Two recent compliance cost surveys are ‘apples and oranges’. The surveys, undertaken by BusinessNZ-KPMG and Otago University, used different sample groups and methodologies.

Media reports this week say some business owners have overstated their compliance burden, because the Otago survey shows a smaller compliance costs than reported by the BusinessNZ-KPMG survey.

However the two surveys are not comparable

The sample size was different: BusinessNZ-KPMG surveyed 949 enterprises while Otago surveyed 25.

The groups surveyed were different: BusinessNZ-KPMG surveyed a range of enterprises from very large to very small and across all sectors; Otago surveyed only very small firms in the service sector.

The definitions of ‘compliance cost’ were different: The BusinessNZ-KPMG survey measured across a larger range of compliance cost areas than the Otago survey, including compliance with companies and securities law, importing and exporting regulations, management of hazardous substances requirements, food sector legal requirements, and education and health sector requirements.

Other differences include:

• The two surveys had different regional compositions: the Otago survey covered firms in Dunedin, while the BusinessNZ-KPMG survey was nationwide.
• The two surveys had different industry compositions. While the Otago study was limited to companies in the service sector, the broad range of firms in the BusinessNZ-KPMG survey included participants in the primary and manufacturing industries, which have a broader range of compliance requirements.
• Otago used a logbook approach over 13 weeks, while BusinessNZ-KPMG asked respondents to recall time spent and costs incurred over a 12-month period.
• The Otago survey might have been under taken during a quiet period for compliance costs, e.g. missing key tax filing and payment periods; some Otago respondents noted that they incurred significant costs on either side of the 13-week period.
• The BusinessNZ-KPMG survey was web-based, so excluding a number of small, unsophisticated businesses which are those most likely to be unaware of certain compliance requirements and so more likely to be non-compliant; it is conceivable that the Otago study covered businesses that were unaware of the full extent of their compliance obligations, resulting in their spending less time on compliance issues.

Although the results of the two surveys are not comparable due to the use of different methodologies, they are nevertheless complementary and showed some consistent results:

• The Otago report included comments that indicated negative perceptions about compliance costs that were similar in magnitude to those expressed in the BusinessNZ-KPMG survey, reporting for example that some survey respondents had not taken on additional employees because of the compliance costs involved, or commenting on a reluctance to buy another business due to the compliance costs involved.
• The four largest compliance cost concerns were identical for the participants of both surveys – tax, employment relations, health and safety in employment, and ACC.

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