Capital MarketsESG
September 15, 2020

Friedman, Profits and Treasury’s Role in Stakeholder Capitalism

50 years after Milton Friedman’s landmark essay on profits, treasurers are trying to embrace stakeholder capitalism responsibly.By Joseph NeuMilton Friedman’s essay, “The Social Responsibility of Business Is to Increase Its Profits,” turned 50 this past Sunday. Many commentators are seeking to mark the occasion with efforts to either square stakeholder capitalism with Friedman’s view—helping stakeholders is good for long-term profitability—or call him out as myopic to the more equal, inclusive and sustainable future that young people—and others—now want. Milton Friedman…
BankingLibor SOFR
September 15, 2020

Excitement Borne of Frustration Greets Ameribor 30-day Term Rate

Bank treasurers facing Libor’s end welcome news on a forward rate from the AFX. Libor’s days are numbered and bank treasurers eager for the development of a forward-looking, term interest rate that has a credit component got some good news last week: The American Financial Exchange (AFX) announced an indicative 30-day forward rate called Ameribor30 whose base rate is overnight Ameribor, which reflects the unsecured borrowing costs of more than 1,100 American lenders.“I’m pretty excited about it,” one member of…
Accounting & DisclosureFX
September 15, 2020

Talking Shop: Disclosing Option Premium Expenses in Revenues

Context: In 2017, the FASB issued ASU 2017-12, which simplified and expanded the eligible hedging strategies for financial and nonfinancial risks. The update goes into effect for all corporates this year, and some NeuGroup Members recently collaborated to share their approach to updated guidance on disclosing option premium expenses in their revenues. Question: “Does anyone disclose option premium expense in their revenues due to ASU 2017-12?” “As a consequence of the revised accounting for hedge costs under ASU 2017-12, our company is reviewing our typical…
Accounting & DisclosureESG
September 10, 2020

ESG Transparency Goals Create Hard Resource Allocation Decisions

The struggle to prioritize reporting requirements for a growing list of ESG standards and frameworks. Some NeuGroup member companies are struggling to prioritize how to allocate the resources necessary to satisfy a growing list of reporting and disclosure standards as corporates strive to be more transparent about their environmental, social and governance (ESG) records. That was among the key takeaways at a recent Virtual Interactive Session where an ESG officer raised the subject of determining what information is truly useful…
COVID-19TaxTreasury Management
September 10, 2020

Auditors Eye Risks of Not Knowing Where Remote Workers Call Home

Employees who move to other states or countries raise tax issues, and others, for employers. Everyone knows that millions of people are still working from home (WFH). But not every employer knows exactly where every employee is working—a potential headache discussed by members of NeuGroup’s Internal Auditors’ Peer Group (IAPG) at a recent virtual meeting. “We’re super worried about it,” said one auditor about the various tax, legal and compensation issues WFH can raise for corporates.It is critical that employers…
Accounting & DisclosureBanking
September 10, 2020

Pandemic Clouds CECL’s Impact on Corporate Loans and Lending

New accounting may prompt more conservative lending terms post-Covid. FASB’s new accounting for loan-loss reserves, current expected credit losses (CECL), directly impacts banks and other lenders and ultimately the loans they provide. Tim McPeak, principal industry consultant in the risk research and quantitative solutions division of SAS, the data analytics provider, said that the current pandemic and economic downturn have blurred the impact of CECL, effective for larger banks and most public companies since the start of 2020.Nevertheless, CECL will be…
COVID-19TechnologyTreasury Management
September 8, 2020

Post-Labor Day Rethink: Reinventing Finance Teams and Redefining the Office

How should corporate finance and treasury roles adjust to extended remote work and further delay of in-person team interaction? By Joseph Neu NeuGroup exchanges with members about team (aka labor) performance during the Covid-19-induced work from home (WFH) period have been generally positive. Productivity has been good, even up, as team members take back time lost to commuting as they give up spontaneous communication and collaborative teaching moments.Sustainability is a concern, though, as WFH requires balancing work and home priorities…
Cash & Working CapitalCOVID-19
September 8, 2020

The Road Beyond Recovery: Corporates’ Upbeat View of Working Capital Management

A majority of companies in a recent Deloitte poll say that they are already in stabilization or growth mode. Working capital is an issue never far from a treasurer’s thoughts, and the uncertainty the pandemic has brought to corporate cash flows has made it only more relevant. A recent survey by Deloitte of 1,500 C-Suite and other executives revealed what Anthony Jackson, a Deloitte Risk & Financial Advisory principal, called unexpected results. A majority of respondents said their companies are…
Capital MarketsCOVID-19Pension and Benefits
August 27, 2020

Wild Ride: Pension Fund Managers Describe a Rebalancing Roller Coaster Amid Pandemic

NeuGroup members discuss successes, disappointments and potential changes to strategy. Huge market swings, limited liquidity and high trading costs have tested the ability of corporate pension fund managers to rebalance portfolios during the pandemic. These challenging conditions have demonstrated the importance of speed and agility to make investment changes in times of crisis, and have forced some managers to take a hard look at asset classes and external managers. These and other insights emerged during a recent NeuGroup Virtual Interactive…
Risk ManagementTechnology
August 27, 2020

Blockchain’s Increasing Popularity Raises Internal Control Issues

Applying the COSO framework addresses risks but raises some new ones. Despite its mysterious origins, distributed ledger technology (DLT) is increasingly viewed by companies as vital to remain competitive. From an internal control (IC) standpoint, the technology has significant potential to reduce risk and improve efficiency but also introduces new risks, prompting a recently published report on how to apply the leading IC framework when adopting DLT, also referred to as blockchain. “We wanted to put this guidance out there…