Audit & Governance Weekly Financial News 23rd October 2020

Company News

Published on: Friday, October 23, 2020 by Paul Stanbridge

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Hi *|FNAME|*

News this week on both sides of the Atlantic was dominated by External Audit regulatory reforms and Money Laundering.

The big news, however, came as Goldmans join Danske in the ‘$2B fine club’ [Danske Estonian branch’s fines were covered in last week’s email blog (https://us13.campaign-archive.com/?u=13d589a9257a929df14b13550&id=197f90c2c3) ]. Goldman’s Asia has been fined a record $350M by Hong Kong for their part in 1MDDB. They start the global regulator’s punishment pf Goldmans (soon joined by U, UK and SIngaporean regulators) in what amount to a total of $2 Billion of fines for Goldman’s role in looting billions of dollars destined for the economic development of Malaysia which were siphoned off in a money laundering and corruption scandal. The LondonFN additionally reported that clawbacks from top Goldmans execs totaling $174M (https://www.fnlondon.com/articles/goldman-claws-back-millions-from-top-execs-to-pay-1mdb-scandal-fines-20201023) will be used to help pay these fines.

The Big 4 had it tough as well this week… The FRC commented, “Concerns have been raised that auditors are not doing enough”. It proposes changes that put the onus directly on Auditors to look for wrongdoing. [story below]. I guess we have Wirecard to thank for accelerating these discussions…

Despite Audit income rising sharply last year, there was a 20% drop in fees from non-audit work for audit clients. (https://www.accountancydaily.co/big-fours-non-audit-fees-clients-fall-20)

Deloitte announced that they will be shutting four UK offices (https://uk.reuters.com/article/uk-britain-deloitte-idUKKBN2720HE) https://www.accountancydaily.co/big-fours-non-audit-fees-clients-fall-20as it reviews its real estate portfolio in the coronavirus pandemic. Staff will be retained on work-from-home contracts. Expect to see many more work-from-home contracts in the months to come!

Compliance leads gender equality: Women work in compliance, men work in trading (https://news.efinancialcareers.com/uk-en/3004663/women-in-compliance-men-in-trading) so say efinancial in their interview with two former heads of EMEA compliance at a U.S. investment bank – …”If you look at the compliance function… women are typically far more populous.”

And lastly … the FRC, is to ‘beef up standards (https://www.accountancydaily.co/frc-beef-standard-fraud-detection) ‘ on 16-year old regulations amid fears they are not sufficiently clear [story below]. Reforms have been overdue for many years [ibid 2018 Sir John Kingsman review (https://www.icaew.com/-/media/corporate/files/technical/icaew-representations/2018/icaew-rep-92-18-review-of-the-financial-reporting-council-by-sir-john-kingman.ashx ) ]…now I’m not saying it’s an easy job but the FRC isn’t without other delays… I’ll leave this here….. https://news.sky.com/story/governance-watchdog-faces- embarrassment-over-chairman-delay-12086712 (https://news.sky.com/story/governance-watchdog-faces- embarrassment-over-chairman-delay-12086712)

That’s all for this week.

Enjoy

Paul
In the news this week…
ASSET MANAGERS COMMITTED INSIDER TRADING, AUDIT DISCOVERS

Forensic audit of key Franklin Templeton India personnel concludes insider trading and issues £900k fine … read (https://www.livemint.com/mutual-fund/mf-news/franklin-templeton-some-officials-redeemed-investments-before-winding-up-shows-forensic-audit-11601996044374.html) more (https://www.livemint.com/mutual-fund/mf-news/franklin-templeton-some-officials-redeemed-investments-before-winding-up-shows-forensic-audit-11601996044374.html)

PANDEMIC’S IMPACT ON RISK-BASED CAPITAL (RBC)

Insights into how the current environment has impacted capital levels and how rating agencies may view a company’s ability to withstand market volatility… read more (https://www.guycarp.com/insights/risk-based-capital-stress-testing.html)
STRENGTHENING SUPERVISORY CO-OPERATION IN DERIVATIVES MARKETS

Commodity Futures Trading Commission and Bank of England sign new agreement on supervisory co-operation in derivatives markets .. read more (https://www.risk.net/regulation/7699926/strengthening-supervisory-co-operation-in-derivatives-markets)

IRELAND FIRES WARNING SHOT TO ASSET MANAGERS ON DELEGATION

Central Bank of Ireland warns asset managers to correct “significant shortcomings” in the governance of Irish entities; viability of the delegation model put in question … read more (https://uk.advfn.com/stock-market/stock-news/83505128/convergence-announces-its-expansion-into-the-irish)
HONG KONG FINES GOLDMAN ASIA RECORD $350M OVER 1MDB

HK lead the US,UK and Singapore regulators punishing Goldman for their role in 1MDB looting billions of dollars in Malaysian money laundering scandal… read more (https://www.scmp.com/business/banking-finance/article/3106660/hong-kong-slaps-record-fine-us350-million-goldman-sachs)
U.K. REGULATOR PUSHES AUDITORS TO SNIFF OUT FRAUD

Financial Reporting Council proposes rule changes amidst concerns that auditors aren’t doing enough … read more (https://www.wsj.com/articles/u-k-regulator-pushes-auditors-to-sniff-out-fraud-11603290771#:~:text=The%20U.K.’s%20accounting%20regulator,to%20auditing%20rules%20on%20Tuesday.)

SEC APPROVES CHANGES TO EASE AUDITOR-INDEPENDENCE RULES FOR COMPANIES, AUDIT FIRMS

Changes will make it easier for companies and audit firms to avoid violations, especially involving IPOs and lending relationships… read more (https://www.wsj.com/articles/sec-approves-changes-to-ease-auditor-independence-rules-for-companies-audit-firms-11602868427)
EU SETS SIGHTS ON MONEY MARKET FUND REFORM

European regulators call for reforms of the continent’s €1.4tn money market fund sector after it came close to buckling under the coronavirus-induced market stress in March … read more (http://www.finregalert.com/eu-sets-sights-on-money-market-fund-reform/)

** Hiring for your Internal Audit team?
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We have an extensive network of immediately available Internal Audit candidates. Call Paul on 0203 397 1774
Paul Stanbridge
Before establishing Fleet Search and Selection with Craig Phipps, Paul worked as an Equity Research Analyst in London. Now, a recruitment consultant for almost two decades, he has recruited many senior roles, including Global Heads of Audit and C-Suite executives. His wide network spans Insurance, Asset Management and Banking, with expertise including Audit, Compliance and Advisory.
As with his day job, Paul likes getting people excited about things. He is a passionate competitive foil fencer with 5 caps for Scotland and now enjoys coaching others to enjoy fencing too.
Contact:
[email protected] (mailto:[email protected])
Craig Phipps

Craig has spent over 20 years recruiting for the Financial Services Industry, predominately in Business and Technology Audit for Investment Banks and Asset Managers. He has also recruited extensively in Market Risk and Quantitative finance. Prior to establishing Fleet Search and Selection, he headed up the Investment Banking Audit and IT Audit Divisions at two prominent recruitment companies.
Craig has helped 100’s of candidates make difficult career choices. When not at work, his strategic mindset turns to his passions for skiing and rugby and is a huge supporter of Australia’s national rugby team.
Contact:
[email protected] (mailto:[email protected])

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