Columns & Editorials from Compliance Week

Balancing Ethical Principles

May 22, 2012

Corporate scandals like the one at Best Buy that led to the ouster of CEO Brian Dunn put compliance officers in a tight spot, having to weigh the need to protect individual privacy and the need to make informed conclusions and disclosures based on documented facts. Inside, David Frishkorn, guest columnist and chief compliance officer at Comverse Technology, examines the compliance officer's role in such situations.
 

Insights on the SEC's View of Effective Compliance Programs

May 22, 2012

The head of the SEC's Office of Compliance Inspections and Examinations, Carlo di Florio, brings a rigorous approach to pursuing the office's objectives of promoting compliance, preventing fraud, monitoring risk, and informing policy. Inside, Columnist Richard Steinberg takes a look at how di Florio has shaped the SEC unit, including di Florio's views on what makes an effective ethics and compliance program.
 

The 'Occupy' Movement: Coming Soon to a Shareholder Meeting Near You

May 15, 2012

The Occupy Wall Street movement is taking its protests to annual shareholder meetings, where it has already caused havoc for Wells Fargo, Bank of America, and even non-banks, such as Carnival Cruise Lines. Inside, Columnist Lou Thompson takes a look at the increasingly sophisticated organization and offers some tips on what to do if OWS is planning to occupy your shareholder meeting.
 

Citigroup's Say-on-Pay Failure Highlights Need for Dialogue

May 08, 2012

What was Citigroup's board thinking? Rescued by taxpayers, targeted by the "Occupy" movement, and weighed down by comparatively poor performance, Citi nonetheless seemed to think the time right for a round of sizable pay increases for top executives. Maybe they should have talked to shareholders first. Inside, Columnists Stephen Davis and Jon Lukomnik make the case for increased shareholder outreach.
 

SEC Cracking Down on Questionable Tactics by Defense Counsel

May 08, 2012

The Securities and Exchange Commission is sending a message to defense attorneys and in-house counsel that it's on the lookout for "questionable tactics" and "sharp practices" by lawyers who try to impede its investigations. Inside, Columnist Bruce Carton looks at what the SEC finds objectionable and the penalties the Commission says it will impose for such practices.
 

Why Measuring Compliance Effectiveness Is So Difficult

May 01, 2012

For years compliance officers have mulled how to measure the effectiveness of their programs, thinking that identifying the perfect metrics would give programs direction and sustainable justification. While the goal is worthy, attaining it is far more difficult than first imagined. Inside, Steve Koslow, chief ethics and compliance officer at CUNA Mutual Group, provides insight on the challenges.
 

Aligning the Internal Audit Plan and Your Risks

May 01, 2012

Corporations know that managing risk is key to their survival today, and many even do a respectable job of assessing and ranking their risks. But what's the role for internal audit to ensure that the audit plan matches all those risks the company just spelled out? Inside, Columnist José Tabuena looks at how to prioritize internal audit's coverage of risk.
 

A Review of the Post-Implementation Review Process

April 24, 2012

A recent development in financial reporting that may have gone overlooked by some amid the flurry of activity is the Financial Accounting Foundation's new post-implementation review process for accounting standards. Inside, Columnist Robert Herz takes a close look at the new review process, including a pilot review of the accounting standard for uncertainty in income taxes.
 

Watch for Traps and Biases in Decision Making

April 17, 2012

While no bullet-proof method exists for making great decisions, more awareness of common decision-making pitfalls can certainly help. To that end, COSO recently published a guide to common traps and biases in decision making. Inside, Columnist Richard Steinberg examines COSO's advice for avoiding the biases that can lead to poor judgments.
 

Public Responses to Privacy Breaches

April 10, 2012

Oh, joy: Your company has had a data breach. Now comes the high-wire act of deciding how, and when, to announce that fact to the world. This week, Columnist Lou Thompson reviews the guidance for how to disclose a breach and the conflicting pressures that force companies to act faster than they'd like. "You have a bundle of variables to consider," he writes, "and the process is anything but simple."
 

Is the SEC's Whistleblower Program Working?

April 10, 2012

The SEC is preparing to dole out its first rewards under the whistleblower program established by the Dodd-Frank Act—and yet, for all the hand-wringing over concerns that its program would ruin internal compliance hotlines, early evidence suggests the SEC's program is not harming internal corporate compliance efforts. Inside, Columnist Bruce Carton looks at the SEC's whistleblower program and its effect on compliance so far.
 

Tectonic Forces in Fiduciary Duty Can Erupt in Governance Earthquakes

April 03, 2012

Underneath the surface, the current interpretation and application of fiduciary duty is undergoing subtle changes that could propel investors to become more engaged and to think and act long term. While these forces evolve at a glacial pace, they can play a big role in influencing changes to corporate governance. Inside, Columnists Stephen Davis and Jon Lukomnik survey the rumblings below.
 

