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

You Unconsciously Undermine Relationships While Working Remotely

An article on the FastCompany webpage, dated November 20, 20202, says that one of the drawbacks for teams working remotely is the lack of context around communication. “Virtual communication often lacks those nonverbal clues we pick up when we have face-to-face conversations with others. As a result, it can be easy to make assumptions or jump to conclusions that are damaging to working relationships.”

“Our brains are hardwired to focus on the negative,” says Carson Tate, author of Own It. Love It. Make It Work. How to Make Any Job Your Dream Job. “It’s a survival mechanism, but it also leads us to make up stories, particularly in the virtual world when we’re all a little stressed.”

If you act on them, believing the stories your brain’s default mechanism creates could harm work relationships. According to the article, “you could begin to undermine those relationships by treating people in a way that creates confusion and misunderstanding.”

Before you attach a negative context to a situation, pause and ask yourself what actually happened. “Go to the facts. What can you observe and quantify? What actually happened? Sometimes it’s difficult to do this by yourself. This is where another colleague or trusted work friend or manager can help.”

It helps to understand the individual styles employees have so you can give interactions more context. Tate says there are four distinct productivity styles:

  1. Prioritizers: Logical, analytical, and data-oriented people who are focused on goals and outcomes.
  2. Planners: Organized individuals who thrive with structure, make plans, and want to talk about the details.
  3. Arrangers: Supportive, relationship-driven team members who work best when they form connections.
  4. Visualizers: Big-picture thinkers who want minimal details and visual imagery.

When you identify a colleague’s style, you can better understand how they work to avoid misunderstandings. “Email is a great place to look for clues. For example, a prioritizer doesn’t want to chitchat; their email will be succinct, direct, and to the point. A planner will ask about details and deadlines, and their email may look like project plans with bullets and numbers. Supportive coworkers are easy to spot. They usually start their email with a greeting, like ‘Good morning’ or ‘Happy Monday.’ And a visualizer will email at the last minute, often apologizing for short deadlines.”

 Applying a one-size-fits-all approach without respect to the nuances of colleagues and how they work can ultimately lead to miscommunication that can create conflict. If I don’t think you respect me, I might be disrespectful to you. This can turn into a cascading event.

For more, see: How you unconsciously undermine remote work relationships (fastcompany.com).

How to Stop Computer Screen-Based Headaches

According to a November 17, 2020, article in the CPA Practice Advisor online, an increasingly common cause of headaches is screen time. The author, neurologist Dr. Charisse Litchman, says that screens raise headache rates among computer users by two-thirds or more. Those who use screens for school or work are particularly at risk. During a normal workday, the typical screen user will develop a headache by mid-afternoon.

Simply switching to a different device won’t work, she says. “Whether you use tablets, desktop computers, phones, or any other screen, you’re at risk for what’s known as ‘Computer Vision Syndrome.’ Tension headaches and migraines are both common CVS complications.”

Although anyone can get CVS-based headaches, they’re more common in certain types of people. Women, people who wear corrective lenses, older individuals, and people who are sensitive to light — which includes roughly three-quarters of migraine sufferers — face an elevated risk.

But, especially if you use screens for work or school, you can’t simply stop using them. To reduce your risk of screen-related headaches:

  • Lower the brightness of your screen. Try reducing your screen’s brightness to the same level of the room you’re in. Eyestrain happens when your eyes have to adjust to different levels of light quickly.
  • Move your monitor. If you look at screens from an angle or from more than two feet away, you may strain your neck, eyes or back. Look at your monitor straight on whenever possible.
  • Check your device’s “View” mode. Do you spend most of your screen time reading text? Set your monitor to account for that. If you mostly look at images or video, your monitor should have a setting for it.
  • Boost the refresh rate. Different screens renew the image at different frequencies. If yours is set too low, an imperceptible flicker may cause eyestrain. Maximize your device’s refresh rate.
  • Raise the font size. When it comes to font size, bigger is better. Increase it until you no longer need to squint to read the text.
  • Stop slouching. Working with poor posture can also cause neck- or eyestrain. Stand up straight and stretch frequently.
  • Take a break. The more often you give your eyes a rest, the better. If you use screens for school or work, take a walk or grab a cup of coffee.
  • Block some blue light. Special computer glasses, screen protectors, and certain apps can block blue light. If you already wear glasses, you can get them tinted to block blue wavelengths.

