Archive for the ‘Daily News’ Category
Posted on May 13th, 2008 by Priya Ramesh »Permalink
So, maybe some people have bigger plans this week than hunkering down for a nice thorough analysis of what factors contributed to the meltdown in the subprime market, but not us. If you’ve got a little free time and an interest in an interesting exploration, check out these collaborations between NPR’s All Things Considered and the public radio program This American Life. It’s actually far more interesting than we would have thought (especially the interviews with mortgage brokers whose fates soared — and tanked — right along with housing prices) — and it’s certainly relevant for anyone following the many ripples that this “thingy” continues to have on varied markets as the conversations continue on how to manage risk in financial markets.
Also interesting is this piece from SoxFirst, with thoughts from George Soros on who all shares the blame for what went down. Econ professors, you’re On Notice.
In cheerier news, we at Approva are the happy recipients of quite the industry award — for the second year running, we’ve been honored with The Service & Support Professionals Association’s (SSPA) STAR Award for Best Emerging Company Support. We’re honored by the recognition — and thrilled to have such a top-notch customer support operation.
Tags: subprime meltdown, credit crunch, George Soros, SSPA
Posted on May 12th, 2008 by Michael Cangemi »Permalink
Financial news in 2008 – from French bank Société Générale’s $7 bn loss to millions of write-downs at other major financial institutions amid hefty subprime losses – underscores the importance for financial institutions of implementing effective governance, risk and compliance (GRC) strategies.
But GRC is a complex challenge, and while many institutions may be tempted to throw more manpower toward the problem, that’s not necessarily the most efficient or effective means of addressing the issue. A recent Deloitte study in the banking sector highlights how dramatically compliance spending is growing – outpacing net income – 3.69% of net income in 2006 compared to 2.83% in 2002 – with 60% of that direct expenditure going to compensation of staff.
With compliance costs on the rise, financial institutions, like other companies, face the sometimes daunting challenge of achieving compliance, eliminating fraud, and managing overall risk — without draining their organizations of resources. Given the cost-consciousness, it’s little wonder that solutions that address broad GRC issues while delivering broader operational value to the business are especially in-demand.
Making the move to automation is a great first step in meeting these broad goals. Controls automation brings tangible and far-reaching benefits, from improved efficiency and elimination of unnecessary procedures to allowing for actionable reporting. Not to mention the advantages that automation offers the global enterprise, enabling data from differing business units, areas, and geographies to be combined for consolidated analysis.
Software solutions that go a step further to offer Controls Intelligence (such as Approva’s BizRights platform), provide even greater benefits, including the ability to continuously monitor critical transactions and processes so that companies have real-time visibility of their control and compliance performance and can manage risk in a proactive manner. This kind of visibility provides a crucial holistic view of controls across the company, so that businesses can address core control and compliance issues including segregation of duties, sensitive access controls or master data controls, across multiple applications – and prioritize high risk areas and exceptions, rather than wasting resources on repeatedly testing low risk controls.
Adopting an intelligent controls solution as the primary platform for compliance and control can result in a significant improvement in an organization’s ability to manage risk, prevent fraud and maintain compliance. Typical benefits in the financial services industry include:
• improved visibility of business risk
• less time preparing for audits
• reduced audit costs
• faster regulatory compliance
• reduced burden on IT staff
In addition to these direct improvements, most companies experience spin-off benefits through streamlined business processes, better quality of transactions, and a more secure operating environment.
A recent survey of bank executives found that 92% of respondents see regulations growing in complexity over the next three to five years. With this threat on the horizon, organizations in the financial services industry should think very seriously about leveraging automation to move their GRC strategies to the next level.
— Michael P. Cangemi is President and CEO of Financial Executives International and an Approva Advisory Board Member
Tags: financial controls, risk management, Controls iIntelligence
Posted on May 9th, 2008 by Priya Ramesh »Permalink
It’s been longer than we care to share since, Econ 101, but the steady hand of supply and demand is impressive still today. Seems like only yesterday that we were reading all over about how hard it is to find qualified accounting folk, and how in-demand they are, and voila! Today we read news that this year’s crop of accounting grads, both undergrad and graduate, is the highest in 36 years.
Speaking of supply and demand, low demand for the US Dollar — and higher demand for just about anything but the dollar (or the Zimbabwean Dollar — yikes), is impacting companies with large global operations (and clients who pay in Euros, Yen and the like). Financial Week warns, though, that gains may be fleeting as the dollar gains strength.
Elsewhere from Financial Week — check this out — an examination of how risk experts are working to account for human behavior in developing risk management policies. We’ll be interested to see where this discussion goes. We’ve talked before about the impossibility of legislating behavior, but planning for it might be something else entirely.
