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The latest news headlines on issues and developments affecting the internal audit profession.

March 12, 2021

More than 25% of S&P Companies Had ESG on Agenda in Recent Earnings Calls

A growing number of S&P 500 companies are including information on their environmental, social, and governance (ESG) initiatives in quarterly earnings calls, according to investment data analytics company FactSet. The data shows that more than 25% of S&P 500 companies talked about ESG in their fourth-quarter earnings calls from Dec. 15 to March 5 — up 64% from the third quarter and 84% from the fourth quarter in 2019, Agenda (paywall) reports. "In the last 18 to 24 months, the acceleration of corporate issuers integrating ESG communications into investor materials has been off the charts," commented Victoria Sivrais, partner with investor relations firm Clermont Partners and board chair-elect at the National Investor Relations Institute. "Whether through earnings calls, CSR reports, or investor presentations — this has exploded." According to Agenda, the ESG talks have largely focused on strategic initiatives. 

Biden Announces Every American Adult Will Be Eligible for a Vaccine by May 1

In an address last night to the American public, U.S. President Biden made a declaration that he would be directing all states to make all adults eligible to receive a COVID-19 vaccine by May 1. This deadline, which comes sooner than many experts previously thought possible, has significant implications not just for businesses who are still looking to return some degree of normalcy, but the U.S. public as a whole. "It will make this Independence Day truly special — where we not only mark out independence as a nation but our independence from this virus," Biden said. "I need every American to do their part." Biden also said the Centers for Disease Control will soon be releasing updated guidance for vaccinated individuals who wish to travel or attend events such as church worship services.

New U.S. Workplace COVID-19 Rules Expected to Face Criticism

The Biden administration is expected to issue new temporary rules next week to curb COVID-19 spread in workplaces, setting a collision course with the growing number of states loosening restrictions on businesses to aid their reopening, Politico reports. The mandates from the Occupational Safety and Health Administration would add enforcement powers to guidelines that are now just optional. However, they threaten to further roil the politics around the administration's cautious reopening strategy. Businesses warn the policy could create confusion and bring hefty new costs for employers, while worker advocates say the rules are needed to protect the largely unvaccinated labor force.

2021 General Audit Management Conference Starts Next Week

The IIA's General Audit Management (GAM) Conference is fully virtual this year. The conference runs from Tuesday, March 16, through Thursday, March 18, and is bookended by a pre-conference workshop and chief audit executive forum as well as post-conference events. The 43rd GAM conference, which is themed "Internal Audit Recharged: Ready, Relevant, Resilient," will focus on rethinking audit practices to optimally position today's audit leaders for future advancement in the post-COVID-19 new norm. The conference offers internal auditors opportunities to learn from and network with industry experts, earn continuing professional education credits, and discover new technology and products to aid internal audit processes. Friday's post-conference activities include a town hall with Anthony Pugliese, the incoming president and CEO of The IIA.

March 10, 2021

Impact of Microsoft Exchange Server Hack Continues to Grow

Four zero-day vulnerabilities in Microsoft Exchange Server are being actively exploited by Hafnium, a state-sponsored threat group from China, and other threat actors in widespread attacks, ZDNet reports. It is estimated that between 30,000 and 60,000 organizations had been hacked as of March 8. The critical vulnerabilities affect on-premises Exchange Server 2013, Exchange Server 2016, and Exchange Server 2019 email inbox, calendar, and collaboration software. Exchange Online was not affected. If used in an attack chain, these vulnerabilities can lead to remote code execution, server hijacking, backdoors, data theft, and potentially further malware deployment, according to Microsoft. Experts warn the hacks could be used for ransomware deployment and data theft. Microsoft has urged IT administrators and customers to apply security fixes immediately. In addition to patches, Microsoft has issued interim mitigation option guides for situations in which patching immediately is not possible, an IT administrators' script on GitHub that includes indicators of compromise, and an additional set of security updates that can be applied to older, unsupported cumulative updates as a temporary measure.

Worldwide, More Employees Feel Pressure to Compromise Ethics Standards

In its annual study of workplace behavior, the Ethics Compliance Initiative (ECI) found that, globally, more employees felt pressure to compromise ethics standards in 2020. Based on data from 14,000 employees from 10 countries, the 2021 Global Business Ethics Survey indicates that 29% of employees worldwide experienced pressure in 2020, with China (53%), India (50%), Mexico (35%), the U.S. (30%), the U.K. (26%), and Spain (23%) reporting record-high levels of pressure. In the U.S., middle managers and top managers were more likely to report pressure to compromise standards than were first-line supervisors and nonmanagers. According to the study, more employees reported observing misconduct such as favoritism, lying to employees, conflicts of interest, inappropriate hiring practices, abusive behavior, and health violations. According to the report, the uptick in misconduct was predictable: "Based on ECI's previous research, we know that when there is increased pressure, the rate of observed misconduct also increases," ECI stated.