You may not be able to avoid screens altogether, but you can take steps to keep them from affecting your health.

For more useful advice, go to: 10 Tips to Stop Computer and Device Screen-Based Headaches | CPA Practice Advisor.

Accelerate Your Digital Transformation

A recent article, “A new norm in accounting: The power of disruption for positive change,” from the Australian online magazine accountantsdaily, points out that, for many in the accounting industry, the writing has been on the wall for years: change is happening and it’s happening fast. That means firms must adapt to a digital-first mindset or risk becoming another statistic in a fast-evolving sector.

“What the COVID-19 pandemic has done is force organizations to look at their short and long-term strategies and make big adjustments,” says the article. “Despite knowing they needed to diversify their operations and embrace technology solutions like cloud workflow software, many traditional firms may have thought they still had a few good years left before they needed to overhaul their systems. That is no longer the case.”

According to the article, “we foresee three major changes to accounting thanks to this ‘enforced evolution,’, and firms that embrace the disruption for all its opportunities will be the ones who come out the other side in a better position – both in terms of client numbers and with a more talented workforce:

  • Client onboarding: Getting staff to buy into the reality of remote work even if it’s enforced – is very different from convincing clients that it’s the best way forward. Indeed, face-to-face interactions is a high indicator of trustworthiness for most clients of Australian firms. But the reality is that remote onboarding is the way of the future, and firms that accept this will be better placed to roll out onboarding strategies, train up staff in how to engage with clients in a wholly virtual environment, and get customer feedback so they can improve their processes and better meet client demands.
  • New roles: The cloud opens up a world of new opportunities, including the creation of totally-digital roles for top talent that may be unable to relocate to head office. And, with a large proportion of firms both here and overseas keen to embrace remote work even after the pandemic has run its course, it seems there is plenty of buy-in for an accounting future in the cloud.
  • Bolstered security: While remote work will create easier interactions with clients and allow new roles to be created, it will also require firms to be more vigilant about their security policies – namely, how to ensure remote staff keep valuable company data secure. This balance between security, privacy and mobility is critical, and it must be baked into the IT team’s security strategy, particularly because remote work is giving rise to increased cyberattacks on businesses.”

According to the article, “The takeaway is that – much like requiring every employee to be in the office every day – there should not be an umbrella solution to the question of remote work. Rather, sit down with your staff on a case-by-case basis and determine if remote work, whether full-time or just a few days every week, could be better for all parties over the long term. This shouldn’t be a set-and-forget decision. Rather, reassess the situation after three, six and 12 months, and use data on their output, client feedback and productivity records to determine whether or not it’s a good fit.”

For more, and access to a paper discussing this issue even more fully, see: A new norm in accounting: The power of disruption for positive change | Accountants Daily.

How to Build a Resilient, Collaborative, Virtual Accounting Organization

An article in the November issue of FEI Canada Finance and Accounting Review, sponsored by Blackline, which automates complex, manual and repetitive accounting processes, points out that the ramifications of the current crisis will long outlast it: how accounting conducts period-end, where accounting staff are located and the way work gets done. Companies that emerge from the crisis having learned the lessons will be better positioned than others who have simply limped through, preserving the status quo.

“Accounting must now provide financial information faster to the CFO, the executive team and business leaders – to drive forecasts and decisions, as business conditions change almost daily, the article stresses. “Waiting weeks to close the books or being heads down on manual transactional accounting was always problematic. Now it is untenable.”

All of these challenges are coming to the forefront as finance and accounting teams are working from home, often struggling with manual accounting, spreadsheets, desktop tools and paper-based processes that were hard enough to manage in the office.

Manual accounting can be a profound drag on remote staff productivity and engagement, and even create a security risk for those who have not modernized their processes and technology.

“Managing uncertainty starts with eliminating the use of manual tools like spreadsheets, Word docs, and binders, to manage much of the close. These tools prohibit access to real-time data,” says BlackLine CFO Mark Partin.