How to Simplify Financial Reports: Be Reasonable

March 27, 2012

Standard setting and rulemaking efforts are underway to relax some of the accounting requirements that seem unnecessarily burdensome. But some of the complexity is the profession's own doing. Inside, Columnist Scott Taub calls for a more reasonable approach to interpreting accounting rules and avoiding unneeded complexity.
 

Does It Make Sense to Relax Regulations for Small Companies?

March 20, 2012

If Congress has its way, small companies that want to go public could luck out with a less-rigorous initial public offering process and exemptions from numerous Dodd-Frank Act and Sarbanes-Oxley Act requirements. But is it a bad deal for investors? This week Columnist Lou Thompson examines the pending legislation and considers the consequences.
 

The Board's Critical Role in Strategy Development

March 20, 2012

For the last few years, the most common word used in the boardroom has been "risk," but some directors are wondering if they are paying enough attention to the word that usually dominates boardroom discussion: "strategy." Inside, Columnist Richard Steinberg emphasizes the key elements of what works for board oversight of strategic development.
 

Taking the Sting Out of the Justice Department's FCPA Enforcement

March 13, 2012

A bruising loss in a landmark FCPA case against 22 individuals could help curb what some consider to be aggressive enforcement tactics by the Justice Department in foreign bribery cases. Inside, Columnist Bruce Carton examines the wreckage and considers what the Justice Department's colossal failure on its "Africa Sting" operation will mean for future enforcement of FCPA allegations.
 

To Gauge the Future of Say-on-Pay, Look Abroad

March 06, 2012

As proxy season approaches and companies brace for the second year of shareholder votes on executive pay, plenty of questions remain. Columnists Stephen Davis and Jon Lukomnik say many answers can be found by looking at how say-on-pay has played out in Britain. But, they warn, you might not like what you see.
 

Embracing Technology in Financial Reporting

February 28, 2012

Over the last few decades, technological advances have been brought to bear on various aspects of the financial reporting process. Yet it hasn't had the kind of transformative effects on accounting and financial reporting that it has had on other aspects of business and life. Inside, Columnist Robert Herz looks at some developments under way that could change that.
 

Fed's New Rules on Bank Risk a Mixed Bag

February 22, 2012

Along with stress tests and new liquidity requirements, the Federal Reserve is considering a host of new rules for banks and financial institutions that would require them to establish risk committees, designate a chief risk officer, and establish a risk framework. Inside, Columnist Richard Steinberg examines the proposed rules and finds some good ideas along with some that raise concerns.
 

Pre-empt Binding Say-on-Pay With Real Reform

February 14, 2012

If the United Kingdom adopts binding say-on-pay votes, can the United States be far behind? There's a history of business regulation taking root in Britain and Europe and then migrating to the United States. If companies want to head off that development, says Columnist Lou Thompson, they will need to make some voluntary reforms on executive compensation.
 

How Integrated Reporting Could Change the Nature of Disclosure

February 07, 2012

We're on the verge of a revolution in corporate reporting. Everything—the what, how, who, to whom, and when—could change. The driver behind such a fundamental transformation? Integrated reporting. Inside, Columnists Stephen Davis and Jon Lukomnik delve into what the future of disclosure might look like under an integrated reporting model.
 

Internal Audit and Compliance: Getting It Together!

January 31, 2012

Can internal audit and compliance professionals better collaborate for the benefit of their organization? Why not? Audit and compliance—working together—are uniquely positioned to help the board and management understand the importance of an integrated approach to governance activities. Inside, Columnist José Tabuena dispels some of the myths of integrated governance, risk, and compliance.
 

Boneheaded Plays in Risk and Compliance

January 24, 2012

If you watch football on ESPN, you've probably seen the segment "C'mon, man!" where analysts shout, "C'mon, man!" after showing clips of players making particularly "boneheaded" plays—plays that are really dumb or sometimes just inept. Well, much the same can be said for corporate governance and risk management. This week, columnist Rick Steinberg offers his best of the worst in 2011.
 

What the (Near) Future of Shareholder Communications Holds

January 24, 2012

As we look ahead at what information best-in-class companies will communicate to shareholders in the coming year and the methods they will use to communicate it, it's worth a quick review of innovations tried last year that met with only marginal success or outright failure. Columnist Lou Thompson looks at fifth analyst calls, virtual annual meetings, sustainability disclosure and more.
 

Emerging Trends in Corporate Governance

January 17, 2012

The champagne may be re-corked, but it's still not too late for some 2012 predictions. Inside, Columnists Stephen Davis and Jon Lukomnik make one for the coming year in corporate governance: that the collision of public-sector downsizing and citizen distrust of private enterprise continues to intensify the focus on the way corporations are governed. Also, find out how they did with last year's predictions.
 