Finally, any NY-area readers might want to mark your calendars — it seems the S&P is holding a fair value accounting forum next Thursday, featuring FASB chairman Bob Herz and S&P’s chief accountant, among others.
Nothing like getting guidance straight from the experts, is there?
Tags: FASB, fair value, accounting industry, GRC, risk management
Posted on May 6th, 2008 by Priya Ramesh »Permalink
It’s shaping up to be quite a busy week for Wall Street. Bloomberg’s got the skinny on the latest goings-on in Microsoft’s bid for Yahoo! (as in, rough day for Yahoo! shareholders although happier days may come), and
Professor Bainbridge has an interesting related take on just what might have soured things in the end — and prevented a hostile bid from MSFT.
Elsewhere on Wall Street, reports that the FASB is about to get a good deal tougher on folks involved in the subprime mortgage meldtown, assembling a task force of assorted agencies to look into whether any of them committed mortgage fraud, insider trading and accounting fraud.” We’ll be watching this one closely.
Meanwhile, WebCPA has the goods on Interpublic’s deal with the SEC and the $12 million they had to cough up to settle charges of accounting fraud — without admitting or denying the charges.
Finally, in what has to be the best-headlined story we’ve read in ages, CFO’s got an interesting piece up this week on how accounting students are planning for the switch from GAAP to IFRS. It’s worth the read.
Tags: Yahoo!, Microsoft, GAAP, IFRS, FASB
Posted on May 2nd, 2008 by Priya Ramesh »Permalink
Howdy, everyone. There’s all kind of news today from the the world of finance. FASB is saying we-told-you-so about the subprime fallout, and just about everyone else is still scrambling to deal with the leftover mess. According to Financial Week, Senator Menendez (of the great state of New Jersey and the Senate Banking Committee), says that it’s time for reform for ratings agencies — that they’re playing both coach and referee.
Senator Menendez isn’t the only one calling for change. A senior official at the Treasury department is also advocating increased transparency in the marketplace, encouraging financial markets participants to adopt “voluntary measures to prevent abuses, reduce risk and boost transparency — or or face new rules requiring changes,” say the folks at Financial Week.
So we need improved transparency and fewer foxes guarding henhouses. Why does that sound so familiar, nearly six years after SOX?
Meanwhile, FierceSarbox picked up a study that CIO recently covered showing that more than 70% of security professionals list damage to brand as a top concern — more so even than avoiding regulatory violations or data breaches or ID theft. That level of awareness of the less tangible, but still serious damage that can come from compliance weaknesses is pretty enlightening. Looks like awareness of the importance of an enterprise-wide focus on GRC is really catching on . . .
Finally, because we’re not above tooting our own horns at Audit Trail, we thought our readers would be interested to hear that Approva has been named to the 2008 Red Herring Top 100 most innovative private technology companies headquartered in North America. You can read a little more about this here.
Tags: subprime meltdown, security officers, GRC, governance, risk and compliance, Red Herring 100
Posted on April 29th, 2008 by Priya Ramesh »Permalink
Happy Tuesday, everyone. It seems that the PCAOB is considering a rule requiring accounting firms to disclose to audit committees any potential conflicts of interest between themselves and the operations they’re auditing. Fierce Sarbox says it’s a no-brainer, and we’re inclined to agree. Anybody out there want to argue otherwise? That’s what our comments are for — let your voice be heard.
Meanwhile, risk seems to be the topic of the week. Financial Week examines how demand has soared for Chief Risk Officers (most recently at Washington Mutual).
As the Financial Week article linked above says, “The credit crunch has pushed risk management to the top of corporate directors’ list of concerns.” No telling how much farther it will climb amid increasingly grim financial news, like Morgan Stanley’s warning that problems for big banks have only just begun. But according to company CFOs, economic forecasts are indeed grim — just not for their own companies. Hmmm. So is this just a high-profile case of cognitive dissonance, or do they know something we (and the Fed) don’t?
Tags: PCAOB, risk management, conflict disclosure, credit crunch
Posted on April 22nd, 2008 by Priya Ramesh »Permalink
Last week was pretty exciting for many of us at Approva. Our own Monica Elliott and Brian Groves attended COLLAORATE 08, which we’ll be telling you more about shortly (stay tuned!). We can tell you about one highlight right away, though — Chris Heller from Grey Sparling solutions live-blogged Monica’s session on strengthening data privacy in PeopleSoft. It’s a good read — be sure to check it out.
