Audit, Compliance and Risk Blog

The Insurance Services Office (ISO) has presented four major filings in commercial property, business auto, business owner’s coverage, and commercial general liability (CGL), some of which will make 2013 an interesting year for professionals whose success hinges on understanding insurance law. These are the first major new filings by the ISO in seven years.

We’ve all just received a grim reminder how easily public celebrations can become public nightmares. Readers who may now be nervous about special events in their areas should know that law enforcement and security professionals have developed security protocols that formalize hazard assessment and management. One important template for such protocols was published in 2007 by the U.S. Department of Justice (DOJ) – Planning And Managing Security For Major Special Events: Guidelines for Law Enforcement.

Many US federal laws provide explicit protections for whistleblowers – employees who report actual or potential violations of those laws to their employers or to the federal agencies that administer and enforce those laws. The Occupational Safety and Health Administration (OSHA) has administered one such provision under its general worker protection authority for more than 40 years, and presently administers provisions under 22 distinct laws. The best known and most litigated of these non-OSHA laws probably is the Sarbanes-Oxley Act of 2002 (SOx) – Section 806 of that law protects whistleblowers who report activities that may violate anti-fraud provisions of the federal Securities Acts. The rest of this posting discusses this SOx provision; readers subject to additional laws should consider the implications for their activities.

Included in the “Dodd-Frank Wall Street Reform and Consumer Protection Act” (Dodd-Frank Act), which became law in the United States on July 21, 2010, was the requirement that U.S. public companies disclose their use of “conflict minerals”—and compliance efforts must begin now. Specifically, companies must determine whether any of their products have been manufactured with any tin, tantalum, tungsten, or gold (3TG).

This blog article discusses the formal post-implementation review (PIR) process for U.S. accounting standards used by companies, not-for-profit entities, and state and local governments.

Litigation is an occupational hazard for corporate directors and officers. Fortunately, the hazard of directors' liability can be reduced substantially when the corporation indemnifies them from personal liability arising from their services. Indemnification is an undertaking by a corporation to reimburse legal costs and related expenses incurred to defend a claim, and may also include advances to cover defense costs as they are incurred. Indemnity arrangements may appear in the corporation’s charter or bylaws, and/or a separate agreement between the individual and the corporation. State laws govern indemnification, and apply through corporate bylaws and/or employment contracts with directors and officers.

Extreme weather is having an impact on the insurance industry with everything from hurricanes to blizzards resulting in increased activity in the sector. In order to remain profitable, insurers write policies that exclude certain types of damage, such as that often caused by water ingress. Most states regulate the sorts of exclusions insurers may specify in insurance policies, and state insurance bureaus receive filings from insurers seeking approval for such exclusions. The bureaus also carry out initiatives around consumer protection entailed by state legislation, and often release publications that educate consumers on their insurance options around mold damage and related insurance claims.

Executive compensation packages can become sources of tension between directors and shareholders in companies. In the U.S., state corporation laws authorize directors to fix their own compensation and to determine suitable compensation for the officers of the corporation, while federal income tax rules require shareholder validation before the company can deduct individual compensation exceeding $1 million ($500,000 for participants in the Troubled Asset Relief Program (TARP)). U.S. federal laws have expanded requirements for shareholder “say-on-pay” votes, but only require that the votes themselves be advisory, not binding. The 2009 federal stimulus bill requires participants to offer non-binding shareholder votes, and the 2010 Dodd-Frank Act requires all public companies to do the same. (See my recent blog on Securities and Exchange Commission (SEC) rulemaking).

The Civil Rights movement of the 1960s extended beyond the ballot box to enter most U.S. workplaces. Beginning with Title VII of the Civil Rights Act of 1964, federal (and follow-on states’) laws seek to ensure employees' rights to equal treatment, by prohibiting employer discrimination against employees because of any characteristics that historically have been the basis for discrimination (dubbed “protected classes”). Federally protected classes presently include the following:

On February 20, 2013, the U.S. Financial Accounting Standards Board (FASB) and its international counterpart, the International Accounting Standards Board (IASB), completed their “substantive deliberations” on the joint project to issue a comprehensive new standard on accounting for revenue. The changes in this standard will affect almost all companies in one way or another. While minor “tweaks” might occur over the next few weeks, the major decisions have been reached.