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Latest News

FASB, IASB Close in on Joint
Rule for Financial Instruments

U.S. and international rulemakers took a big step last week toward converged rules on accounting for financial instruments. The Financial Accounting Standards Board and the International Accounting Standards Board have agreed to follow a three-category approach for classifying and measuring debt investments. More details on the agreement are inside.

CFPB Proposes New Rule on Establishing Non-Bank Oversight

The Consumer Financial Protection Bureau is seeking comments on a newly proposed rule that establishes procedures to notify a non-bank that it is being considered for supervision, and the recourse it may take to respond. Under the Dodd-Frank Act, the CFPB has authority to supervise any non-bank if reasonable cause exists that it poses a risk to consumers.

CFTC Member Blasts Dodd-Frank Rules as ‘Vague and Complex’

The objective in implementing the Dodd-Frank Act "should be compliance, and not enforcement" says Scott O'Malia, a commissioner on the Commodity Futures Trading Commission. During a recent speech he criticized Dodd-Frank rulemaking for the swaps market as inflexible and overly burdensome on businesses that hedge risk.

CFTC to Host Volcker Rule Talk

In other news, the CFTC will hold a day-long roundtable discussion on proposed regulations to implement the Volcker Rule on Thursday, May 31. Discussion topics will include what types of activities should be exempt from the restrictions and how the rule with effect hedging. The roundtable is open to the public and available via teleconference.

As Tips Pour in, Intelligence Unit Improves SEC Response to Data

The SEC's Office of Market Intelligence now analyzes approximately 200 tips per day, including a small number of "high quality" tips from the SEC's whistleblower program. Formed in 2010, the office has greatly improved the regulator's ability to collect, analyze, and weigh the hundreds of pieces of data the agency gets each day.

Microsoft Adopts Measures to Thwart Consumer Class Actions

One year has passed since a U.S. Supreme Court ruling granted companies broad authority to settle disputes through arbitration, rather than costly class-action lawsuits. Microsoft is just the latest to revise terms-of-use agreements to ban consumer class actions. Details inside.

Chipotle Hiring Probe Deepens

Fast food chain Chipotle has disclosed that the U.S. attorney for the District of Columbia is investigating possible criminal securities law violations related to employee work permits and related disclosures. On May 17, the company was also subpoenaed by the SEC on allegations related to a crackdown on undocumented workers.

New Council to Address Private-
Company Accounting Concerns

The Financial Accounting Foundation has formed the Private Company Council to recommend modifications of accounting rules to the Financial Accounting Standards Board and to serve as an advisory group on private-company accounting concerns. The move stops short of the independent standard setting body that some have demanded.

In-Depth Coverage

FASB Back to Drawing Board
on Going-Concern Warnings

The Financial Accounting Standards Board will try again to come up with requirements for management to issue a warning if a collapse could be imminent. The idea worries some executives. "It is very concerning to corporations to be stigmatized with a going-concern qualification if they don't feel it's deserved," says Dennis Beresford, audit committee chairman at Legg Mason.

Regulators’ No Admission Settlement Policy Under Fire

The policy of the SEC and other regulators to settle cases of alleged fraud on a "neither-admit-nor-deny" basis is under increasing fire from critics who believe such settlements are too lenient. During a recent committee hearing, members of Congress assailed the policy as irresponsible, while others defended it as a practical necessity. Details inside.

Court: Firm Can Fire Compliance Officer for Reporting Misconduct

The New York State Court of Appeals recently issued a ruling that could weaken protections for compliance officers who raise warnings of wrongdoing. It said compliance officers were not exempt from the state's "employment-at-will" doctrine that gives the company the right to terminate employees for nearly any reason. Details inside.

Using Data Analytics in the Fight for Anti-Bribery Compliance

Anti-corruption compliance efforts are never easy, but some companies are making them more effective with statistical techniques that comb through massive amounts of data and sniff out unusual patterns. Corruption analytics are the latest tools in the hunt for questionable transactions and compliance risks buried deep within information systems. Details inside.

Britain’s ‘Shareholder Spring’

A wave of shareholder activism is hitting the United Kingdom, where companies are seeing much higher levels of negative votes on compensation plans and a few CEOs have even resigned after losing say-on-pay votes. Some say it could be a sign of things to come in the United States. "It seems highly unlikely that this trend will be confined to the United Kingdom," says Bob Mecrate-Butcher, a partner at law firm Charles Russell.

Best Buy CEO Ouster Offers Lessons in Crisis Management

When allegations arise against a CEO of an inappropriate relationship or other misdeeds, the compliance officer is often forced into a difficult balancing act. The CCO, in assisting the board, must weigh the need for quick action with the need for a thorough and fair investigation. Best Buy recently faced such a situation, and how the company responded may serve as a model for good crisis management. Details inside.

Columnist

Need to Restate Earnings?
Choose Your Method Wisely

When a financial reporting error is identified, companies generally need to decide if a restatement of prior periods is in order, or if correcting it in the current period will suffice. Yet there are multiple ways to correct an error through a restatement. Inside, Columnist Scott Taub looks at the many different types of restatements and offers his views on when each is appropriate.

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Compliance Week LinkedIn Group

Compliance Week now has a companion group on LinkedIn, where members can network and discuss the compliance and governance news of the day. Open to all compliance professionals, free to join.

Survey of the Week

Deloitte is conducting their annual Look Before You Leap: Managing Risks in Global Investments survey to better understand the approaches companies are taking to address compliance and integrity-related risks in emerging markets.