Corporate Finance

Finance Roundup for Executives: April 20, 2016

Be informed, get involved, and shape the world through finance. Read CFO.com's most recent headlines and standout stories.
Kerry MarunaApril 20, 2016

Standout Stories

Connected cars… The shift to a “digital” economy is fundamentally changing virtually every industry. Over the next decade or so, the accelerating integration of digital technologies will make many things connected and “smarter,” capable of reporting where they are, who’s using them, and how they are used. That flood of data and the embedded analytics that harvest insights from it promise to offer a multitude of new value-creation opportunities to the companies (and their customers) who embrace “digital.”

Getting there won’t be easy. Let’s look at the automobile as an example. Cars are already halfway or more to being the ultimate mobile applications platform, despite the fact that for manufacturers (OEMs) hardware still matters more than software and the idea of “agility,” “updates,” and rapid evolution are embryonic. The update cycle for a vehicle line is still multiple years, and the over-use of “all new” for each model cycle fails to obscure the fact that most changes are minimal and “revolutions” are rare. Read article.

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Audit Control Violations… There has never been more pressure on finance leaders to ensure integrity in internal auditing and controls. Boards of directors want assurance that official financial statements are squeaky clean, with every piece of data in tables and in footnotes double-checked. There’s zero tolerance for such funny business, as a business unit booking revenue in one quarter while pushing related costs to the next.

In the digital age, manual/random audits no longer cut it. Companies with millions of transactions to audit need a more reliable way to gauge who and what needs to be investigated — before accidental errors or intentional malfeasance blow up to damage the company’s reputation and hurt investors. The pioneers are looking for solutions in technology-enabled auditing tools and processes. Read article.

Justice Department scrutiny… Two events last fall left corporate compliance officers, and those that they report to, squirming in their seats.

First, in what’s now commonly referred to as the Yates Memo, Deputy Attorney General Sally Yates stressed that the Justice Department will step up efforts to prosecute individuals, both civilly and criminally, who perpetrate corporate misconduct.

The memo noted that there are “substantial challenges to pursuing individuals for corporate misdeeds.” These include diffuse decision-making responsibility within companies and the need for investigators to conduct “painstaking review” of corporate documents, which can number in the millions. Read article.

Headlines

IBM Beats Estimates But Sales Drop Again

If the “strategic imperatives” IBM is betting on were really working, “the company’s growth rate should be improving,” one analyst says.

 

Where’s My Connected Car?

Continuing pressure on safety, infrastructure capacity, and emissions are going to force carmakers to fully embrace the smart, connected automobile.

 

A Blueprint for Better Benchmarking

Finance’s role in managing business performance is expanding.

 

Metric of the Month: Audit Control Violations

It’s safe to say that more automation means fewer control violations involving audits.

 

Compliance Officers Fear Greater DOJ Scrutiny Officials

The heightened scrutiny could result in a mass exodus of compliance officers from their positions, research suggests.

 

Comerica’s Earnings Spoiled by Energy Loans

But the Federal Reserve’s interest rate increase pushed first-quarter overall loan yields higher.

 

U.S. Housing starts, Building Permits Languish

Privately-owned housing starts rose 14% over 2015, but were nearly 9% below February’s revised numbers, said the Commerce Department.

 

Ex-Logitech CFO Accused of Accounting Fraud

The executive and a former Logitech controller are accused of inflating the company’s operating income in fiscal 2011.

 

Goldman Sachs Hit Hard By Headwinds

First-quarter earnings fell year over year, and revenue declined in many of the bank’s business units.

 

ECB Stimulus: Good for Loan Volumes, Bad for Profits

Bankers say the European Central Bank’s stimulus is leading to more loans but is also cutting into profitability.

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