Monitoring employees' activities and conducting internal audits topped the list of operational compliance issues cited by small and midsize companies, according to survey data compiled by Deloitte Development L.L.C.

Nearly 55% of firms reporting less than $1 billion in annual revenue listed monitoring their employees' adherence to internal policies among the biggest operational issues regarding their compliance management strategies, according to Deloitte. Other top operational issues cited by small and midsize firms included conducting internal compliance audits (53%), policy and procedure management (47%), and monitoring existing third-party relationships (45%).

The data was derived from Deloitte's 2013 Compliance Trends Survey, released to the public last week. The survey included responses from 189 U.S.-based companies, 34% of which reported less than $1 billion in annual revenue in 2012. Survey results for that segment were provided to Business Insurance by request.

According to Deloitte's findings, less than 13% of small and midsize firms have not named a chief compliance officer, compared with 16% of larger companies and 15% of survey respondents overall.

However, a greater proportion of large companies have designated the CCO as a stand-alone position, as opposed to combining their duties with another operation. Approximately 41% of small and midsize firms' CCO is also listed as their chief audit executive, chief risk officer or general council, compared with 32% of large firms and 35% of all survey respondents.

%%BREAK%%

Asked to rank their CCO's top responsibilities, small and midsize firms listed managing complaints as the most important task assigned to their compliance officers, whereas large firms cited establishing standards of conduct. Both groups listed managing whistle-blower hot lines as their CCO's second most important responsibility.

Not surprisingly, small and midsize companies' compliance budgets were much more modest than their larger counterparts'. Seventy-two percent of smaller firms allocated less than $1 million in 2013 for compliance staff salaries and functions, while only 9% have budgeted up to $5 million for compliance.

By comparison, 34% of large companies and 47% of all survey respondents budgeted less than $1 million for compliance in 2013, while 29% of large firms and 22% of total respondents said they budgeted up to $5 million.

A slightly greater proportion of large firms (18%, versus 14% of smaller companies) did not know how much they had budgeted for compliance operations for the current year.