Regulation: A moving but immovable target

By Neil Amato

Compliance requirements related to the Patient Protection and Affordable Care Act, P.L. 111-148, are just one example of the regulatory changes keeping finance departments busy these days.

Amid local, state, and federal regulations, CPA decision-makers have a hard time finding time for forward-looking analysis. Regulatory requirements and changes, for the 11th consecutive quarter, top the list of challenges in an AICPA survey of finance executives in business and industry.

The strategies for dealing with regulatory clutter vary, but one thing is certain: Regulation is not going away.

“The world’s not getting simpler anymore,” said John Robinson, CPA, the treasurer for U.S. operations for IKEA, the global furniture and home accessories retailer. “It’s getting more and more complicated.”

Some accounting leaders are having staff do extra work to deal with issues such as Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, which employers of a certain size must complete for each full-time employee to comply with the federal health care law (for more on that topic, click here).

“It’s not that one form that’s a big deal, but it’s one more thing added on,” said John Bradshaw, CPA, the controller at public utility Arizona Water Co.

Bradshaw said that health care reporting requirements, in addition to water-quality reporting changes and other regulations, have taxed his staff. He also cited Internal Revenue Code Sec. 199, which contains rules for the domestic production activities deduction, and the Treasury’s tangible property (or “repair”) regulations as tax-related issues that add to the staff’s workload.

A consulting group worked with the company from 2008 to 2013 on a study of infrastructure improvements so Arizona Water could implement the repair regulations. But any future work related to the regulations will be done in-house.

“Both of these items take considerable time for accounting staff working with the operations and engineering staff each year,” he said.

Some finance chiefs have leaned on consultants to deal specifically with regulatory compliance.

Kirstin Sandaas, CPA, CGMA, the CFO at Foss Maritime Co. in Seattle, said consultants are needed at times because it’s hard to plan for regulatory changes. “It’s tough to be proactive with regard to regulation, because often you don’t see it coming, or the things you do see coming end up being so far out—and change so much,” she said.

Health care guidelines have been delayed or amended several times over the years since the Affordable Care Act became law, and proposed changes to lessee accounting recently announced by FASB have been in the works for years.

Worrying about regulatory compliance goes beyond the CFO, of course. CEOs and boards of directors, in a survey conducted last year, ranked regulatory concern as the top risk heading into 2015, ahead of economic conditions, cyber-threats, and talent-related issues.

In early 2013, domestic economic conditions were cited as the top challenge in the Business & Industry Economic Outlook Survey, a quarterly poll of CPA executives conducted by the AICPA. While the domestic economy and talent concerns have fallen and risen, regulation has remained atop the list of challenges since the second quarter of 2013.

Slowly but surely, regulatory requirements have increased. For example, 10 years ago, no one had any reporting requirements related to the Affordable Care Act, or for the Payment Card Industry Data Security Standard, which requires businesses that accept credit or debit cards to demonstrate certain security baselines.

That reporting has been added, and few—if any—finance leaders can recall regulatory requirements diminishing. “Death by a thousand cuts is the best way to put it,” Sandaas said.

Neil Amato ( is a JofA senior editor.


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