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24 October 2008
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PCAOB Proposes Seven New Risk Assessment Auditing Standards AccountingWEB.com, 23 October 2008 This week, the PCAOB voted to propose seven new auditing standards related to the assessment of and responses to risk. These standards would establish requirements and provide direction on procedures performed throughout the audit world to improve the existing framework for risk assessment. |
Our view: In risk assessments, don’t leave room for obfuscation and gaming. Management may be reluctant to candidly disclose true risk exposure or may underreport the severity or likelihood of risks. |
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GSK to Publish Payments to Doctors Financial Times, 23 October 2008 GlaxoSmithKline is taking steps to limit accusations that it influences doctors and medical academics by capping payments and making fees public. |
Our view: Companies will have to adapt to an environment characterized by increased regulation and heightened demand for greater transparency, and those who do so first will be better positioned to help frame regulatory discussions and avoid negative attention. |
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Bankers May Find Relief by Simply Apologizing Reuters, 22 October 2008 For banks, an apology—even with the litigation risk that it supposedly creates—may rebuild confidence and trust. Academics draw parallels to studies showing doctors who say they are sorry reduce the risk of being sued by patients. |
Our view: If that doesn't work, follow the General Counsel Roundtable's recommendations for managing litigation in an era of rising liability. |
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Credit Crisis Boosts Sales in Das Kapital BBC, 20 October 2008 After decades of economic and political irrelevance, Karl Marx is riding the global financial crisis back onto people’s reading lists. Sales of the communist’s Das Kapital have surged in step with peoples’ economic pain. |
Our view: Marx may be in vogue with a new generation of college students, but it’s still too soon to invest in sickle manufacturers. |
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China Faces Pressure to Improve Product Safety Toronto Star, 23 October 2008 The United Nations calls on China to increase product and food safety oversight and establish a system that holds suppliers accountable for raw materials supplies as well as finished products. Related News: “Wal-Mart to Hold China Suppliers to Higher Standard” (Financial Times, 23 October 2008) |
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Stricter Standards Likely as Rating Agencies Come Under Fire New York Times, 22 October 2008 Former executives of S&P and Moody’s claimed in a Congressional hearing that conflicts of interest—particularly the desire to drive revenue—led to lax ratings standards and undervalued risk. Related News: The level of criticism by regulators and law markets portends significant changes in the industry. For more information, read: “Greenspan Reverses Position on Bank Regulations” (The New York Times, 23 October 2008); Op-Ed: “Banks Receiving Bailout Should Not Pay Dividends” (The New York Times, 20 October 2008) |
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Daily Capital Markets Review: Banks Borrow More from Fed, Stocks Tumble Corporate Executive Board, 23 October 2008 This summary includes news items regarding global liquidity, the TED spread, commercial paper and T-bill rates, currencies and commodities, and corporate debt spreads. If you would like to receive the Review after markets close (instead of the next morning), please click here. |
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