The latest news headlines about the pandemic and its impact on employees, organizations, and governments.
Aug. 28, 2020
Economists presented a new paper at the U.S. Federal Reserve's Jackson Hole annual conference Thursday, linking the slowdown in U.S. productivity growth in recent decades to a decline in diffusion of knowledge from new innovations among companies. Bloomberg News (paywall) reported that the economists cited the concentration of patents and inventors among the largest companies as potential causes of the decline in knowledge diffusion from "frontier firms" to rival "laggard firms." That, in turn, may have prevented rivals from exerting enough competitive pressure on frontier firms, leading to a decline in incentives to experiment and innovate. The paper's authors say lax enforcement of antitrust laws may have played a role. They also warn that the pandemic may worsen the outlook for future productivity growth, as COVID-19-related disruptions weigh disproportionately on small- and medium-sized businesses and further reduce competition.
A well-known model from the Institute for Health Metrics and Evaluation (IHME) at the University of Washington forecasts that more than 317,000 people in the U.S. will die from COVID-19 by December,
CNN reports. This would reflect an increase of 136,000 additional deaths between now and December, and a daily death rate that could rise as high as 2,000 per day. Since January, U.S. health authorities have identified more than 5 million COVID-19 cases so far nationwide, and more than 180,000 people have died, according to the latest data compiled by Johns Hopkins University. Despite this bleak outlook, IHME researchers noted that these projections do not account for any potential changes in adherence to risk-mitigation procedures. For example, according to the study, "if mask wearing in public increases to 95%, more than 67,000 lives could be saved."
Female-owned small businesses have been disproportionately affected by the COVID-19 pandemic, and they are less likely to expect future revenue, investment, and staffing growth, according to a new report from the
U.S. Chamber of Commerce. Among the findings, 57% of male business owners said they expected a revenue increase next year, compared with 49% of female business owners. The Chamber surveyed 500 small business owners in July, most of whom operated businesses with fewer than four employees.
The U.S. Securities and Exchange Commission has released new rules that are the first significant upgrades to how publicly listed companies describe a range of business, legal, and personnel risk factors in 30 years, according to Agenda (paywall). The upgraded rules cover human capital resources, such as whether employees are working remotely, workplace health and safety information, and strategies to manage employees. However, the SEC (PDF) left it up to corporate boards and managers to decide exactly how much to tell investors about the connection between their human talent and the financial performance of their companies.
A government-backed program called "Eat out to help out" resulted in a boost to restaurants and pubs in the U.K. during the month of August, according to
The Economist (paywall). The
program incentivized Britons to eat out at participating restaurants on Mondays, Tuesdays, and Wednesdays by offering them a 50% discount on food and non-alcoholic drinks, up to a £10 ($13) discount per diner. Restaurants were reimbursed by the U.K. government. On the first day of the event, food sales were up 100% over the previous Monday, according to a hospitality researcher. In the first nine days alone, 64 million meals were consumed at 84,000 eateries, at a cost of £336 million to the UK government. According to the article, the program may have helped get people back to the habit of eating out: Almost 40% of participants were eating out for the first time since venues reopened on July 4 — albeit with social distancing restrictions. However, economists warn that the food and drink industry faces more pain in September, as rent deferments end and colder weather puts people off from eating out, especially outdoors. Internal audit in the public sector can consult with their organizations to look for ways to promote small business in their jurisdictions.
Aug. 26, 2020
The IIA and IFAC have issued a statement containing six recommendations to help audit committees "optimize their crucial role in governance, oversight, and long-term value creation," which are particularly relevant amid COVID-19 conditions. The professional organizations advise audit committees to stay well informed through heightened vigilance, dynamic communication and collaboration with stakeholders, and expanded access to expertise. Additionally, the statement suggests maintaining a broad, holistic perspective, encouraging innovation and continuous improvement, and optimizing performance through technology and flexible work practices.
While other diseases can be seen to infect people in "clusters," scientists have noted that COVID-19 is particularly efficient when it comes to transmission among large groups of people, according to an
NPR story. In fact, scientists with the World Health Organization (WHO) said there is evidence that between 10% and 20% of COVID-19 cases are responsible for about 80% of transmission events. There are two main reasons why the novel coronavirus is so "superspready," according to researchers — one is the way the virus spreads and the other is the behavior of infected individuals. For one thing, the virus can hang suspended in air particles and can spread effectively in a closed roomful of people. For another, research shows that nearly half of COVID-19 transmission happens before a patient shows symptoms or starts feeling sick. People at large, festive outings or in bars may be less apt to wear face coverings, as well. According to Dr. Gabriel Leung, dean of medicine at The University of Hong Kong, all of this means that containing the coronavirus requires more intensive interventions than past disease outbreaks like SARS. Based on the latest evidence, internal auditors should continue to provide guidance to their organizations on preventing "superspreader" events among employees, customers, or other stakeholders.
