ThinkTWENTY20

A random collection of news items I hope you will find interesting this week.
By Gundi Jeffrey, Managing Editor

Effective Ways for Accounting Professionals to Respond to a Data Breach

According to an article I found very useful, published in AccountingWEB June 18,2020, the following is a partial list of events that may indicate a security breach in your IT systems:

• Your passwords suddenly stop working
• Suspicious programs show up when you run “Control Panel > Programs and Features.”
• Your virus protection software has been deleted or disabled.
• When browsing, you start seeing many unusual browser pop-ups, URLs you enter are redirected to different webpages, or your Home URL is automatically changed to one for another website.
• You are suddenly missing files.
• You experience constant or regular crashes because the system has become unstable.
• Applications suddenly will not run or are missing.
• Your computer is running terribly slow, and even though you have a lot of memory and disk space, it keeps churning away for no apparent reason.
• You get locked out of your PC altogether because it says your password is invalid.
• You may get the blue screen of death, meaning the computer will not boot up at al.l

After any of these types of breaches have occurred, advises the article, the best defense against your computer systems shutting you down or causing major business disruptions is a solid plan B and good, current backups. But even that can be problematic, depending on the amount of time passing between when your system was breached and the time the malware is executed. Hackers know that most individuals do not back up their systems regularly, in which case the malware may execute as soon as it downloads or the next time the system boots. Alternatively, the malware may not run for several weeks or months after it downloads so it will be on all backups to negate a simple recovery by reloading. In that scenario, the malware executes again after you’ve restored everything.

For a ton of advice on how to prevent and spot security breaches, as well as what to do about them, consult: https://www.accountingweb.com/practice/practice-excellence/effective-ways-for-accounting-professionals-to-respond-to-a-data-breach.

The Six Biggest Post-Lockdown Challenges for Businesses and Organizations

According to a June 17, 2020 article in INSEAD Knowledge (which is published by an organization of the same name that calls itself The Business School for the World), a new normal is taking shape, and the pressure for safeguarding human lives and supporting workers and morale is shifting from governments to businesses and organizations. The upshot is that organizations will effectively be competing on how well they respond and adapt to the pandemic.

There appear to be six post-lockdown issues that organizations are grappling with: design and risk mitigation, remote working, control, connection, time horizons and versatile leadership.

The upshot is that organizations will effectively be competing on how well they respond and adapt to the pandemic, says Charles Galunic, INSEAD Professor of Organizational Behaviour. “The government has done some of the big work, and now the responsibilities are moving quickly down to the organization to try to figure out how to resolve economic issues, supply chain issues, and also health and safety issues,”

Apart from the other five post-lockdown issues noted above that need to be addressed, the most important will be versatile leadership. According to Galunic, “Senior leaders understand that things like financial reporting and supply chains have to work, processes that they oversee but do not directly manage. However, they need to directly manage key processes related to the business strategy such as sense-making, mobilization, structural balancing, cultural and capability development.”

For this crisis, concludes the article, it’s ultimately vital that we have versatile leaders who can work across the frontstage and backstage. “Leaders who will do the best through this moment in history will be working across those two stages – being competent frontstage, with powerful moments of inspiration and hope, but also working hard in the backstage, making sure they understand what the reality is in those key strategic processes that they have to own and then making them better.”

For detailed tips and advice, check out the article at: https://knowledge.insead.edu/blog/insead-blog/the-six-biggest-post-lockdown-challenges-for-organisations-14416.

Accountants focused on client retention and survival, AccountantsWorld 2020 survey finds

In April 2020, AccountantsWorld launched a nationwide survey to gauge the business outlook for accounting firms and their clients. Almost 400 professionals in public accounting participated.  Owners or partners of accounting firms represented almost 90% of the entire responding audience; 65% of responders work in firms with five or fewer employees; 23% were in firms with six to 20; and 12% were from larger-staffed firms.

Accountants are concerned that up to 28% of their clients may not survive the current economic landscape, versus only 5% of their clients that they expect will see growth.  Accountants believe that more than half of their small and medium-sized clients will struggle to survive or will need to scale down their growth expectations, and barely 10% will emerge with minimal impact to their business.

More than half of all respondents expect that their firm’s financial performance will decline by the end of 2020, while less than 13% are expecting elevated performance. Interestingly, 36% expect performance to continue at its current pace for the remainder of the year.