2011: The Year in Enforcement

January 10, 2012

The past year was a busy one for regulatory enforcement. The SEC says it filed a record 735 enforcement actions during the 2011 fiscal year. And while the SEC was in pursuit of Ponzi schemers, inside traders, and other scammers, it was defending itself from Congress, the judiciary, and its own inspector general. Inside, Columnist Bruce Carton takes stock of the year in enforcement, including the unprecedented and the bizarre.
 

Preparing Your 2011 Financial Reports

January 02, 2012

Happy New Year—now get to work writing your company's annual report. That task requires all your skill at understanding useful and correct financial disclosure, so this week, Columnist Scott Taub offers his 10 tips on what makes for useful disclosure. And those tips include, he says, the idea that sometimes saying less is more helpful to investors. His full column is inside.
 

Revised COSO Internal Control Framework Is Here!

December 20, 2011

The Committee of Sponsoring Organizations released a proposal for a major update to its Internal Control—Integrated Framework, which has become the authoritative document on internal control. Inside, Columnist Richard Steinberg, who played a role in working on the original and the update, provides a sneak peak at what is in the revised version, including a discussion of the "principles" and "attributes" of internal control.
 

The Downside of Crowdfunding

December 13, 2011

In the name of job creation, Congress passed a series of bills that make it easier for small companies to raise funds without registering with the SEC and to use social media sites to do it. But could it open investors up to fraud and manipulation? Inside, Columnist Lou Thompson looks at the dark side of "crowdfunding," and why it might not be such a hot idea.
 

Reforming the Audit Firms ... Again

November 29, 2011

It's been roughly a decade since a spate of financial frauds such as Enron served as catalysts for the restructuring of the audit profession as we knew it. Now a new round of proposals for significant change is on the table. Inside, Columnist Scott Taub examines the proposed reforms and considers whether they will lead to higher quality audits or just more cost and complexity.
 

Daimler Gets This One Right

November 22, 2011

The stumblings of others make for great case studies on how to improve compliance programs. But on occasion a company's actions serve as a model to follow on how to get it right. When Daimler removed its U.S. CEO for what appear to be lapses in integrity, Columnist Richard Steinberg finds just such an example. Details inside.
 

Preparing for Proxy Season 2012

November 22, 2011

Speaking of proxy season, Columnist Lou Thompson covers some of the trends he expects to play out in the coming year. He says the pendulum continues to swing toward greater involvement by shareholders in the proxy process. Also inside, the latest thinking on shareholder meetings and tips for conducting shareholder outreach.
 

One Judge's Battle Against the SEC's Settlement Practices

November 15, 2011

U.S. Judge Jed Rakoff is pushing for a change to the SEC's method of settling cases with language that allows the accused to neither admit nor deny their guilt, which he once called "a contrivance designed to provide the SEC with the facade of enforcement." Inside, Columnist Bruce Carton looks at what it could mean for SEC enforcement if Rakoff is successful in challenging the practice.
 

The Reasonable Person: Internal Audit's Role in Internal Investigations

November 08, 2011

Yes, sometimes the best response to an allegation of misconduct is to commission an external investigation—but in many cases, an internal investigation will do just as well. How can you assure objectivity and independence in those cases? Inside, Compliance Week Columnist José Tabuena explores internal audit's role in serving as the "reasonable person" whose expectations are what counts in court.
 

Why Investors Are Demanding Change in Audit Reporting Practices

November 01, 2011

Big changes are likely coming to the audit world, including the possibility of increased reporting requirements for external auditors, or mandatory audit firm rotation. Whatever changes come, investors are pushing for auditors to be more accountable. Inside, Columnists Stephen Davis and Jon Lukomnik unpack shareholder demands for auditors to disclose more of what they know.
 

Renewed Focus on Mandatory Auditor Rotation

October 25, 2011

The PCAOB has recently begun assessing the potential benefits, costs, and unintended consequences of requiring periodic rotation of auditors by SEC registrants. Advocates of term limits believe rotation could address the conflict of the auditor being paid by the auditee. But the potential for additional costs and disruption to companies are also important factors. Inside, Columnist Robert Herz assesses both sides of the issue.
 

One More for the Rogues Gallery

October 13, 2011

The $2.3 billion in losses racked up by a single trader at Swiss bank UBS is just the latest result of a series of breakdowns in controls at large banks that let rogue traders gamble recklessly with massive sums. UBS's former CEO claims that there's "nothing you can do," but he should know better. Inside, Columnist Richard Steinberg surveys the wreckage and hunts for lessons on how to create effective controls.
 