American Airlines plans to lay off 19,000 workers on Oct. 1, part of a plan to make the airline 30% smaller than it was pre-pandemic, CNBC reported. The cuts are the latest sign of the hardship facing the industry and its employees as the summer travel season winds down and protections tied to U.S. federal government aid expire. U.S. carriers have warned employees that thousands of jobs could be cut when the aid runs out. The airlines had agreed not to let any workers go through the end of September as a condition of the $25 billion they received under a broad economic stimulus package passed in March.
NBC News reports that, according to a new joint study from the Massachusetts Institute of Technology and the University of Oxford, the current guidance for social distancing — especially the "six feet apart" recommendation — may not be sufficient to halt the spread of COVID-19. According to the study, evidence suggests that COVID-19 may travel more than six feet through activities like coughing and shouting. In high-risk situations, such as indoor areas with poor ventilation or large crowds, social distancing beyond six feet should be considered, the report recommends. Even then, however, it is important for individuals to consider all of the variables involved in a situation and not just physical distance. For example, location, crowd size, potential exposure time, and the type of activity (shouting, singing, etc.) should all be considered when determining an appropriate risk mitigation strategy.
McDonald's Corp., which has been investigating possible misconduct by former CEO Steve Easterbrook, is looking into whether he also covered up improprieties by other executives, according to reports. The fast-food giant said it is now examining potential misconduct within its human resources (HR) department, including whether HR executives under Easterbrook ignored complaints about the conduct of co-workers and executives. Easterbrook was dismissed in November after an employee alleged she had a sexual relationship with him. The HR department has been under internal review since April. Internal auditors should review how the organization and HR department handle complaints about inappropriate behavior by executives and employees.
Aug. 24, 2020
During a media briefing last week, World Health Organization officials commented on recent reports that have suggested herd immunity may be achieved when as little as half of the population is immune, lower than the previous estimates that 70% would be required. WHO officials warned that research indicates only about 10% of the global population has COVID-19 antibodies. According to this World Economic Forum (WEF) article, focusing on herd immunity via antibodies is a distraction. Instead, the WEF advises citizens, governments, and business leaders to continue to focus on the known-to-be-effective strategies: testing, contact-tracing, isolating, mask-wearing, and physical distancing, as global collaboration on therapy and vaccine development continues. Internal audit can assist management on the risks involved in reopening offices as well as protective measures.
U.S. companies have registered a strong upturn in business activity, with both manufacturers and service providers registering expansions, according to global information provider IHS Markit (PDF). The firm's services index rose by the most since March 2019 to 54.8 for August, while the manufacturing index rose to 53.6 from 50.9 in July. In addition, Markit said the rate of job creation among service providers accelerated, while manufacturers indicated their first increase in worker numbers since February. Internal audit can assist corporate leadership in analyzing the evolving risk environment of the COVID-19 pandemic.
The director of Africa Centres for Disease Control and Prevention (Africa CDC) said the continent's lower daily average of COVID-19 cases last week was a "sign of hope" that the continent was beginning to "bend the curve slowly," according to the
BBC News. Africa CDC Director Dr. John Nkengasong also said the drop from 11,000 daily average cases to 10,300 cases was reason for cautious optimism, but urged people to continue wearing masks and social distance. Recorded cases and deaths are lower in Africa than in many other parts of the world, but some experts warn that this could be because of a lack of uniform testing across the continent. South Africa leads in testing and accounts for more than half of the continent's cases, and its daily average of new cases has recently fallen from 12,000 to 5,000. Internal audit can help their organizations monitor the state of COVID-19 in all parts of the world where they do business.
Although the COVID-19 pandemic is still strong in the minds of the public, there are additional risks people should be aware of that the presence of COVID-19 may cover up. One such risk is the movement into flu season, which has symptoms that easily could be mistaken for COVID-19. "You're in the flu season. Everybody is sneezing, everybody is coughing, and everybody has a runny nose," said New York Governor Andrew Cuomo. "Who has the flu and who is possibly COVID positive?" According to Norton Healthcare, the main differences between the two is COVID-19 causes potential loss in taste or smell, persistent pain or pressure in the chest, new confusion, and bluish lips or face. The public should remember that it is possible to have both at the same time, which should reinforce the need to take necessary steps to mitigate the chance for infection such as regular hand washing; avoiding the touching of one's eyes, nose, and mouth; and avoiding close contact with others. Flu season is a good time for internal audit to take a look at the organization's sick leave policies.