Speaking of good reads, Charles over at Trust Matters has an interesting take on how important trust is in customer relationships, and the positive impacts that honest dealings have on a company’s bottom line.
Finally, because it’s been something crazy like four whole days since we blogged about executive compensation, an interesting piece from Compliance Week on exec tax gross-ups, which shareholders (and many average Joes) despise but which — according to our friends at tThe Corporate Library, don’t seem to be going away any time soon.
Tags: COLLABORATE 08, corporate trust, executive compensation
Posted on April 21st, 2008 by Priya Ramesh »Permalink
Happy Monday, everyone. Not-good news out today from Bank of America, which just posted a 77% decline in quarterly profit, with losses being blamed on ongoing credit problems. They’re not the only ones — not by a long shot — who are a little cash-strapped these days. Are we the only ones getting weary of new of CDOs, structured debt products and and credit squeezes?
Financial Week is reporting on a Moody’s analysis that shows a record number of corporate bond issuers with weak liquidity ratings. Weak liquidity ratings are often a precursor to defaults. Since no market operates in a vaccum, defaults almost always manage to spiral, bull-in-china-shop style, through the economy, so we doubt this is that last we’ll hear about the defaults.
Speaking of spiraling effects, NPR had a good discussion last week of collateralized debt obligations (CDOs) and their role in the ongoing credit crisis. One of the more illuminating points was how hard it is to assess a value for the CDOs in financial instutitions’ profiles, since no one’s buying them right now. Banks have been doing their best to guess, and when they think they’ve guessed wrong, we see write-downs.
Which leads us to an interesting interesting read on the transition to fair-value accounting. It seems that average Joes aren’t only ones struggling to make sense of CDOs and what they mean for the market. It seems that no less than the board members of FASB have run into some issues when discussing how best to assign value to liabilities that have no market — so much so that they had to interrupt a meeting on this issue to give time for clarifying complicated fine points on fair-value accounting.
Maybe we should recommend reading this little ditty, and oldie-but-goody from late last year? It’s practically educational.
Tags: credit squeeze, CDOs, fair value accounting, FASB
Posted on April 16th, 2008 by Priya Ramesh »Permalink
So much in the news this week! First up, all kinds of economic news, most of which can be categorized as less than optimistic. Reuters reports that bankruptcies were up by 38% last year. Global food prices are on the rise, fueling inflation domestically and elsewhere. (You think .3% is bad? Check out Zimbabwe’s national rate of — and we’re being careful to type this accurately — 165,000%.
Meanwhile, analysts at JP Morgan are predicting that the “market hangover” could last a decade or more.
In the wake of serious subprime losses, it looks like Bear Stearns is being investigated by both the SEC and the FTC for questions about the bidding process for Bear’s municipal derivatives, as well as Bear’s EMC mortgage unit’s business and servicing practices.
With the market downturn, shareholders are looking closely at areas for cost savings, and exec pay (along with golden parachutes) are getting a good bit of attention. Not everyone thinks Say on Pay is a good idea, but a lot of people are talking about it.
Speaking of people talking, very exciting news from Monday’s Wall Street Journal — a profile on Audit Trail’s close pal Steve Zelin (whom faithful readers will remember from his prominent role in our SOX Fifth celebration. Don’t forget you knew us when, Steve!
Tags: economic outlook, Say on Pay, Singing CPA, Bear Stearns
Posted on April 14th, 2008 by Priya Ramesh »Permalink
So, it like domestic accounting standards (GAAP) are on their way out, to be replaced by international ones. CFO Magazine has good background on what’s likely to happen, and their follow-up this week is equally worth reading. Because things are almost never as straightforward as they seem, we recommend also reading Accountants Round Up’s exploration of some dicey issues that may arise when international standards are finally the law of the land.
Closer to home, SOX is still a hot topic, though Compliance Week has a very interesting study out about SOX spending, and how companies are moving beyond SOX alone to address more generalized risks, with some great analysis from our good friend John Hagerty of AMR. Hey, did we just say SOX spending can have business impacts beyond compliance alone? Why does that sound so familiar?
Elsewhere at Compliance Week, they’ve got some interesting follow up to the Bear Stearns meltdown — the skinny from one of FASB’s valuation research group members about just how much detail FASB regulations required Bear to disclose about mortgage-backed issues. Hint: It’s more than you’d think from listening to the companies and regulators blaming FASB for the current state of things. So the question that seems to remain is whether the investment community chose to see what it wanted to, or whether the arrangements were so complicated that even the experts couldn’t decipher them. We’re not sure which of those scenarios is worse, but we’d love for you to weigh in on it.
Tags: GAAP, IFRS, Bear Stearns