An overwhelming majority of accountants are focused on helping their clients navigate and survive the new normal.  Many firms are looking for new ways to increase efficiencies, such as upgrading technology and/or cutting costs.  At this time, long-term growth is not a primary focus for most firms.

For the fine details, check out: https://accountantsworld.blog/2020/06/08/accountants-focused-on-client-retention-and-survival-accountantsworld-2020-survey-finds/.

5 Easy Tips to Cope with Covid-19

There is a lot of advice out there on how to stay sane while coping with the many stresses that the Coronavirus has dragged into our lives – financial loss, families cooped up together for months at a time, strict isolation rules, etc., etc. Here’s a short round-up of the advice I have found most useful.

1. Breathe. Take regular deep breaths in and slow breaths out. This is called diaphragmatic or abdominal breathing. Studies have shown that diaphragmatic breathing lowers cortisol, our stress hormone and increases focus. Often, people shallow breathe when under pressure, worsening their stress. Instead, breathing properly triggers the nervous system to slow our body down.

2. Move. In the book Spark, the Revolutionary New Science of Exercise and the Brain, Dr. John Ratey talks about the power of exercise. He explains the mind-body connection and how elevating heart rates through aerobic exercise can remodel our brains, change our brain chemistry and make us feel better. For starters, try the 2-minute rule. Tell yourself that you are going to move for just 2 minutes. Anything will do, for instance, jumping jacks, skipping, running up and down the stairs, or dancing. It doesn’t have to be ‑a well-designed workout in a gym to gradually improve your general wellbeing.

3. Sleep. Disrupted sleep patterns can also negatively affect people’s mental and physical health. Deep and refreshing sleep is essential for high energy levels, a positive mood, concentration and focus. It also plays a vital role in regulating body weight and immunity. To improve the quality of your sleep:

• Avoid screen exposure 1 to 2 hours before bedtime. Try listening, reading or chatting to family or friends instead.
• Avoid eating too late, past 8 pm.
• Practice meditation or mindfulness. There are many apps and free resources available online.

4. Eat. Food is medicine and what we eat is vital to our body’s needs. The essential proteins and fats are the building blocks of the chemical processes that take place in our body. We need nutrients from food to produce hormones, enzymes and neurotransmitters such as serotonin, the chemical that is linked to our feeling of happiness.

• Eat whole foods and avoid processed foods when you can.
• Pay attention to your protein intake, incorporating fish, chicken, eggs, meat, or tofu.
• Opt for healthy fats, eating olive oil, nuts, or avocados.
• Eat more whole grains.

5. Laugh. Last but not least, finding humour in adversity can help overcome even the darkest of times. Studies have shown that laughter helps decrease levels of cortisol, our stress hormone. They have also shown that laughter has a positive effect on the immune system, activating the body’s protective cells.

That’s it. Breathing, moving, eating well, sleeping and laughing. A varied bag of tools to help us all stay healthy in our minds and bodies.

Employers Rush to Adopt Virus Screening But The Tools May Not Help Much

A recent article in the New York Times says that, while a plethora of new symptom-checking apps and fever-screening cameras promise to keep sick workers at home and hinder the Coronavirus, experts warn they can be inaccurate and violate privacy.

Many business leaders have been racing to use new employee health-tracking technologies to make it safer for people to return to their jobs in factories, offices and stores. Some employers are requiring workers to fill out virus-screening questionnaires or asking them to try out social-distancing wristbands that vibrate if they get too close to each other. Some even hope to soon issue digital “immunity” badges to employees who have developed coronavirus antibodies, marking them as safe to return to work.

For example, PwC in the US has developed a contact-tracing app to help employers “provide a lower-risk workplace for employees.” It will automatically log proximity between employees and can be used to help identify people who may have been exposed to the virus at work.

But a number of public health experts and bioethicists caution that there is little evidence to suggest that the new tools can accurately determine employees’ health status or contain virus outbreaks, even as they have enabled companies to amass private health details on their workers.

Worse, they say, many of the tools — including certain infrared thermometers and antibody tests that would be needed for employee “immunity” certificates — can be wildly inaccurate. Public health experts also fear that the tools could create a false sense of security, leading workers to spread the virus inadvertently.

For the full story, go to: https://www.nytimes.com/2020/05/11/technology/coronavirus-worker-testing-privacy.html

Preparing accounting students for a changing profession 

A recent AICPA blog noted that accounting programs just about everywhere have had to quickly make changes, “like adapting to full-time remote learning almost overnight in response to the coronavirus pandemic, as well as longer-term changes to ensure programs are preparing the next generation of accountants for the realities of a rapidly evolving business environment.”

