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

May 21, 2021

New Executive Order Requires Federal Agencies to Create a Strategy to Mitigate Climate Change Risks

On Thursday, U.S. President Biden issued a new executive order that directed federal agencies to develop a governmentwide plan to identify and disclose climate risk on government programs, assets, and liabilities within the next 120 days. Additionally, the order requires Treasury Secretary Janet Yellen to deliver a report on financial risk data related to climate change. Climate change continues to be a top priority for the current administration, which remains committed to cutting U.S. greenhouse gas emissions by up to 52% below 2005 levels by 2030. Biden has also said he expects the country to adopt a clean energy standard that would make electricity carbon-free by 2035, with the wider goal of net-zero carbon emissions accomplished by 2050.

Nearly 500,000 Cybersecurity Jobs Remains Vacant in the U.S.

According to CyberSeek, a tech job-tracking database from the U.S. Commerce Department, there are currently 465,000 open cybersecurity positions across the country with the majority located in California, Florida, Texas, and Virginia, CBS News reports. CyberSeek also notes that many of these positions require little more than a Network+ or Security+ certification, but there still remains a significant gap in qualified talent. This is also due to the high levels of competition in the computer science industry; a few college graduates may choose to pursue a career in cybersecurity, but many others will choose software development, artificial intelligence, or robotics. With ransomware and other cyberattacks becoming increasingly common across many different industries, this can quickly become a long-term risk across the business landscape and leave already short-handed companies even more vulnerable the longer the gap exists.

U.S. Federal Reserve, Treasury, Turn Attention to Cryptocurrencies

U.S. Federal Reserve Chief Jerome Powell turned up the heat on cryptocurrencies, saying they pose risks to financial stability, according to Channel News Asia, indicating that greater regulation of the increasingly popular electronic currency may be warranted. Powell also said the Fed would release a discussion paper this summer on digital payments, with a focus on the benefits and risks of establishing a central bank digital currency, and will also seek public comment. Meanwhile, the Treasury Department underscored its concerns that wealthy individuals could use the largely unregulated sector to avoid tax, and said it wanted big crypto-asset transfers reported to authorities.

AICPA: New Standard on Assessing Risks, Internal Controls

The AICPA Auditing Standards Board plans to finalize a new standard at its August meeting, reports the Journal of Accountancy. The standard, which was designed to address audit deficiencies discovered during peer reviews, defines how to discuss and assess risks related to internal controls and how to use that information to plan and perform audit engagements. The new standard includes attention to elements such as the control environment, the entity's risk assessment process, information systems, and monitoring that could result in material misstatements.

May 19, 2021

EU Moves To Loosen COVID-19 Travel Restrictions

The European Union (EU) on Wednesday took a step toward relaxing tourism travel restrictions for visitors from outside the bloc, with EU ambassadors agreeing on measures to allow fully vaccinated visitors in, the Associated Press reports. They also agreed on easing the criteria for nations to be considered a safe country, from which all tourists can travel. The EU imposed strict measures last year to contain COVID-19 outbreaks. EU nations will have to formally approve the measures before the borders can reopen. Meanwhile, Singapore said the opening of an air-travel bubble with Hong Kong, originally set for May 26, has been postponed because of an uptick in COVID-19 cases, according to Channel News Asia.

Business Coalition Will Push For Fixes to Child and Elder Care

JPMorgan Chase, McDonald's, Spotify, Uber, and almost 200 other businesses have formed a coalition focused on ensuring that women are not held back in the labor force because they bear the brunt of caregiving in the U.S., The New York Times reports (paywall). The new Care Economy Business Council portrays the effort in stark economic terms, arguing that fixing the nation's crumbling child and elder care systems is essential to the economic recovery. Led by Time's Up, the advocacy organization founded by powerful women in Hollywood, the council will push for federally funded family and medical leave, affordable child care and elder care, and elevated wages for caregiving workers.

