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from Financial Regulatory Forum:

Internal Audit & the Four Cs: Culture, Conduct, Corporate Governance and Customer Outcomes

By Michael Cowan, Regulatory Intelligence Analyst, Thomson Reuters

NEW YORK, July 30, 2014 - Corporate governance and culture have moved into the mainstream as a result of the financial crisis, and as the global recovery takes hold, governments and regulators are keen to ensure lessons are learned. It is clear, however, that despite the increasing profile of corporate governance with regulators, shareholders and customers, and the effect it has on the health and reputation of firms, it is still an area in which many internal auditors lack a high level of involvement.

Thomson Reuters annual State of Internal Audit Survey, which was published in June, found that 49 percent of internal auditors had no involvement in assessing their firm’s culture, while just over a quarter of internal auditors have not assessed their firm’s corporate governance; regionally, this figure was most concerning for North America, with 32 percent of internal auditors having no involvement in assessing corporate governance. This figure dropped to 18 percent for European respondents, where regulators like the UK Financial Conduct Authority have honed in on the interrelated issues of corporate governance, customer outcomes and conflicts of interest and have stated that they will start assessing culture by looking at relevant areas of a firm’s business and behavior and drawing conclusions from there.

The internal audit profession is aware of the need to roll up their sleeves and start auditing these ‘soft’ issues, but in many cases lacks the organizational support and operational framework to do so effectively. In fact, earlier this month, the Chartered Institute of Internal Auditors launched a report calling on boards to take more concrete steps to audit their corporate culture and behavior.

Culture is a vital regulatory priority around the world and it is therefore worrying that nearly half of all internal auditors have had no involvement in assessing their firm’s culture. The results further emphasize the need for a strong, well-resourced independent audit function which is equipped and empowered to extend their independent assurance activities beyond functional processes and controls to the values and behaviors that define a good corporate culture.

from Edward Hadas:

Not all banks are alike

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Competition is fierce for the Bankers’ Bad Behaviour Award. Rate-rigging, client-fleecing, dishonest documentation, reckless trading and exorbitant pay were all widespread before the 2008 financial crisis, and faulty practices have proven remarkably persistent. It sounds like there is something wrong with all banks. The ethical problem, though, is not universal.

from Breakingviews:

Deutsche/UBS: there’s life in EU bond trading yet

By Dominic Elliott

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Deutsche Bank and UBS have shown there is life in Europe’s bond traders yet. The two banks and Credit Suisse have been losing share to Wall Street since last year, but in the second quarter they hit back. Fixed-income revenue at Deutsche was flat year-on-year, and down just 2 percent at UBS – against a 9 percent average fall at American banks.

from Breakingviews:

Goldman’s new lead director better as chairman

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Goldman Sachs has found the right man for the half-right job. The bank tapped Adebayo Ogunlesi to be its new lead director. The former head of client coverage for Credit Suisse might not be the most obvious candidate. For example, he has never led a public company. On balance, though, he’s a good choice. If only Goldman saw fit to call him chairman.

from Breakingviews:

Murdoch calls on European outposts for Time Warner

By Quentin Webb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Rupert Murdoch is calling on European outposts to help in his pursuit of Time Warner. The media mogul’s Twenty-First Century Fox is poised to sell its Sky pay-TV arms in Italy and Germany to Fox’s UK affiliate British Sky Broadcasting. There’s strategic logic to the asset shuffle and the proceeds could help sweeten his $80 billion bid for the owner of CNN and Warner Bros. How Murdoch treats non-Murdoch owners is the linchpin.

from Breakingviews:

Why Time Warner shareholders should listen to Murdoch’s muzzled minorities

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Time Warner shareholders pondering whether to surrender to Rupert Murdoch would be well advised to listen to the media mogul’s muzzled minorities. Most Twenty-First Century Fox believers are relegated to owning non-voting stock in the entertainment conglomerate, the same second-tier paper on offer as part of the $80 billion takeover bid for the owner of HBO, CNN and Warner Bros. studios. Despite broad investor overlap in the two companies, the record shows a clear distaste for Murdoch’s imperialism.

from Breakingviews:

Murdoch may be heading for Pyrrhic Time Warner win

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Rupert Murdoch may yet buy Time Warner, but it may be a Pyrrhic victory. The owner of HBO quickly shut off Twenty-First Century Fox’s $80 billion or so offer. Yet Murdoch appears determined to buy his media rival. Problem is, he’d need more than twice the synergies Fox has already identified to make the deal work – and a ton of debt. History suggests the octogenarian won’t give up – and may destroy value by offering more.

from Breakingviews:

Gowex collapse leaves egg on many faces

By Fiona Maharg-Bravo

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The collapse of Gowex has ramifications beyond Spain’s junior stock market for riskier companies. The Spanish wifi provider has said its chief executive admitted falsifying the accounts, days after investment firm Gotham City Research attacked the company. With Gowex held up as the poster child for Spanish entrepreneurialism, its impending failure will make life harder for other small firms.

from Breakingviews:

Solving the second-class stock conundrum

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Over dinner in San Francisco recently, an activist investor and an internet entrepreneur got into a heated discussion. The two men, with a gap of about two decades between them, were debating the practice of many young, growth businesses in the technology world – though it happens elsewhere too – to issue multiple classes of stock, generally one for hoi polloi investors in public offerings and another for founders and other insiders with super-charged voting powers.

from Breakingviews:

BNP’s Prot should go

By Pierre Briançon

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Baudouin Prot should go. The French establishment has circled the wagons, and there is little chance that the chairman of BNP Paribas, who was the bank’s chief executive at the time of the criminal activities it just admitted to, will resign or be asked to. He will then fail to do the decent thing after the bank’s unprecedented guilty plea and near-$9 billion fine.

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