Compliance
Douglas O’Donnell, former Acting Commissioner of the U.S. Internal Revenue Service (IRS), recently stated that as the IRS's annual discretionary budget drops from over $12 billion in fiscal year 2025 to $11.2 billion in fiscal year 2026, with a proposed budget of only $9.8 billion for fiscal year 2027, if enforcement staffing continues to shrink, audit numbers will decline, potentially prompting some taxpayers to underreport income and creating a 'race to the bottom' in tax compliance. He reminded businesses to reassess their tax risk frameworks and noted that the IRS's audit statute of limitations for tax year 2026 filings can extend to 2030, meaning future policy shifts could expose current aggressive strategies to risk.
The U.S. Securities and Exchange Commission (SEC) announced on Wednesday the creation of a new enforcement division dedicated to handling cases of financial reporting and accounting fraud. The division will be housed within the Division of Enforcement and will be composed of lawyers and accountants with expertise in financial reporting, accounting, and auditing.
Flexible Finance (operator of Flex payment services) filed a lawsuit in Manhattan court on Monday, accusing its former CFO candidate Alex Anderson of misappropriating trade secrets and using that information to help his current employer, competitor Split Pay, expand its business. The complaint alleges that Anderson violated a confidentiality agreement during the interview process, stole core confidential information such as Flex's financial models and strategic plans, and assisted Split Pay in shifting to a B2B model highly similar to Flex's. Flex requests the court to order the return of all trade secrets and to award damages.
Resilience's latest analysis shows that in the first half of 2026, 85.3% of incurred losses in its insurance portfolio resulted from cyberattacks exploiting human error, a significant increase from 17.7% two years ago. AI technology has made phishing and payment transfer fraud more deceptive, and the report recommends that companies strengthen multi-layered verification and overall risk management.
The Financial Accounting Standards Board (FASB) voted on Wednesday to advance a "targeted improvements" project for goodwill accounting, proposing to eliminate the annual impairment test and shift the testing level from reporting units to operating segments to simplify the model and reduce costs.
Grant Thornton Advisors and CBIZ announced a $5 billion all-cash merger agreement, expected to close in the fourth quarter. The combined company will operate in more than 20 countries and regions, with annual revenue of nearly $7.5 billion and over 34,500 employees, becoming the fifth-largest professional services, tax, and consulting firm in the United States.
The Antitrust Division of the U.S. Department of Justice announced that it will restore the targeted 'second request' investigation model for merger transactions to reduce corporate burdens and expedite the review process. This move is seen as the latest initiative by the Trump administration to reshape merger enforcement and shift toward policies more favorable to transacting parties.
The US will impose new tariffs on imports from 60 trading partners starting Friday, replacing the temporary global tariffs that are about to expire. This move is based on Section 301 investigations, involving China, the EU, and Mexico, with tariff rates of 10% or 12.5% respectively.
A Deloitte survey found that 51% of corporate boards lack AI usage rules and guidelines, 47% have not introduced AI into their work, and only 8% use company-approved AI tools. An out-of-control incident during OpenAI system testing highlights the importance of AI governance. Experts note that the pace of AI deployment and governance is imbalanced, putting CFOs under dual pressure.
An Avalara survey of 1,505 CFOs and senior finance executives found that 92% of respondents feel pressure to prove AI investment returns, but only 7% of organizations prioritize AI governance over adoption speed. 44% of respondents have only partial confidence in explaining AI agent behavior to auditors or regulators, and 76% say they lack internal expertise to understand how AI operates. The survey also shows that 30% of organizations have not updated internal controls within a year, 50% say AI agents bring only limited measurable returns, and 23% believe accountability for AI errors is unclear.