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The latest news headlines about the pandemic and its impact on employees, organizations, and governments.

May 22, 2020

Relaxed Medicare Rules Opens Door to Telemedicine Fraud

While telemedicine is a useful and potentially life-saving option during lockdowns, it can also be an avenue for Medicare fraud. Medicare reimbursement rules have been temporarily relaxed during the pandemic, allowing recipients greater flexibility and access to telemedicine. According to an article in Fraud Magazine, the U.S. Federal Bureau of Investigation, the U.S. Department of Health and Human Services Office of the Inspector General, and the U.S. Department of Justice recently charged 24 defendants in a $1.2 billion Medicare kickback and bribery scheme. The alleged crime involved call centers providing kickbacks to telemedicine physicians for prescribing medically unnecessary equipment. The call centers sold the prescriptions to medical supply companies, which then billed Medicare for more than $1 billion. Internal auditors in the public sector and health-care industry should be alert to the possibilities of telemedicine fraud.

Tech Companies Weathering COVID-19 Storm

Nearly two-thirds of U.S. technology solution companies expect to see signs of recovery from the COVID-19 pandemic by August, according to a new poll by the IT industry's leading tech association. Globally, the outlook is not as upbeat, with most expecting to get back on track by September or later. The survey by CompTIA, finds close to half of respondents (46%) remain optimistic, the same percentage are "hanging in there," while the remaining 8 percent report they are struggling, according to a news release on the survey.

China +1 Strategy Will Enhance Global Manufacturing Capacity

According to the Oxford Business Group, the trend towards diversifying global industrial capacity is accelerating as companies adopt a "China +1" strategy in the wake of the COVID-19 pandemic. The strategy calls for maintaining significant operations in China while developing production capacity in other countries. The article touches on incentives in countries including Vietnam, the Philippines, Thailand, Indonesia, Morocco, Egypt, and Mexico. This shift is expected to encourage the growth of small- and medium-sized enterprises in emerging markets and enhance long-term manufacturing self-sufficiency. Companies considering relocation should assess costs associated with establishing new supply chains, because necessary components, raw materials, and other production inputs need to be established near new production sites.

Reuters Chart Tracks Status of Restrictions Worldwide

National and local authorities around the world are beginning to wind down the restrictions imposed to slow the spread of COVID-19, gradually lifting the lockdowns that have stunted economies and thrown millions out of work. Reuters has developed a chart that shows the status of social distancing measures in five important areas: schools, shops, bars and restaurants, public transport, and international travel. The chart will be updated as more governments announce measures to reopen their economies, or if they go too far and have to pull back. Internal audit should assist organizations in analyzing the risks of resuming operations as restrictions are lifted.

UK Consumer Confidence Drops to Decade Low

Consumer confidence in the U.K. fell back to the lowest level in a decade in May compared with the end of April, indicating that consumers remain gloomy despite the easing of some lockdown measures, according to MarketWatch. The GfK consumer confidence barometer was at minus 34 in May, down one point compared with the reading two weeks earlier. The barometer has been roughly at the same low level since the last two weeks of March, when the nation entered a state of lockdown in an attempt to slow the spread of COVID-19.

New Player in Cyber Wars — Fleeceware

The latest twist in the ever-evolving cyber war is something called fleeceware. While not as devastating or potentially costly as ransomeware or malware, it could be detrimental to organizations and individuals battling the COVID-19 pandemic's economic fallout. Fleeceware is the practice by unscrupulous app providers of hiding high charges in misleading language or fine print of their contracts. For example a $9.99 introductory offer could balloon to $200 in a week, not a month. Organizations should be alert to the practice and train staff to carefully scrutinize details of such too-good-to-be-true offers. An article in TechRepublic provides some practical tips to avoid getting fleeced.