Research conducted by the AICPA found that public accounting firms are hiring fewer new accounting graduates but more non-accounting graduates who have different skill sets, particularly those related to technology. Practitioners are increasingly advising schools that accounting curricula need to help students gain a better understanding of technology and its applications within the profession. As well, instead of entering the profession as generalists, students are now graduating straight into specialized roles in areas such as business valuation and forensic accounting.

According to the blog, accounting academic programs must consider whether or not they are equipping students with the skills and knowledge CPAs need in today’s business environment. And they also need to consider if they’re adequately preparing students for the roles they may have once they graduate.

That’s why the AICPA, in partnership with the National Association of State Boards of Accountancy (NASBA), has created CPA Evolution, an effort to transform the CPA licensure model to recognize the rapidly changing skills and competencies accounting requires today and in the future.

NASBA and the AICPA are proposing that CPA licensure moves to a “core + discipline” model. The proposed model starts with a strong core in accounting, auditing, tax and technology that all candidates would be required to complete. Each candidate would then choose a discipline in which to demonstrate deeper skills and knowledge. Regardless of chosen discipline, this model leads to full CPA licensure, with rights and privileges consistent with any other CPA. You can learn more about the proposed model in the blog at:

https://blog.aicpa.org/2020/05/preparing-accounting-students-for-a-changing-profession.html#sthash.7R5KQXBF.dpbs?utm_source=mnl:cpald&utm_medium=email&utm_campaign=18May2020

Client Accounting Services Poised to Surge in Post-Corona World

By Hitendra Patil, CPATrendlines May 19, 2020

According to this article, not all the impacts of the Coronavirus are terrible – there are some silver linings in those clouds of doom. For example, says this article, business owners are interacting far more with their accountants, compared to about six or so months ago. These interactions, in addition to being commercial and compliance-oriented, have also been highly emotional in these anxious times. Accountants also have seen far more busy times to meet the deadlines of PPP and SBA loan programs. “All of these efforts have ensured that, in general, clients are very grateful to their accountants and that accountants have accumulated very strong goodwill in a very short period of time.”

Even more important, clients have increasingly recognized how much more accountants can help their businesses, beyond traditional accounting, payroll, compliance and tax services. These experiences are fully expected to have more clients obtaining more services from their accountants, as business owners would want to fully focus on their own businesses.

Given these new shifts in clients' thinking processes, accountants are already planning to include more client accounting services in their offerings. Many accounting firms are expecting, and working on, generating more revenue from existing clients, because widening their service offerings will also make clients more "sticky." It is also much faster and economical for firms to sell more services to existing clients who are more receptive to explore such possibilities now.

Almost everyone has now been forced to rethink how to work and do business. Accountants are not immune to this effect. It is actually turning out to be an opportunity for accounting firms to rethink their business processes, technologies, services mix, and even the business models of their firms. Learn how to take advantage of the new opportunities that the Covid 19 crisis if offering you at: https://cpatrendlines.com/2020/05/14/client-accounting-services-surge-in-post-corona-world/.

The COVID-19 recovery will be digital: A plan for the first 90 days 

May 14, 2020 McKinsey & Company

We all know that this is happening just about everywhere and according to consultants McKinsey and Company, there is no end in sight. By now, most companies have digitized at least some part of their business to protect employees and serve customers facing mobility restrictions as a result of the COVID-19 crisis. As one CEO of a large tech company recently said, “We are witnessing what will surely be remembered as a historic deployment of remote work and digital access to services across every domain.”

Indeed, recent data show that we have vaulted five years forward in consumer and business digital adoption in a matter of about eight weeks. Banks have transitioned to remote sales and service teams and launched digital outreach to customers to make flexible payment arrangements for loans and mortgages. Grocery stores have shifted to online ordering and delivery as their primary business. Schools in many locales have pivoted to 100% online learning and digital classrooms. Doctors have begun delivering telemedicine, aided by more flexible regulation. Manufacturers are actively developing plans for “lights out” factories and supply chains. The list goes on.

According to the article, customer behaviors and preferred interactions have changed significantly of late, and while they will continue to shift, the uptick in the use of digital services is here to stay, at least to some degree. Fully 75% of people using digital channels for the first time have indicated that they will continue to use them when things return to “normal.” Companies will need to ensure that their digital channels are on par with or better than those of their competition to succeed in this new environment. 

