Two-thirds of accounting, finance and business professionals believe regulation is having a significant or very significant impact on their organizations’ opportunities to grow and innovate, according to a new survey by the International Federation of Accountants.
Meanwhile, 79 percent of the survey respondents reported that the regulation affecting their organizations is complex or very complex, and 83 percent said the impact of regulation on their organizations has become more significant or much more significant over the past five years. Eighty percent also believe regulation has a significant or very significant impact on their organizations’ cost of doing business.
“Good regulation is essential to the fairness, efficiency and effectiveness of economies, and making it work as well as it can is a never-ending mission,” said IFAC CEO Fayez Choudhury in a statement. “Growth remains a concern globally, and these results should be a wakeup call for us to examine the impact of regulation, including the regulation and reform introduced in response to the global financial crisis.”
Choudhury pointed to the growing scope of regulations. While the Glass-Steagall Act, which was instituted in 1933 in the wake of the Great Depression, was 37 pages, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which was passed in response to the 2008 financial crisis, had more than 2,000 pages. The first Basel Accord, introduced in 1988, had seven risk categories and required seven calculations, while Basel III had more than 200,000 risk categories and more than 200 million calculations.
The results also demonstrate that the regulatory approach across different regions is inconsistent, with nearly half the respondents reporting that collaboration between regulators is ineffective.
“There are urgent questions surrounding regulation’s impact on growth and innovation, as well as how its complexity is affecting the agility needed to face emerging risks and potentially the next financial crisis,” said Choudhury. “IFAC aims to collaborate with policy makers, regulators, and the organizations impacted to examine these questions and probe the impacts as a major priority.”
The Global Regulation Survey polled 313 accounting, finance, and business professionals in organizations ranging from small and medium entities to very large entities, operating in a wide range of industry sectors on six continents. The survey was conducted during July and August 2015.
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