“CFOs must integrate more automation into every process. Reducing repetitive, tedious, manual tasks not only increases efficiency and accuracy but enables accountants to become less reactive and more visionary.”

The shift to remote work had been gradual before the current crisis. No longer. The current crisis has highlighted the need to enable workforce flexibility and business continuity. The

amount of change hitting enterprises and accounting departments at once is dizzying—from fluid business conditions that demand near real-time data to disruptions to how everyone traditionally works. For accounting, the biggest obstacle to adapt remains manual accounting, which crushes efficiency and collaboration, and creates roadblocks to workforce flexibility.

For the complete article, which advises how on you can make the necessary transformations, see: https://www.feicanada.org/cfo-resources/newsletters?id=4122&a=5.

Compliance Risk Management: Applying the COSO ERM Framework

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) has published new guidance on how to apply the COSO enterprise risk management framework to effectively manage and mitigate compliance risks.

In a November 11, 2020, press release, COSO says that companies are taking a closer look at how to effectively manage and mitigate compliance risks, especially at a time when many compliance programs are under the microscope from regulators while also dealing with the effects of a global pandemic. To help out in that effort, COSO has released a new publication, Compliance Risk Management: Applying the COSO ERM Framework, which describes the application of the COSO ERM framework to the management of compliance risks. 

“For many years, compliance professionals have used a widely accepted framework for compliance and ethics (C&E) programs, based on the U.S. Federal Sentencing Guidelines as well as global legislation, to prevent and timely detect noncompliance and other acts of wrongdoing,” COSO says. The COSO ERM Framework has been used by risk and other professionals to identify and mitigate enterprise risks, including compliance risks. 

The publication, commissioned by COSO and authored by the Society of Corporate Compliance and Ethics & Health Care Compliance Association (SCCE & HCCA), describes the characteristics of effective C&E programs associated with each of the five components and 20 underlying principles of COSO ERM framework. “A significant aspect of ERM is its focus on creating, preserving, and realizing value. Effective C&E programs contribute to each of these objectives.” 

“Compliance risks are common and frequently material risks to achieving an organization’s objectives,” says COSO Chairman Paul Sobel. “This publication aims to provide guidance on the application of the COSO ERM framework to the identification, assessment, and management of compliance risks by aligning it with the C&E program framework, creating a powerful tool that integrates the concepts underlying each of these valuable frameworks.” 

The publication points out that a governing board of directors and all employees have compliance-related responsibilities, and compliance risk often extends to activities carried out through third parties. The compliance function leads the development of the C&E program and works closely with business units in its execution. But, to be successful, the program must receive the support of senior management and the board of directors. 

“As compliance and ethics programs continue to evolve and gain wider adoption globally, it makes increasing sense to understand and appreciate the synergies that can be achieved by applying the ERM framework,” says Gerry Zack, the CEO of SCCE & HCCA. “The goal of this publication is to facilitate this synergy by creating a roadmap between required and emerging practices for C&E programs and the COSO ERM framework.” 

Please visit www.COSO.org for the full publication, Compliance Risk Management: Applying the COSO ERM Framework.

SEC Adopts Amendments to Modernize and Enhance Management’s Discussion and Analysis and other Financial Disclosures

The Securities and Exchange Commission announced November 19, 2020, that it has voted to adopt amendments that will modernize, simplify and enhance certain financial disclosure requirements in Regulation S-K. The amendments are intended to enhance the focus of financial disclosures on material information for the benefit of investors, while simplifying compliance efforts for registrants.

"Today's rules will improve the quality and accessibility of the disclosure that companies provide their investors, including, importantly giving investors greater insight into the information management uses to monitor and manage the business," said SEC Chairman Jay Clayton. "The improved approach to these disclosures reflects the broad diversity of issuers in our public markets and will allow investors to make better capital allocation decisions, while reducing compliance burdens and costs and maintaining strong investor protection."

The amendments reflect the Commission's long-standing commitment to a principles-based, registrant-specific approach to disclosure. This approach, as applied to Management's Discussion and Analysis, should yield material information relevant to an assessment of the financial condition and results of operations of the registrant, and allow investors to view the registrant from management's perspective. The amendments are also intended to improve disclosure by enhancing its readability, discouraging repetition and eliminating information that is not material.