May 21, 2020

Dark Days for the Experience Economy

Around the world, massive music festivals, theme parks, and sporting events have gone silent this year, and they may be among the last industries to return, The New York Times reports. The experience economy contributed $1.6 trillion to the U.S. gross domestic product last year and has spawned its own value chain of support services. In the wake of the coronavirus, events have been cancelled, and companies that produce live events and experiences have seen large stock declines and employee furloughs. Even with lockdowns easing, consumer concerns about large gatherings and travel may make restarting these events tentative at best and have a pass-on economic impact on cities and states that depend on large events. Internal auditors at organizations that produce live events should help management and the board work through plans for reopening, if that's possible, as well as how to weather the current storm.

IG Firings May Impede COVID-19 Relief Oversight

The ouster of five U.S. government inspector generals (IGs) in the past six weeks could inhibit oversight of federal coronavirus relief measures, Reuters reports. Of particular concern is whether members of the Pandemic Response Accountability Committee, a panel of IGs, can carry out their anti-fraud tasks when they may fear for their jobs. The article notes that government decisions during the pandemic may have "lasting economic and public health consequences." It points out that empowered IGs and "aggressive oversight" helped minimize fraud in a $700 billion bailout package during the 2009 financial crisis.

Google, Apple Release Software to Fight COVID

Google and Apple yesterday released software for smartphones that will allow governments to create apps capable of notifying people if they have come into contact with someone infected with coronavirus. Using Bluetooth functionality, the software can detect if a person who has downloaded the app has spent time near another app user who tests positive, according to this article in The Guardian. Twenty-two countries and several U.S. states are planning to build voluntary apps using the software, which will use encryption and anonymous identifier beacons to protect the identity of users. The collaboration between the rival tech giants will work across national and regional borders and make it easier for iPhones and Android phones to detect each other.

New OSHA Memorandum Gives Guidance on Reporting COVID-19 as a Work-related Illness

New guidance from the U.S. Occupational Safety and Health Administration (OSHA) for compliance safety and health officers (CSHOs) helps determine when COVID-19 cases must be recorded as work-related under the recordkeeping obligations of the Occupational Health and Safety Act. It is effective May 26, 2020, and supersedes guidance issued last month. The Memorandum, according to this article on JD Supra, reminds employers that COVID-19 cases among workers should be examined and responded to appropriately as a matter of health and worker safety. It also provides considerations for CSHOs in recordkeeping obligations and reasonable determination of work-relatedness. Internal audit should review the guidance as part of its role providing assurance in the realm of environmental, health, and safety risks.

May 20, 2020

Remote Audits, Remote Work, and More: Contingency Plans With Staying Power

While the pandemic has certainly delivered widespread economic damage, it has also accelerated the adoption of technologies and practices that arguably promote efficiency and cut costs. A Forbes article makes the case that while remote work, remote audits, and telemedicine were at first seen as merely contingency plans in an emergency, their practicality and success has given them staying power. Moreover, the pandemic has not only influenced the adoption of such non-traditional practices, it has also at times promoted technological innovation. As examples, the article cites the use of artificial intelligence to rapidly identify target populations for a COVID-19-related clinical trial and the use of drones for inventory audits. Some of the contingency plans, while not completely replacing traditional work practices, may be here to stay.

Tips for Companies Considering Voluntary Layoff Programs

As companies face grim economic times, some are considering programs that offer incentives for employees to step down voluntarily, perhaps reducing the potential for lawsuits, reputational damage, and the liability for unemployment payments. This article reviews considerations for human resource professionals and management. Recommendations include transparently communicating about specific areas of the business that need reduction and designing a policy that defines terms, explains the purpose and process of the program, describes who is eligible, and specifies required documentation. The authors contend that an attractive voluntary separation package for outbound employees should include a "better-than-average severance rate" of pay and outplacement services. The article discusses the risks and benefits of such programs, provides downloadable guides and references, and advises that organizations work closely with legal counsel to ensure compliance with laws.