Banks, Businesses Push for Continuation of U.S. Small Business Aid Program

Banks and other businesses are pressing U.S. President Biden's administration and Congress to keep the government's largest small-business aid program running beyond its March 31 expiration date, warning that struggling employers need more time to obtain the economic lifeline. Politico reports that banks responsible for distributing billions of dollars in loans under the U.S. Paycheck Protection Program are already beginning to close their application portals so they can process requests and ensure they can clear new government fraud reviews. The crunch comes just days after the Biden administration unveiled new rules designed to help self-employed businesses gain access to the program and qualify for more aid. 

COVID-19 Has Increased Financial and Social Inequity Between Women and Men

report from the U.K. Office of National Statistics finds that the well-being of women has been more negatively affected than men during the COVID-19 pandemic. Women are more likely to be furloughed, more likely to dedicate additional time to unpaid household work and childcare, and likely to spend less time working from home than their male counterparts. In one notable statistic, in September and October 2020 women were doing 99% more unpaid childcare than men and 64% more housework. The findings also show that nearly 70% of women who experienced negative disruptions because of the pandemic are now concerned about their ability to progress in their career. "Women need to take stock," said Sarah Coles, personal finance analyst at Hargreaves Lansdown in Yahoo News. She says women who have taken a career hit during the pandemic should understand how it will impact them over the long-term and how they can close that gap. "Otherwise, there's a risk that the gender gap that has opened up during the pandemic hurts women financially for the rest of their lives," she notes.

March 8, 2021

California State Audit Critical of State's Claims of Greenhouse Gas Cuts

An internal audit report said officials of a California state climate change program have overestimated the results of their efforts to coax Californians to drive cleaner vehicles, calmatters.org reports. According to the audit report, the California Air Resources Board "has generally not determined the effects its incentive programs have on consumers' behavior and thus, has overstated [greenhouse gas] emissions reductions its incentive programs achieve." The state uses a combination of incentives and regulations to encourage the reduction of carbon pollution from vehicles. California may not be on track to meet its goal to cut greenhouse gases by 40% by 2030, the state auditor warned. Indeed, the report cited a "problematic trend" showing that emissions from transportation have increased since 2013.

EEOC Launches Probe Into Hiring and Promotion Practices at Facebook

The U.S. Equal Employment Opportunity Commission has launched a widespread investigation into Facebook for alleged racial bias in its hiring and promotions, Reuters reports. The agency is acting on the complaints of three job applicants and a manager who claim the company discriminated against them. Separately, NBC News interviewed current and former Google employees who said when they complained to human resources about racial or gender discrimination issues, they were told to get mental health counseling or take medical leave, even though their mental well-being was not an issue in the complaints.

On International Women's Day, U.N. Women Warns of Gender Inequality in Leadership

New research shows that when women are in power, government corruption is reduced, political parties are more likely to work together, and overlooked policy issues get more attention, U.N. Women announced today on International Women's Day. Only three countries globally have 50% or more women in parliament, and the same amount have no women in parliament at all, according to U.N. research (PDF). Current projections also show that gender equality in the highest positions of power will not be reached for another 130 years. U.N. Women's upcoming 2021 Generational Equality Forum will discuss these issues, kicking off in Mexico City on March 29-31 and culminating in Paris in June. During the global gathering, U.N. Women's Action Coalitions will define the most catalytic areas for investment in advancing gender equality. They also will seek commitments from diverse organizations — governments, nonprofits, companies, and youth leaders — to take actions that lead to lasting gender equality.

News of COVID-19 Variant in New York Raises Concerns With Loosening Restrictions

Although news regarding the ongoing COVID-19 continues to be positive, there are signs that the public at large should still be wary, Forbes reports. According to Dr. Anthony Fauci, a COVID-19 variant with some resistance to antibody treatments and vaccines is now spreading "pretty efficiently" through New York. Although this variant has not been as resistant to treatments as the variants found in South Africa, this strain does elude "some of the protection of antibodies from monoclonal antibodies, as well as the vaccine," Fauci told CBS News' "Face the Nation." Although this news should not be cause for panic or worry as of yet, Fauci does say that immediate measures should be taken by state and local authorities to prevent the spread, and warns that loosening restrictions now may prove counterproductive in the long run. "Don't turn the switch on and off because it really would be risky to have yet again another surge," Fauci said. The U.S. Centers for Disease Control and Prevention (CDC) is expected to release new guidance in the coming days that will detail procedures for people who have been fully vaccinated.

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