For background and specific changes to the rules, please visit: https://www.sec.gov/news/press-release/2020-290.

Why This Recession Is Very Different from Any Other

The coronavirus-induced recession is very different from past downturns, and this raises new challenges for central bankers and lawmakers, a European Central Bank (ECB) board member told CNBC in an interview November 12, 2020.

The current crisis hinges on the services industry, which has almost come to halt since social restrictions were introduced across the world earlier this year. Despite some relief in the summer months, as governments eased lockdowns, many restaurants, bars, cafes, some hotels and most retail outlets have had to close their doors once again during a second wave of infections.

“This services recession may be very different from a regular recession. And so one question is: How long will the recovery take? Another will be: What are the effects on employment?,” Isabel Schnabel, member of the ECB governing council, told CNBC’s Annette Weisbach.

Her comments came as ECB President Christine Lagarde highlighted in a speech that “a large number of people who lost their jobs in the spring left the labour force and stopped looking for work, with 3.2 million workers classified as ‘discouraged’.”

In addition, the ECB is concerned with how the coronavirus crisis is hitting different parts of the population. “What we also see, which I think is important, is that it hits different countries very differently and then it also hits different people within countries very differently,” Schnabel said. “This actually raises new challenges, mostly for the fiscal side, but of course, it also affects monetary policy.”

There’s evidence that young people and women are two of the most hard hit groups during this downturn. Young workers tend to have temporary contracts, which makes them easier to fire, for example; and many women work in contact-sensitive areas, which have been severely affected by the pandemic

The euro zone economy grew by 12.7% during the third quarter of 2020 — its steepest growth on record as restrictions were relaxed. This followed a contraction of 11.8% in the second quarter, when strict lockdowns were in place.

The ECB has hinted that it is working on more monetary stimulus for the euro zone. Speaking earlier this week, Lagarde suggested the central bank could introduce more favorable conditions for banks and additional purchases of government bonds as it attempts to keep the economy alive. “It’s important that the lending remains as strong as needed,” Schnabel said, while adding that the ECB is looking at “all” available instruments. 

For more, go to: https://www.cnbc.com/2020/11/13/covid-crisis-is-very-different-from-previous-crisis-ecb-schnabel-says.html.

PCAOB Adjusts Plans for Coronavirus

The Public Company Accounting Oversight Board has been making changes to its strategic plans and agenda in response to the COVID-19 pandemic as it sees auditors doing more work remotely and facing issues with auditing financial statements issued during the pandemic.

“We have a five-year strategic plan. We’re in the middle of it, and our effort is to make the PCAOB a more proactive, more relevant, more innovative, more collaborative organization,” said PCAOB board member Duane DesParte during Financial Executives International’s Corporate Financial Reporting Insights Virtual Conference held November 9,2020. “There are four priorities that, in my mind, are clearly important and guiding our activity. We want to put more focus on how we can keep driving better audit quality.

“One of the things we’re emphasizing and thinking about is how we can focus on prevention of audit deficiencies in addition to inspecting audit deficiencies. For instance, we’re striving to provide more relevant, timely, and easier to understand information and insights. We’re striving to be more proactive in our engagement with all of our stakeholders. We’re going to continually monitor, as we always have, issues and trends in the financial reporting ecosystem, as well as look at findings and observations in our program. We’ll continue to adapt our agenda as appropriate.”

“Certainly, for all of us, the pandemic is uncharted territory,” said DesParte. “Our focus, of course, has been on firms maintaining high-quality auditing in this unique environment. We’ve put out a few published documents to emphasize that, despite the economic uncertainties, despite the operational complexities that both issuers and auditors may be facing, that it’s important auditors stay focused and comply fully with our auditing standards. Objectivity and professional skepticism in this environment are really key.”

The PCAOB has signaled that audits may take more effort and require more time than in the past. “It’s important that management, audit committees and auditors work together to make sure that everybody has the right amount of time to get their work done effectively, and that includes the audit,” said DesParte. “The auditor sometimes can be jammed at the end of the process, and everybody needs to be aware that they’re going to need to take whatever time they need to take to get it done correctly. We’ve also been emphasizing that auditors need to give a bit of attention to risk assessment. Management should be reassessing risk as well, of course.”