Airlines Face Wave of COVID-19 Litigation

Airlines are contending with a wave of pandemic-related litigation that will complicate recovery efforts as governments begin easing travel and stay-at-home restrictions, according to a report in Law 360. Ticket refunds for cancelled flights are a lightning-rod issue, triggering suits against most major carriers as well as two enforcement notices from the U.S. Department of Transportation. In addition, some carriers have been accused of circumventing rules barring them from cutting payroll or reducing staffing levels before Sept. 30 to receive funds from the CARES Act.

Debate Arises Regarding COVID-19 Data Sharing

There is growing concern that, despite assurance that private medical information would be protected and remain undisclosed, such information is being shared among government entities, says an article from ABC News. Officials in at least two-thirds of states are sharing the addresses of people who tested positive with first responders, and at least 10 of those states are sharing the patients' names. Although the sharing of such information does not violate medical privacy laws, says the U.S. Department of Health and Human Services, this is particularly concerning to minority communities, who worry about the potential for profiling or even the sharing of such information with immigration officials. Additionally, there is confusion regarding law enforcement best practices, which say that every individual should be treated as if they may have COVID-19. This, in effect, would negate the need for medical information to be shared.

LinkedIn Data Suggests Job Hiring Hit Bottom in Mid-April

CNBC reported that the worst of the U.S.'s coronavirus-related job losses may have occurred in mid-April, followed by a plateau, according to LinkedIn Chief Economist Karin Kimbrough. Its data through May 8, 2020, shows that countries hit earlier by the coronavirus, such as China and France, have already begun a recovery in hiring rates, but progress is slow. "They haven't yet returned back to where they were prior to the crises, so if China is any guide for the U.S., then I think it's going to be an extremely gradual pace of recovery in terms of hiring," Kimbrough said. She explained that resuming hiring will come after retooling strategies and reconfiguring supply chains.

May 19, 2020

COVID-19's Integration of Work and Life

The boundaries that separate work from the rest our lives have been all but destroyed thanks to COVID-19, and many workers are wondering if a work-life balance still exists. Business scholar Stewart Friedman says that "balance is bunk" and a more gratifying goal is to better integrate work and life in ways that create "four-way wins" between work, home, community, and self, according to this article. Combining aspects of your life normally isolated from one another can create positive spill over and enrichment into other roles, say psychologists Jeffery Greenhaus and Saroj Parasuraman. This integration can allow us to work on being more open, honest, and vulnerable instead of trying to be the "perfect" partner or parent.

WEF Warns of Pandemic Fallout

There may be 18 months of "economic distress and social discontent" unless world leaders, businesses, and policymakers work together to manage fallout from the pandemic, warned the World Health Economic Forum (WEF), Marsh & McLennan, and Zurich Insurance Group in a report released today. Covid-19 Risks Outlook: a Preliminary Mapping and Its Implications ranks the biggest concerns, in terms of likelihood and impact, of 350 senior risk professionals around the world, with economic fallout — ranging from a prolonged recession to the weakening fiscal position of major economies, tighter restrictions on goods and people movement, and the collapse of a major emerging market — dominating companies' risks perceptions, according to this International Investment article.

Pandemic Boosts Use of Nonfinancial Metrics in Incentive Plans

COVID-19 will likely accelerate the move to incorporate nonfinancial metrics into executive compensation plans, especially as companies struggle to meet financial goals and stakeholders focus on how executives have handled environmental, social, and governance issues during the pandemic, according to this Agenda article. Research shows the use of nonfinancial metrics was already increasing year over year, but committees will probably rely more heavily on softer metrics — things like strategy, safety, customer satisfaction, and employee engagement — says Mike Esser, a managing director at executive compensation consulting firm Pearl Meyer. Moving forward, compensation committees may even look to include measurements on operational execution, supply chain issues, customer service, and workforce retention and optimization. Internal audit should be prepared to evaluate and monitor activities that drive incentive plan outcomes.

