The World in Union

This Week in GRC for September 8 2023

Sep 08, 2023

Welcome to This Week in GRC, MBK Search's weekly digest of the news and views in governance, risk, and compliance.

The Opening Bell: Kick-off

The 2023 Rugby World Cup kicks off this weekend in France. The tournament, which is predicted to generate $4 billion in total revenue, is not without its risks.

The 2019 edition hosted by Japan was disrupted by a super typhoon which saw two pool matches cancelled. Meanwhile, a late summer heatwave has gripped much of Europe, lending a sweltering start to this ostensibly winter sport.

The U.S. was announced as the host of the 2031 edition of the tournament, with Australia to host in 2027.

Why Gen Z’s interest in studying accountancy has gone red

Why is Gen Z less interested in becoming accountants? The number of students studying accountancy is gradually decreasing, with the latest figures showing a 2.8% fewer bachelor's degrees awarded in the U.S. for the 2019-2020 academic year. We explore the issue in this week's edition of The GRC Story.

Lee became the fourth hurricane to form in the Atlantic Ocean this year and is expected to strengthen into a major hurricane in coming days.
The FDIC released its latest quarterly report card on the state of American banks, citing the impact from inflation as the biggest risk facing the sector.
A joint-advisory of five countries is warning risk managers to update systems to avoid cyber attacks.

Seven years after a fake accounts scandal engulfed the bank, thousands of Wells Fargo employees are doubling down on risk management efforts:

Each day, employees gather in virtual and in-person “workshops” to map out the risks that come with big moves such as foreclosing on a home and small moves like allowing a customer-service representative to override a late fee. How best to manage those risks is debated. Employees regularly present before a panel of superiors, and their work either is waved through or sent back.
Risk exercises are common at many companies, but the stakes are higher at Wells Fargo. The bank needs to upgrade its risk and control functions to its own liking—and to satisfy regulators.

The bank finds itself in a “make or break” moment, as the Wall Street Journal reports.

The UK’s Financial Conduct Authority is vowing “prompt action” over refusal of bank services to the country’s politicians, following controversy around former Ukip leader Nigel Farage.
Google parent Alphabet has reached a tentative agreement with a list of U.S. states to end antitrust litigation accusing the company of running a monopoly with its Google Play app store.
Compliance and Risk Management startup Certa announced that it raised $35 million in its Series B round.

Regulators in Canada are forcing Wealth One Bank to cut ties with its three founders, relocate to a new headquarters with better security, sweep its corporate premises for bugs, and hire two senior compliance officers, one of whom will need government-issued security clearance.

The strong measures come after the country’s finance minister Cynthia Freeland sent a letters of patent to Wealth One earlier in the year, demanding the bank sever ties with its three founders over fears they might be susceptible to pressure from the Chinese government.

The list of demands include:

Data Protection

Wealth One must deny founders Xian, Chen, and Yang all data access. Any attempted access must be reported to the Ministry of Finance. A new Data Privacy and Security Council will meet quarterly to ensure compliance.

Messaging App Bans

Wealth One must prohibit WeChat and other messaging apps for work. Only company systems can be used for communications. Tight compliance is required on messaging apps.

Surveillance Countermeasures

Wealth One must hire a third party for annual sweeps for bugs and to check device security. "Sweeps" are mandated by the Ministry.

Physical Security

Wealth One must relocate ASAP to a Ministry pre-approved building, completely separate from Xian, Chen and Yang. The three ex-employees cannot enter the property unrelated to compliance.

Read the full extraordinary story here.

The FASB voted on Wednesday to issue a cryptoassets standard requiring entities to report on fungible crypto holdings using the fair value measurement standard.
Engineering and construction company Fluor agreed to pay $14.5 million to settle charges over accounting violations on two large-scale projects.
Nasdaq’s executive vice president John Zecca says the PCAOB’s plans to require auditors to identify laws and rules that “could reasonably have a material impact on a company’s financial statements,” will overwhelm Internal Audit teams.

Former PCAOB chief auditor Marty Baumann is calling on both his former employer and the FASB to form tighter bonds.

“I think the PCAOB and the FASB have to work together to resolve the going concern issue […] and together, they should both put out a common reproposal by the FASB on their existing standard and a proposal by the PCAOB to amend their standard to whatever it is they come up with.”

The push for a common solution has long been a pipe dream, but Baumann thinks it’s well within reach.

This piece from Thomson Reuters explores in depth what a common alignment could look like.

The FDA has proposed 3 guidances to improve 510 (K) clearance processes, making recommendations for selecting predicate devices, using clinical data and conducting performance testing for implants.
New legislation designed to regulate the American cosmetics industry will have one important benefit that’s been overlooked: addressing asbestos in makeup.
The medtech industry in both the UK and EU has reacted positively to news the UK will re-join Europe’s Horizon project.

The cost of prescription drugs in the U.S. is on average 156% higher than other developed countries. American drug companies argue that innovation and subsidizing care in other countries are driving prices skyward, but the top five companies made more than $80 billion in profit last year.

The risk effects are obvious. When a patient doesn’t take their medications, “diseases and disorders worsen, leading to more expensive conditions,” leading to higher spending by patients, insurance companies, and taxpayers.

N. Adam Brown argues that time has come for consumers to get a bigger say.

Do companies have enough resource to assess the risks in their risk assessments? In this episode of Compliance in the Weeds, hosts Tom Fox and Matt Kelly explore why attracting and retaining quality risk managers is an issue that deserves more attention.