The PCAOB has been highlighting issues such as changes in materiality, in addition to cybersecurity and fraud risks. “As business changes in certain companies, [and there are] changes in company processes and controls, including IT controls, perhaps new cyber risks need to be considered,” DesParte explained. “The potential for heightened fraud is something else that needs to be considered. Economic pressures add a potential incentive for fraud. The changes in operations and controls add potential opportunity for fraud, so that has to be thought about in new ways. Obviously, there are new risks in the financial statements. Testing may need to be adjusted. Fair valuation, reserves, impairments, going concern assessments — all of that is important.”

The PCAOB itself has changed the way it operates as a result of the pandemic. “We transitioned to remote work in mid-March,” DesParte noted. “We are conducting our core activities remotely with very minimal disruption. From an inspection standpoint, we are 100 percent remote there.”

“The objective of updating it was to hone in on and really focus the public’s attention on those projects where we expect to have activity or action within the next 12 to 18 months,” DesParte added. “I believe that the projects that are on the agenda are really important. For instance, the [quality control] project, I think that is an important project in driving improvements in audit quality, and I think that all the projects that are on the agenda are likewise going to help drive improvements in audit quality to the benefit of investors, which of course is our primary mission.”

For the rest of this article, please see: https://www.accountingtoday.com/news/pcaob-adjusts-plans-for-coronavirus.

Business Recovery from Covid 19: The Essence of Resilient Leadership

An article on Deloitte’s webpage, which is part of the firm’s “Insights” series, advises that, as we progress into the recovery phase of the pandemic, resilient leaders need to recognize and reinforce critical shifts from a “today” to a “tomorrow” mindset for their teams. According to author Punit Renjen, “They perceive how major COVID-19-related market and societal shifts have caused substantial uncertainties that need to be navigated – and seized as an opportunity to grow and change. Amid these uncertainties, resilient leadership requires even greater followership, which must be nurtured and catalyzed by building greater trust. And resilient leaders start by anticipating what success looks like at the end of recovery how their business will thrive in the long term – and then guide their teams to develop an outcomes-based set of agile sprints to get there.”

“Resilience” is not a destination, says Renjen. It is a way of being. A “resilient organization” is not one that is simply able to return to where it left off before the crisis. “Rather, the truly resilient organization is one that has transformed, having built the attitudes, beliefs, agility and structures into its DNA that enable it to not just recover to where it was, but catapult forward – quickly.”

During the recovery phase, resilient leaders need to inspire their teams to navigate through these significant COVID-related uncertainties. But great leadership requires even greater followership  –  and followership is nurtured by trust. Indeed, many leaders have built a significant bank of trust from deftly navigating through the early frenzied unpredictable stages of the crisis.

Two attributes of trust are particularly relevant in this regard. First, trust is a tangible exchange of value. It has no value in isolation, but represents value only in an interaction with others, for example, customers, suppliers, employees, investors, and team members. Likewise, trust is only built in relationships, where a real, genuine give-and-take provides mutual value. Trust is also accretive: Invested wisely and prudently, it grows through repeated affirming experiences; when invested poorly, it rapidly depreciates. 

Second, trust is actionable, and human, along multiple dimensions. Trust is nurtured and built among stakeholders along four different dimensions: physical, emotional, financial, and digital. And trust starts at the human, interpersonal level. COVID-19 has heightened stakeholder sensitivity across these four dimensions, which offers greater opportunities to act to build – or lose – trust. For example, trust may be built among employees when leaders thoughtfully consider how to reengage the workforce in the office (such as by reconfiguring the space to honor social distancing), or when they go to great lengths to preserve as many jobs as possible rather than just preserving profits. Similarly, trust may be built among customers when organizations add extra security measures to protect customer data from cyber threats.

A recovery of this scale and scope hasn’t been accomplished in most of our lifetimes, and it is complicated by the complexity of simultaneously navigating rapidly changing governmental mandates, fragile supply networks, nervous team members, and cautious customers.

Given the market uncertainties, companies that try to recover by relying on conventional wisdom may discover that the world they thought they knew is no longer there when they arrive. 