U.S. Relief Fund Has Issued Few Loans

A U.S. Treasury Department and Federal Reserve program has lent little of the $500 billion set aside to help companies during the coronavirus pandemic, according to the program's congressional oversight panel. Time magazine reports that the only fund that is operating is a fund intended to provide loans to large companies. Funds for aiding the airline industry and small and medium-sized businesses have not disbursed any money. The oversight panel's 17-page report questioned how the funds will operate and asked how Treasury and Fed leaders will assess the program's success or failure. Internal auditors should study the requirements of the various federal loan programs to better advise management and the board about applying for those loans. 

Pandemic May Permanently Shift Consumer Spending Online

A report finds that U.S. consumers have shifted buying habits online — and nearly one-fourth intend to keep them there after the pandemic. More than 40% of consumers say they are buying routine items online more often. One-third are going online for retail goods, 13% for groceries, and 16% for restaurant purchases. Consumers with more than $100,000 of income are most likely to continue buying routine items online. The report also notes that consumers who have shifted buying behavior online say they can live an average of 66 days on their savings, which may indicate the limits of consumers' buying power with unemployment increasing. Internal auditors at retailers should note the report's conclusion that the economic restructuring caused by COVID-19 may permanently shift $158 billion in brick-and-mortar sales online.

May 18, 2020

Age Discrimination and COVID-19: Organizations Need to Know the Risks

Organizations in almost every industry are facing tough questions on employee retention. Companies that determine they must lay off some employees to survive must ensure that they aren't acting discriminatory in the process. A Forbes article recently addressed the possibility that some companies might use COVID-19 as a pretext for firing older employees with higher salaries — or who management thinks may cost more in health claims or paid time off. A similar article in the National Law Review cites a lawsuit filed in May in which the plaintiff is claiming age discrimination, linking it to the COVID-19 environment. Both articles highlight red flags that can suggest an employee is being targeted for their age rather than a legitimate need to reduce the workforce. Some examples are: a relatively small-scale layoff, mostly made up of older, higher-paid employees; management making comments about age and retirement to older employees; and the employer hiring new, younger employees shortly after letting older ones go. Internal auditors can help mitigate the risk of an age discrimination lawsuit by providing advice to management on preventing discrimination during layoffs.

Experimental COVID-19 Vaccine Shows Promise

Promising early safety trial results of a coronavirus vaccine developed by a Massachusetts biotech company boosted stock markets and hopes of accelerating a path to normalcy. Moderna, based in Cambridge, announced the encouraging news May 18 along with plans to launch a large clinical trial in July designed to determine if the vaccine works. According to an article in The Washington Post, "The company reported that in eight patients who had been followed for a month and a half, the vaccine at low and medium doses triggered blood levels of virus-fighting antibodies that were similar or greater than those found in patients who recovered. That would suggest, but doesn't prove, that it triggers some level of immunity."

IRS Gives Employers Flexibility on Health Plans

According to The New York Times (paywall), the U.S. Internal Revenue Service has made it easier for employers to allow workers to make adjustments to their health-insurance plans and flexible spending accounts in response to the COVID-19 pandemic. Normally, strict rules prevent employees from changing health-insurance plans in the middle of a year. But under the new guidance, employers can let their workers drop out of their health insurance if they have another option, or sign up if they failed to earlier in the year. Workers also could be allowed to add more family members to their plan, or switch from one workplace plan to another. Internal audit can help guide organizations in assuring these policies are correctly implemented.

Investors Push Companies to Address COVID-19 Responses

Investors are pushing companies to address items like hazard pay and whether temporary policies and practices related to employees need to stay in place as businesses recover from COVID-19 shutdowns, according to a report in Agenda (paywall). Fiona Reynolds, CEO of the U.N.-backed investor network, Principles for Responsible Investment, says the top human resources issues for investors right now include information on furloughs, employee compensation, sick leave, health insurance, protecting whistleblowers, protective equipment, retention, full-time and part-time transitioning, and social distancing. 

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