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

June 4, 2021

Priority for U.S. Ransomware Investigations to Be on Par With Terrorism Cases

In light of recent damaging ransomware attacks, including the Colonial Pipeline and JBS SA hacks, the U.S. Department of Justice (DOJ) plans to treat investigations of ransomware attacks with the same priority as terrorism, Reuters reports (paywall). On Thursday, the department directed U.S. Attorney's offices to share information on all ransomware cases with the DOJ's ransomware task force, created in April. The DOJ said it is seeking to centrally coordinate the investigations to be able make connections between threat actors and other cases, both nationally and globally. "We've used this model around terrorism before but never with ransomware," said John Carlin, principal associate deputy attorney general at the DOJ. According to legal experts, the process has typically been reserved for "a short list of topics" such as national security cases.

U.K. Pushes for Mandatory Reporting of Environmental Risks

U.K. Chancellor of the Exchequer Rishi Sunak is pushing the Group of Seven nations to impose mandatory reporting of environmental risks on their big companies, Bloomberg reports. Under the proposals, which are being considered at the current G-7 summit, the biggest companies would report annually on their exposure to risks and opportunities presented by climate change. The report would follow guidelines set out in 2017 by the Task Force on Climate-Related Financial Disclosures. The drive comes as the U.K. seeks to burnish its post-Brexit credentials as a global leader on climate change.

Reports Show Signs of Recovery and Optimism in U.S. Economy ...

Two U.S. economic reports indicated cautious optimism this week. Tuesday, the American Institute of CPAs (AICPA) released its second quarter 2021 CPA Outlook Index, which reflects the views of AICPA members in executive positions across a variety of organization types and industries. The index moved from 68 to 78, with improvement among all major index components, including U.S. economy optimism, organization optimism, expansion plans, and employment. Friday, the U.S. Bureau of Labor Statistics reported that the U.S. economy added 559,000 jobs in May, with the unemployment rate dropping slightly, from 6.1% to 5.8%. Restaurants, bars, food service, amusements, recreation, and hotels all saw strong gains. Schools, health care, manufacturing, transportation, and warehousing also added jobs, while construction had the biggest loss as a sector. Still, 7.5 million fewer Americans are employed than were employed in February 2020, according to The Washington Post (paywall).

… But New Polls Suggest That Many U.S. Small Businesses May Close

Despite recent optimism regarding the growth potential of the U.S. economy following increased COVID-19 vaccinations and large-scale reopening of business offices, more risks may be on the horizon. According to a recent poll of 3,772 small business owners by Alignable, 35% of U.S. small business owners are still at risk of closing permanently by the end of the U.S. summer, CPA Practice Advisor reports. These feelings stem from the cumulative negative effects of the pandemic on the business landscape; inflationary pressures such as the rising costs of gas, supplies, and employees; and labor shortages. The latter is proving a notable surprise, with 55% of respondents saying they're having trouble finding employees, up 5% from last month. Additionally, several respondents reported that they are still not fully open. Some business owners even admitted to taking second jobs to keep their businesses afloat. Of those surveyed, one-third say they have fully recovered to their pre-pandemic monthly revenue numbers.

June 2, 2021

Meat Processor JBS Resumes Production After Cyberattack

The world's largest meat processing company, JBS SA of Brazil, said it is getting back online after production in North America and Australia was disrupted by a cyberattack, The Associated Press reports. According to Reuters (paywall), JBS told the U.S. government that it had received a ransom demand from a criminal organization likely based in Russia. The company said the cyberattack affected servers in supporting operations in the U.S., Canada, and Australia. Backup servers were not affected, and the company said it was not aware of any customer, supplier, or employee data being compromised.

7 EU Countries Join Initial Run of New Digital COVID Certificate for Travelers

The European Union (EU) has launched a trial run of its EU Digital COVID Certificate, a type of health passport that allows visitors to the EU to travel freely without having to be tested or go into quarantine, MIT Technology Review reports. To qualify for the certificate, travelers must show they have been fully vaccinated against COVID-19, have recovered from the virus, or have tested negative within the last 72 hours. Also called a digital green certificate, the passport is stored as a QR code, which can be presented via mobile phone or printed on paper. The certificate is now being accepted in Bulgaria, Croatia, the Czech Republic, Denmark, Germany, Greece, and Poland and will be active in all 27 member states on July 1. According to the European Commission website, data from the certificate is not retained anywhere for security and privacy reasons.

U.S. Cities Take New Climate Change Action

In a trend that has coincided with the agenda of President Biden's administration, major U.S. cities are launching programs designed to counter the effects of extreme weather resulting from climate change, Reuters reports (paywall). Miami, for example, has created a new position called the chief heat officer, which will develop strategies to help citizens adapt to the increasingly hot climate of the Miami area. In particular, the city is concerned about the climate's impact on what Mayor Levine Cava calls "communities of color and low-income residents, who have fewer resources to overcome these challenges." In February, Los Angeles launched a Climate Emergency Mobilization office with a $1.1 million budget to coordinate the city's policies on climate change across its dozens of neighborhoods and districts. Tucson, Ariz., already one of the hottest cities in the country, has hired a climate change advisor and city forestry advisor to supervise the planting of 1 million trees by 2030. Since 2019, more than 30 cities have taken such actions, many of which are specific to the issues facing each particular region. 

Judge Orders Process Fixes After Bank's Hacked Customers Go Hungry

Bank of America Corp. has finalized an agreement to improve its processes, as ordered by a judge in a lawsuit brought by California customers over the hacking of prepaid debit cards used to administer unemployment benefits, Bloomberg reports (paywall). Bank customers complained that they were damaged by the bank's response to the hacking. U.S. District Judge Vince Chhabria concluded that the account holders suffered "irreparable harm" after Bank of America used a faulty screening process to freeze accounts needed to "feed their families and keep a roof over their heads" through the pandemic. On Tuesday the judge directed the bank to take several steps to improve its processes.

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