Compliance priority for '06

Staff -- Purchasing, 12/8/2005

It looks like every penny spent next year is going to come under greater scrutiny. That's the word from American Express, which recently conducted its 2006 Expense Management Benchmark Survey of financial executives. Results show senior execs are intensifying their watch over employee expenditures, in light of Sarbanes-Oxley regulations, as well as much publicized reports of expense abuse.

"For midsized companies, getting employees to follow rules and spending policies seems to be as important as securing good deals from suppliers," says Anré Williams, executive vice president, U.S. Commercial Card, American Express Global Corporate Services. "Focusing on spending policies supports good corporate governance and drives bottom-line savings."

While respondents have confidence they have control over indirect expenditures and that employees are adhering to spending policies, a majority have stepped up their watch. In fact, 20% report corporate disciplinary actions against employees who've strayed from rules governing procurement or travel and entertainment (T&E) expenses.

At the same time, many financial execs are anxious about rising costs. A majority (54%) of respondents forecast overall spending for non-T&E procurement (incurred in both procuring and processing purchases) for 2006 will increase 10%. Fifteen percent expect spending to grow more than 10%. Another 20% see no growth in 2006 spending, while the others forecast declines.

Nearly half (47%) forecast a 10% rise in T&E spending for 2006, while another 9% estimate a spike higher than 10%. One-third say T&E spending will remain the same, with the remainder expecting declines. One reason: Higher fuel prices driving airfares.

Nearly 30% of those responding cited Sarbanes-Oxley as the burning issue for 2006. Other responses include rising costs of capital, increased health care costs, rising energy prices, interest rates and inflation.