Compliance
CrowdStrike outage could cause insurance industry losses of up to $1 billion
A Guy Carpenter report indicates that insurance losses from the CrowdStrike outage are expected to range between $300 million and $1 billion, and reminds the insurance industry to pay attention to the risk of more frequent small and medium-sized events.
Five Financial Strategies to Address 'Key Person Risk' and SEC Delayed Filings
The number of delayed filings with the U.S. Securities and Exchange Commission (SEC) is increasing, with 71 companies postponing their annual reports in 2023, up about 40% year-over-year. UHY experts Ro Sokhi and Amy Gallagher note that a shortage of accounting talent, stricter regulations, and a surge in newly listed companies have created a 'perfect storm.' This article proposes five countermeasures, including eliminating key person risk, planning filing calendars, utilizing grace periods, reserving time for mergers and acquisitions, and strengthening internal controls.
Accounting Talent Pipeline Task Force Proposes Six Fixes
The National Accounting Talent Pipeline Advisory Group (NPAG), composed of accounting industry stakeholders, released a 95-page final report proposing six recommendations to address the accounting talent shortage, including reducing the time and cost of education required to become a CPA, increasing starting salaries, and reforming licensure requirements. The report emphasizes the need for coordinated industry action and notes that the talent shortage has already impacted the timeliness of financial reporting for U.S. companies.
Former New Jersey Law Firm CFO Sentenced to Five Years in Prison for Embezzling $1.5 Million
The New Jersey Attorney General's Office announced that John Dunlea, a former law firm chief financial officer, was sentenced to five years in state prison after admitting to embezzling over $1.5 million in company funds and evading state taxes. He will pay over $1.5 million in restitution to his former employer, McElroy, Deutsch, Mulvaney & Carpenter, LLP, and over $20,000 in taxes to the state of New Jersey.
Zelle and Big Banks Clash Over Fraud Reimbursement at Senate Hearing
Earlier this week, bank executives at a Senate hearing voiced concerns over expanding provisions of the Electronic Fund Transfer Act. Senator Richard Blumenthal proposed extending Regulation E to cover transactions authorized after consumers are deceived, but banks argued that this would not help address the source of fraud and might instead induce false claims. Data disclosed at the hearing showed that major banks have extremely low reimbursement rates for fraud victims.
Detroit Riverfront Conservancy sues former CFO, accusing him of embezzling approximately $40 million
The Detroit Riverfront Conservancy (DRC) filed a lawsuit on Wednesday in the Third Judicial Circuit Court of Wayne County, Michigan, accusing former Chief Financial Officer William Smith of embezzling approximately $40 million from the nonprofit organization between November 2012 and March 2024 through methods such as falsifying bank records and financial statements. The lawsuit names Smith's mother, wife, and sister as co-conspirators and accuses his friends of assisting in hiding assets. Previously, U.S. federal prosecutors had filed criminal charges of bank fraud and wire fraud against Smith, and a court has frozen some of his assets.
Court ruling deals heavy blow to SEC's cybersecurity enforcement stance
Judge Paul Engelmayer of the U.S. District Court for the Southern District of New York recently ruled to dismiss most of the SEC's charges against SolarWinds and its CISO, holding that cybersecurity controls are not internal accounting controls under Section 13(b)(2)(B) of the Securities Exchange Act. Legal experts note that this ruling substantially weakens the SEC's ability to hold companies accountable for cybersecurity deficiencies, but the SEC can still pursue part of the lawsuit based on claims that company statements misled investors.
Visa and Mastercard Statement: CrowdStrike Incident Did Not Affect Their Payment Networks
Last Friday, a CrowdStrike update failure caused disruptions across multiple industries globally, but major U.S. card networks Visa and Mastercard both stated that their payment networks were unaffected. Despite chaos experienced by some issuers and merchants, both companies, along with Discover, confirmed that their systems were functioning normally. JPMorgan Chase stated that its credit card business was not directly impacted, while Wells Fargo and Capital One declined to comment. Analysts noted that full recovery may still take several days.
Reducing Travel and Expense Policy Violation Rates: Three Key Measures
Travel and expense (T&E) policy violations are a persistent drain on corporate funds, intensifying as employee travel increases. A 2023 survey revealed that 61% of financial executives stated their T&E policies are frequently or sometimes violated, and 73% expect the issue to worsen over the next five years as companies grow. TravelBank CEO Duke Chung noted that violations are not entirely intentional, with inaccessible policy information being a primary cause. Forrester Consulting research shows that by improving compliance rates (from 40% to 91%), companies save an average of $321,000 over three years. This article proposes three key measures: enhancing employee policy awareness, improving booking visibility, and monitoring out-of-policy spending, and explains how modern management platforms can facilitate compliance and savings.
Former Trump Organization CFO Weisselberg released from prison for second time
Former Trump Organization Chief Financial Officer Allen Weisselberg was released early on Friday after serving five months for perjury. He had previously been imprisoned for tax fraud, marking his second time in prison.