It Pays to Get on Board the ESG Bandwagon

October 11, 2011

More companies are reporting their corporate sustainability efforts using the Global Reporting Initiative framework, but the portion of the Fortune 500 doing so still stands at 20 percent—far less than their European peers (45 percent). A recent survey that finds GRI reporters far outperform non-reporters, however, may entice more companies to join the crowd. Inside, Columnist Lou Thompson makes the case for why they should.
 

Executive Compensation: Stop the Insanity

October 04, 2011

Shareholders have pleaded for alignment in executive compensation, but despite endless "solutions," the result has been frustration on all sides and an erosion of the trust between investors and directors. No magical compensation formula can perfectly align interests. Yet, as Columnists Stephen Davis and Jon Lukomnik argue inside, there is still hope for a partial solution.
 

The Importance of a Strong Insider-Trading Compliance Program

October 04, 2011

Some companies still don't have a strong insider-trading compliance program, opting instead to let employees who violate the rules hang by their own rope. Indeed, some legal departments say it's better to have no policy than to have one that failed to prevent insider trading. Bad idea, says Columnist Bruce Carton. Inside, he lists the benefits of an insider-trading compliance program.
 

Why Support for Global Accounting Standards Is Waning

September 27, 2011

Support in the United States for moving to a single set of global accounting standards appears to be ebbing. Convergence projects remain unfinished, and questions linger—justified or not—about the effectiveness of the International Accounting Standards Board. These developments have left Columnist Scott Taub discouraged about the outlook for a single set of global accounting standards. And that's unfortunate, he says.
 

How Storytelling Fills in the Lines of Regulatory Ambiguity

September 20, 2011

Each new enforcement action brings a new set of characters and plot twists, as the case unfolds and lessons are learned about compliance errors. But as Columnist Louis Thompson observes, they also build a living library of compliance tales that bring rules and regulations to life and illustrate their complex concepts.
 

We Won't Get Fooled Again ... and Again, and Again

September 20, 2011

Too often companies fail to correct an underlying problem and continue to get tripped up by the same issues. Much of governance, risk management, and compliance is about dealing with the unknown—what could happen—which includes what did happen in the past. Inside, Columnist Richard Steinberg takes a look at three real-life cases where the same set of difficulties, left unaddressed, comes back to haunt.
 

Boards Step Up Zero Tolerance Corruption Policies

September 13, 2011

Anti-corruption laws are proliferating around the globe, and countries that already have them in place are strengthening them and pursuing offenders more aggressively, creating new compliance risks for companies. Do such risks rise to the level of governance? You bet, say Columnists Stephen Davis and Jon Lukomnik. Inside, they look at the implications for boards, shareholders, and compliance officers.
 

Surveys as Internal Auditing Tool

September 07, 2011

The recent history of major business frauds and failures invariably points to the culture of the fraudulent organization as a root cause. Fair enough. But how can an internal audit department evaluate something as intangible as culture? Inside, Compliance Week Columnist José Tabuena considers the employee survey: how it can properly be used to measure integrity, the effectiveness of compliance departments, and more.
 

Back to Reality: Debunking the SEC 'Whitewash' Theory

September 07, 2011

Another month, another instance of Congress and ill-informed outsiders beating up on the SEC—this time, over its destruction of files related to preliminary investigations that end up going nowhere. So says Compliance Week legal columnist Bruce Carton, who urges those critics to think through what an exhaustive records retention policy at the SEC would mean. His full thoughts are inside.
 

The Known Unknowns: Uncertainty in Financial Reporting

August 30, 2011

Whether and how uncertainties, such as a contingent legal liability, are reflected in financial statements has always concerned investors, while related accounting and disclosure requirements pose real challenges for issuers and auditors. Inside, Columnist Robert Herz takes a closer look at uncertainties in financial reporting and poses some basic questions to consider when examining them.
 

Lessons From the Fall: Where News Corp. Went Wrong

August 23, 2011

The phone-hacking scandal at News Corp. has led to the closure of a 168-year-old newspaper, the resignation—and in some cases arrests—of high-ranking company officials, and a hit to the reputation of the company and its bold chairman. The company's response could be considered a case study in how not to respond to a crisis. Inside, Columnist Richard Steinberg considers the lessons of News Corp.'s debacle.
 

Why You Should Be Talking to Hedge Funds

August 23, 2011

The Dodd-Frank Act includes a number of provisions intended to lift the shroud of secrecy that has cloaked the hedge fund industry since it began decades ago. But despite new rules, details on their investment strategies will remain largely hidden. Inside, Columnist Louis Thompson examines how to get at this information and why it's more important now than ever.
 

Want Strong Controls? Start With Respect

August 16, 2011

Speaking of employee surveys—Jason Mefford, head of internal audit at Ventura Foods, writes in a guest column this week that one of the most important variables a survey should track is employees' perceptions of respect in the workplace. If you want more engaged and productive employees, he says, then focus on respect in your organization.
 
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