact on greater transparency of risk (71%) but an astonishing 75% do not see it as having a positive impact in protecting consumers against corporate failure – the very reason Basel II came into being in the first place.
The next compliance milestone for the financial services sector will be MiFID, due to be introduced in November 2007. Eight out of ten of CFOs in the financial services sector have not yet started to work on complying with standards.
The survey results were compiled from the responses of 236 European CFOs, or their nominated specialists, working in top 500 companies in France, the Netherlands Spain and the UK.
Click here for a breakdown of the relevant data.