Harris Poll 100: Corporate Reputations Shift as COVID-19 Recovery Progresses

The 2021 Axios Harris Poll 100 (PDF) has identified the 100 "most visible companies," defined by either excelling or faltering in the eyes of the U.S. public. The annual ranking of corporate reputations across seven dimensions is based on Harris Poll's Reputation Quotient framework and a survey of 42,935 Americans between April 8 and April 21. An overarching theme in the data is that some of the most visible companies at the beginning of the pandemic have been replaced in the top 100 by the companies that are assisting recovery and a return to normalcy and those that have taken a stand on values.

New CDC Guidance Met With Confusion, Criticism From the Public

Although the U.S. Centers for Disease Control and Prevention (CDC) recently updated its guidance to state that fully vaccinated Americans no longer need to wear a mask indoors, many individuals and businesses are still trying to adapt to the sudden shift. In some cases, some people are misinterpreting what the new guidance actually means. "I think people are misinterpreting, thinking that this is a removal of a mask mandate for everyone. It's not," Dr. Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, told Axios. "It's an assurance to those who are vaccinated that they can feel safe, be they outdoors or indoors … They said, 'If you are vaccinated, you can feel safe — that you will not get infected either outdoors or indoors.' It did not explicitly say that unvaccinated people should abandon their masks." In response to the criticism, Politico reports that the CDC plans to more tightly control messaging by consolidating oversight and creating a new reporting chain from the new director of the agency's vaccine task force to CDC Director Rochelle Walensky.

May 17, 2021

The IIA Appoints Heather Pownall as Executive Vice President and Chief Strategy Officer

The IIA announced on Monday the appointment of Heather Pownall, a longtime association executive, as executive vice president and chief strategy officer. Pownall, a certified association executive, strategic consultant, and facilitation expert, will join The IIA in June and serve on The Institute's executive management team. Her responsibilities will include planning and implementing strategic goals that focus on effective and sustainable growth and member engagement. She also will oversee key initiatives around culture, diversity, equity and inclusion, and innovation. In announcing Pownall's appointment, IIA President and CEO Anthony Pugliese noted that her vision and leadership "will fuel The IIA's strategic plans for enhancing internal auditor competencies and the membership experience, as well as advocating for the profession." Most recently, Pownell was a strategy consultant for ISC2 and chief development officer at the Association for Women in Science. She previously held leadership positions at Association of International Certified Professional Accountants.

WHO/ILO Study: Deaths From Working Long Hours Increasing Globally

Joint research from the World Health Organization (WHO) and the International Labour Organization (ILO), found that working 55 hours per week or more is killing 745,000 people a year globally, CNBC reports. The study — the first global analysis of its kind — found that working 55 hours or more per week was associated with an estimated 35% higher risk of a stroke and a 17% higher risk of dying from ischemic heart disease, compared to working 35-40 hours a week. Such deaths increased by 29% between 2000 and 2016, notes the study, published in the Environment International journal on Monday. The WHO said working long hours is the risk factor with the largest occupational disease burden and recommended that governments "introduce, implement, and enforce laws, regulations, and policies that ban mandatory overtime and ensure maximum limits on working time." 

Investors Weigh Inflation Fears, Indicator of Slow Chinese Economy, and Virus Variants

U.S. and European stocks fell on Monday as investors weighed the news of rising inflation, retail sales data indicating that China's economic recovery is slower than expected, and the implementation of restrictions in some Asian countries amid cases of the coronavirus variant first discovered in India, Business Insider reports. Audit committees should assess the key accounting and disclosure implications of changes in inflation expectations on estimates, forecasts, impairment analyses, according to an EY article on the Harvard Law Forum on Corporate Governance.

Federal Reserve Begins Privately Asking Lenders for Information on Climate-related Risks

Reuters reports that The U.S. Federal Reserve Board has begun privately asking lenders to provide information on the measures they are taking to mitigate climate-related risks to their balance sheets. These actions coincide with recent reports that the Fed is considering implementing a new scenario analysis that will help it better understand climate risks to bank assets, although no actions have been formally taken. That contrasts with the explicit actions European regulators are taking by rolling out climate change "stress tests" for lenders. The Fed analysis will cover geographical exposure of bank assets to physical risks such as flooding, drought, and wildfires, as well as test exposures to different sectors, such as how oil and gas loans may perform versus renewable energy loans.

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