As organizations emerge from recovery and transition into the thrive phase, trust  coupled with the five qualities of resilient leadership, serves as a strong foundation on which resilient leaders can build the business models to address the new markets that will emerge.

What might life be like after the crisis passes, and what will it take to thrive in a world remade? Have a look at this comprehensive article at: https://www2.deloitte.com/global/en/insights/economy/covid-19/guide-to-organizational-recovery-for-senior-executives-heart-of-resilient-leadership.html.

PwC Committing To Net Zero By 2030

PwC has committed to reducing its total greenhouse gas emissions by 50% across its entire network by 2030. This includes a switch to 100% renewable electricity in all territories, as well as energy efficiency improvements in its offices and halving the emissions associated with business travel and accommodation within a decade. 

A post on its webpage explains that, in the 2019 financial year, emissions associated with flights alone represented around 85% of PwC’s total carbon footprint. “The COVID-19 pandemic has accelerated the shift to remote working and demonstrated the feasibility of new client delivery models, as part of a longer-term transformation of our services.”

In addition to these steps, PwC plans to invest in carbon removal projects, including natural climate solutions. “For every remaining ton (CO2 equivalent) that we emit, we will remove a ton of carbon dioxide from the atmosphere, to achieve net zero climate impact by 2030. Our projects will be selected on the basis of quality criteria and verification of the carbon reduction impact, and will also support broader local economic and social development co-benefits. 

PwC also has plans to help its clients worldwide accelerate the transition to a net zero future together. “We support organizations as they develop and implement concrete plans for how to get to net zero. This includes re-aligning corporate strategy, governance and accountability, operating models, innovation and research and development (R&D), tax strategy and reporting, and enterprise and supply chain transformation.”

Building on existing client work in sustainability and net zero transformation, PwC will infuse science-led climate analysis into its areas of service. For example, the Advisory practice will integrate climate risks into relevant engagements, providing clients with insights about climate risks and opportunities as well as helping them to transform their business processes. Another major focus area will be integrating climate-related and other ESG-related factors into mainstream corporate disclosures and governance, where PwC’s Assurance practice will support the development of high-quality, aligned disclosure and measurement standards and help clients embed these into their reporting and governance. PwC’s Tax practice  will be helping clients understand how net zero transformation will impact tax strategy, transparency and compliance obligations, subsidy and incentive opportunities, and revenue impacts for both public and private sector organizations.

For more, see: https://www.pwc.com/gx/en/about/net-zero.html.

Pairing Humans and Machines to Form Superminds

According to a fascinating article on the Deloitte global webpage, artificial intelligence (AI) is one of the signature issues of our time, given it’s a general-purpose technology with the potential to reshape business and societal landscapes alike. 

The article notes that an implicit assumption shaping many discussions of this topic might be called the “substitution” view: namely, that AI and other technologies will perform a continually expanding set of tasks better and more cheaply than humans, while humans will remain employed to perform those tasks at which machines cannot (yet) excel.

But, say the authors, this notion limits one’s ability to reimagine jobs in ways that create new forms of value and meaning. “Framing AI as a kind of technology that imitates human cognition makes it easy to be misled by exaggerated claims about the ability of machines to replace humans.”

The authors believe that a change in perspective about AI’s role in work is long overdue. “Human and machine capabilities are most productively harnessed by designing systems in which humans and machines function collaboratively in ways that complement each other’s strengths and counterbalance each other’s limitations.”

The change in perspective from AI as a human substitute to an enabler of human-machine superminds has fundamental implications for how organizations should best harness AI technologies:

  • Rather than focusing primarily on the ability of computer technologies to automatetasks, we would do well to explore their abilities to augmenthuman capabilities.
  • Rather than adopt a purely technological view of deployingtechnologies, we can cultivate a broader view of designing systemsof human-computer collaboration.
  • Rather than approach AI only as a technology for reducing costs, we can also consider its potential for achieving the mutually reinforcing goals of creating more valuefor customers and work that provides more meaningfor employees.