But, as the economy lurches back, demand recovery will be unpredictable – uneven across geographies, sectors, product categories and customer segments – and often slow to return to pre-crisis levels. While a few sectors will face unusually strong demand, many industries will have to deal with periods of structural overcapacity. Those companies face the painful need to right size the cost base and capital of their operations, supply chains and organizations overall, and to transition their fixed costs to variable costs aggressively wherever possible. Complicating matters is that historical data and forecasting models will be of little use to predict where pockets of demand will emerge and where supply will be necessary. New data and completely rebuilt analytical models will be essential to steer operational decisions.

Finally, many organizations have shifted to remote-working models almost overnight. A remote-first setup allows companies to mobilize global expertise instantly, organize a project review with 20 – or 200 – people immediately, and respond to customer inquiries more rapidly by providing everything from product information to sales and after-sales support digitally. And this step change in remote adoption is now arguably substantial enough to reconsider current business models.

Quickly pivoting the business agenda to address these changes will be critical for a successful recovery. Digital will undoubtably play a center-stage role. The article offers suggestions for a 90-day plan to realign the digital agenda and implement the enablers for acceleration during the recovery and beyond at https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-covid-19-recovery-will-be-digital-a-plan-for-the-first-90-days.

Impressive awards haul for CPA profession’s flagship magazine

For the second year in a row, Pivot, CPA Canada’s magazine has scored an impressive haul at Canada’s National Magazine Awards: B2B competition. Pivot garnered three gold and six silver awards after having been nominated a leading 18 times in 10 categories. 

“The fact that we were nominated for 18 awards this year and collected nine reflects our vision and commitment to publishing innovative and insightful ideas that benefit business professionals and society,” said Heather Whyte, Pivot’s publisher.

Pivot’s wins were in the following categories: Best Issue (Gold); Best Profile of a Company (one Gold, one Silver and one Honourable mention); Best Series (Gold and Silver); Best Feature Article: Professional (Silver); Best Illustration (Silver and Honourable mention); Best (Silver and Honourable mention); Best Art Direction (complete issue) (Silver and 2 Honourable mentions); Best Profile of a Person (2 Honourable mentions); Best Photograph (Honourable mention); and

Best Magazine (Honourable mention).

CPA Canada partnered with Strategic Content Labs (SCL), a division of St. Joseph Communications, to launch Pivot in April 2018. Together, they deliver the national accounting body’s flagship publication in both English and French, with print and online editions. It is distributed six times a year to CPAs across Canada and around the world. 

“Huge thanks go out to the collective team of individuals at CPA Canada and St. Joseph Communications who have made Pivot the insightful publication it is, and a must read for the country’s professional accountants and business leaders,” Whyte said.

In total, 64 publications competed across 19 award categories in the annual competition produced by the National Media Awards Foundation to honour excellence in business-to-business publishing. 

SEC Charges Three Former KPMG Audit Partners for Exam Sharing Misconduct (SEC Release)

And, finally, this SEC release shows that it’s not only kids who cheat on exams although we would think accountants should not be misbehaving like this. Without admitting or denying the findings in recently published SEC Orders, former KPMG LLP audit partners Timothy Daly, Michael Bellach and John Donovan agreed to be suspended from appearing or practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies, with the right to apply for reinstatement after three years, two years, and one year, respectively. Their crime?

Each engaged in misconduct in connection with exams KPMG administered to test whether its audit professionals understood certain accounting and auditing principles. The orders against Daly and Bellach find that in October 2018, at Daly's request, Bellach texted Daly images of the questions and answers to a required training examination. After KPMG began investigating possible cheating by its professionals and required strict compliance with a document preservation notice sent to all KPMG personnel, Daly deleted the text messages from Bellach and falsely told KPMG investigators he had not received any answers to KPMG training exams. The orders further find that Daly encouraged Bellach to delete the text messages as well, which Bellach did after receiving KPMG's document preservation notice. 

The order against Donovan finds that he also supported the sharing of exams and answers within his team. According to the order, between April and September 2018, Donovan received answers to training exams from subordinates on several occasions, and shared answers with his team three times. Donovan also falsely told KPMG investigators that he had not sent, received, or shared answers. Read the whole sorry story at: https://www.sec.gov/news/press-release/2020-115