FEI Weekly

April 24, 2019

PCAOB clears PwC, turns to EY, Netflix accounting risks, and how to meditate at work.

Cyber Attacks and Losses Skyrocket in 2019

Yahoo Finance

A recent report says that 55% of UK companies faced a cyber attack, up from 40% in the previous period. Average losses from cyber attacks saw a huge increase, up 61% to $369,000. The World Economic Forum's latest data shows that “economic loss due to cybercrime is predicted to reach $3tn by 2020," adding, “74% of the world’s businesses can expect to be hacked in the coming year.”

Netflix Accounting Risks

Seeking Alpha

Since almost the entire balance sheet of Netflix consists of streaming content assets and liabilities, the capitalization and amortization of assets is absolutely critical. Investors asking for ever-rising stock prices can incentivize executives to make questionable accounting decisions and investors need to stay vigilant. Although there is no indication of wrongdoing at Netflix, these sort of gray areas lead to accounting fraud in the past.

SEC Turns Up Heat on Private Companies

CFO

The dealings of private companies and their executives have become an area of increased focus for the SEC, and the trend shows little sign of slowing down. Earlier this month, the SEC and the former CEO of Jumio — a defunct, privately held mobile payments verification startup — agreed to settle fraud charges related to the overstatement of revenue. Executives of private companies should regard the case, and other recent ones like it, as warnings.

PCAOB Clears PwC, Turns to EY

Economia

Inspectors from the PCAOB found no issues with the two audits they picked out of the 23 PwC carried out in 2017 nor with the work on one of the 168 audit engagements it did where it was not the principal auditor. Nor did the team find problems in its review of PwC’s quality control system. However, inspections of EY’s audit of one US-listed company and its work on two other audits where it was not the principal brought to light a number of deficiencies.

How to Meditate at Work

Quartz

Your brain needs a break and a shift away from autopilot when it’s at its busiest. Tap In is the first live meditation app made for any user, but especially for today’s distributed workforce. Look for a private, comfortable place to sit, preferably stepping away from your desk and wait for a 10-minute live meditation session to begin.