In addition to being more scientifically grounded, a human-centered approach to AI in the future of work will better comport with the societal realities of the post-COVID world. A recent essay by New America chief executive Anne-Marie Slaughter conveys today’s moment of opportunity: “The coronavirus, and its economic and social fallout, is a time machine to the future. Changes that many of us predicted would happen over decades are instead taking place in the span of weeks. The future of work is here [and it’s] an opportunity to make the changes we knew we were going to have to make eventually. “

 The article also contains a short note by Joe Ucuzoglu, CEO, Deloitte US, who says that “the unique capabilities of humans matter now more than ever, even in the face of rapid technological progress. In the C-suite and boardrooms, a range of complex topics dominate the agenda: from understanding the practical implications of AI, cloud, and all things digital, to questions of purpose, inclusion, shareholder primacy versus stakeholder capitalism, trust in institutions, and rising populism—and now, the challenges of a global pandemic. In all of these areas, organizations must navigate an unprecedented pace of change while keeping human capabilities and values front and center.”

It's a long but stimulating article and well worth a look at: https://www2.deloitte.com/us/en/insights/focus/technology-and-the-future-of-work/ai-in-the-workplace.html.

The Evolving Role of Investor Protection at the PCAOB

In a speech given at the 50th World Continuous Auditing & Reporting Symposium, PCAOB member J. Robert Brown, Jr., noted that “the concept of continuous auditing is critical to the future of the audit profession.” But, he added, “without changes, the profession may confront extinction.”

The creation of the PCAOB almost two decades ago ended the era of self-regulation for the audit profession, he said. “Perhaps the most far reaching change made by Congress in setting up the PCAOB was to include in the statute an explicit mission to act in the interests of investors and the public. In setting standards, conducting inspections and imposing disciplinary sanctions, the explicit objective was and is to act in the public interest.”

Brown believes that, 17 years after the creation of the PCAOB, implementation of this mission warrants reexamination. “While the PCAOB has taken some useful steps, much more needs to be done. The policies designed to promote investor input should be clearly specified and added to the PCAOB's bylaws and rules, making them a requirement not a choice. In doing so, these avenues should be structured in a manner consistent with congressional initiatives.”

To more effectively achieve the public interest mission, Brown suggested, requires increased transparency, including the addition of mechanisms designed to increase awareness of the operations and activities of the PCAOB. Transparency also should include improvements in the information provided to investors and the public for use in assessing audit quality and in making investment and voting decisions.

In addition to transparency, the PCAOB needs to increase and make permanent the avenues of investor and public input. These mechanisms should be inserted into the rules or bylaws of the PCAOB, making clear to the public that they are a requirement not a choice.

The PCAOB has struggled with transparency, having been described as "completely opaque." Unlike the U.S. Securities and Exchange Commission, therefore, the PCAOB is not subject to the Sunshine Act, the Freedom of Information Act or the Administrative Procedure Act . “The failure to make these laws mandatory was not the same as a prohibition. Nothing prevented the PCAOB from implementing the principles embodied in these laws. Nonetheless, the PCAOB has, for the most part, chosen not to do so. This approach should be reconsidered.”

Similarly, while Congress imposed some limitations on the PCAOB's ability to disclose information to the public learned during the inspection process and enforcement proceedings, these should not, given the mission of the PCAOB, be extended. Yet they have been.

Brown says that public inspection reports have excluded the identity of the companies where the audit deficiencies occurred, “sharply reducing the usefulness of the reports to investors and the public.” 

With respect to enforcement settlements, the PCAOB typically identified the company where the allegedly deficient audit occurred, an approach consistent with practices at the SEC. “In 2019, however, the instances of issuer disclosure were significantly reduced, limiting the usefulness of enforcement settlements to investors, audit committees, and the public. These decisions bear reexamination.”

In addition to transparency, the PCAOB needs to increase and make permanent the avenues of investor and public input. These mechanisms should be inserted into the rules or bylaws of the PCAOB, making clear to the public that they are a requirement not a choice.

For more on Brown’s ideas on what is broken and how to fix it, go to: https://pcaobus.org/News/Speech/Pages/Brown-PCAOB-3-0-Evolving-Role-Investor-Protection-PCAOB.aspx?utm_source=PCAOB+Email+Subscriptions&utm_campaign=a5a1aa7307-Duhnke-Keynote-Speech-Baruch-College-14th_COPY_01&utm_medium=email&utm_term=0_c97e2ba223-a5a1aa7307-125362969.