Canadian business leaders are concerned that regulatory requirements have caused their finance departments to focus on compliance at the expense of other areas of their mandate, according to a survey released today by KPMG LLP.

The survey, Striking the Balance, is based on the replies of 170 senior executives.

The senior business leaders surveyed say that they believe their finance functions are successfully coming to grips with the financial reporting processes required by the new regulatory environment.

However, a significant number, nearly three-quarters (73%), say that they believe the heavy focus on compliance has affected both the growth and profitability of their companies over the past 18 months.

The survey highlighted a number of gaps between the importance that decision makers place on certain finance activities and their perceptions of the finance department’s performance in these areas:

  • Management and Reporting – 25% gap between importance and performance;
  • Budgets and Forecasts – 26% gap; Corporate Finance – 23% gap;
  • Risk Management – 27% gap;
  • Strategic Planning – 31% gap

“What the survey tells us is that Canadian business leaders are pleased with the way their finance groups have taken on the challenge of building sustainable compliance models,” said Diane Jeffreys, KPMG’s National Service Line Leader for Operations Improvement in Canada. “The next step, though, is for finance to close those gaps on the business performance chart,” Jeffreys added. “Business leaders recognize that all these activities support the growth, efficiency and profitability of their businesses and they need more attention.”

The executives who participated in the survey were from Canadian-owned public company head offices located across Canada. Their businesses covered four major sectors: consumer markets, industrial and automotive, mining, and oil and gas.

“The survey highlighted how highly senior executives value their finance organization,” added Stephen Spooner, Partner-in-Charge of KPMG’s operations improvement practice in Western Canada. “Now, a major challenge is to achieve the correct balance between finance processes required for performance and those required for compliance.”

To download a copy of the full survey including the results from the four major sectors please go to www.kpmg.ca.