Weaver: Beyond the Numbers

How the Pandemic Could Change Leadership, Culture and Work with Dale Jensen and Lee Colan.

On this episode of Weaver: Beyond the Numbers, Weaver’s Bruce Zaret, Robert Neill and Trip Hillman tackle perhaps the largest looming question as the world marches toward a new normal – what risks are emerging in the wake of the COVID-19 pandemic?

These emerging risks will impact every corner of your organization, from facilities and the supply chain to insurance, financials, your workforce, operations, organizational culture and more.

With that in mind, it’s critical to examine how c-suite leaders and other stakeholders can address these risks, turn them into opportunities for growth, and outline a path forward that engenders success in the post-pandemic era, not trepidation and stagnation.
In particular, the trio of Weaver experts touched on:

• Where innovation can play a key role in navigating the post-pandemic new normal
• How to manage elevated risks for IT professionals, including those surrounding technology implementation, remote work capabilities, growing security risks as organizations incorporate remote collaboration and more into permanent strategies, and more
• Actionable next steps for updating overall organization strategies and assessing risk to maintain critical agility and productivity
  

Other key considerations during the immediate post-pandemic era and beyond include data protection, management of third-party services and vendor relationships, regulatory changes that could result from this period of uncertainty, and more of the top 11 risks likely to impact your organization in the coming months.

Visit weaver.com for more thought leadership on today's topics and to subscribe to Weaver's Monthly Insights Newsletter. Until next time, stay safe and thank you for tuning in.

The purpose of SOC reporting is to give insights into business-to-business relationships. Neha Patel, Partner-in-Charge, IT Advisory Services, Weaver, and Alexis Kennedy, Senior Manager, IT Advisory Services, Weaver, joined Beyond the Numbers to talk about the importance of SOC reporting in supply chain management, which is a critical component of many businesses.

“The force behind these reports is to allow a business to gain a more transparent look into the operations of the companies they are entering into a relationship with,” Kennedy said. “The SOC for supply chain is also designed to provide the users with information that they may use to assess and manage the risk that may arise from the relationship with that particular supply chain vendor.”

“The whole premise of this ‘SOC for supply chain’ is to highlight and give more transparency to what dependencies there are throughout that life cycle,” Patel said. “When you think about the world today, there are global dependencies, timelines, dependencies on delivery—companies manage those risks. So, if a company has a dependence on a producer, or supplier or delivery organization, any impact to those tangential elements could impact their ability to operate effectively."

For additional resources to help your business thrive, especially during challenging times, visit Weaver’s Resilience and Recovery Resource Center for up-to-date content on topics including cybersecurity, strategic governance, organizational assessments, tax relief for businesses and individuals, IT and financial considerations, compliance and other legislative updates. Also, be sure to subscribe to our industry publication for the latest news, videos and podcasts in the Business Services Industry.

Weaver: Beyond the Numbers: The Importance of Strategic Governance

At our core, we’re a Texas-based, national accounting firm with comprehensive capabilities. That means we do the things you’d expect us to do: traditional assurance and tax services. However, our philosophy has always been about doing more than expected. That’s why Weaver also provides a wide array of advisory services including risk advisory, transaction advisory, IT advisory, energy compliance services, forensics and litigation, financial institutions consulting and public company services.

As Americans shelter in place to help flatten the curve of infection, manufacturing industry leaders have the challenging task of balancing employee health and safety with international supply chain demands like never before.

On this episode of Weaver's Beyond the Numbers podcast, host Shelby Skrhak sat down with Jody Allred, Partner-in-Charge for Large Market Manufacturing and Distribution and Technology Services, and Kurtis Dixon, Partner in Tax Services to discuss critical issues facing manufacturing industry leaders who are seeking guidance on handling the unprecedented COVID-19 pandemic.

Two industry organizations, Manufacturers Alliance for Productivity and Innovation and the National Association of Manufacturers, recently surveyed the industry, seeking insight on their coronavirus concerns and practical solutions for mitigating the effect.

MAPI revealed that pandemic concerns are rising, with approximately 62% of executives expressing moderate or high concern about COVID-19’s impact on global operations when surveyed March 9. This was a significant rise from the first poll in late-January, which reported 37%.

"For U.S. manufacturing businesses that operate globally, in a very short amount of time, their perspective changed as more information was known," Allred said. "And from March 9 until today, we're looking at an even more significant change."

Whereas the initial and follow-up surveys focused on supply chain issues for essential equipment, such as personal protective equipment, U.S. manufacturers have a new problem emerging, as people are under government orders to stay home and close non-essential businesses.

Of note, the largest manufacturer of protective masks for healthcare workers is Wuhan, China, the initial epicenter of the pandemic.

"Manufacturers are looking forward at demand locally in the U.S and how that's degrading," Allred said. "That has become a much more significant problem today than what the March 9 survey that was focused on supply chain issues (suggested)."

Also on this episode, Dixon discussed the tax implications related to the government's CARES Act, which will provide stimulus relief, and the lesser-known Families First Coronavirus Response Act that was recently passed.

"We've had a lot of conversations from small businesses of under 500 people asking how all this works," Dixon said. "The rules can be confusing, initially."

It requires certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19.

An epic push-and-pull takes place every day in for-profit hospitals and healthcare facilities. Finance teams need to do their jobs to keep the business profitable, while medical professionals work to give patients the very best care possible. Today on Weaver: Beyond the Numbers, host Shelby Skrhak sits down with CPA Anna Stevens to discuss accounting struggles in the healthcare industry, specifically bridging the gap between departments that can seem at odds.

Before Stevens joined Weaver as director for Weaver's healthcare industry practice, she worked for three years as the controller for an $80 million post-acute health care system, where she saw firsthand the communication gap between finance teams and clinicians.

"We could spend an entire day talking about why these two teams struggle to work together," Stevens said. "It's communication. Yes, we need to communicate better, but how can we do that if we don't even know how to communicate with each other as different personality types?"

Stevens began studying how the common personality traits of finance professionals -- usually analytical thinkers who make decisions based on facts and hard data -- could clash with personality traits common among clinicians, who are more likely to be empathic, intuitive people using feelings and inference to make decisions. In essence, a hard-numbers person probably has a very different communication style from a person who relies on feeling and intuition.

"It's up to us [as accounting professionals] to realize we're coming from different points of view and experiences, and find better ways to communicate," Stevens said.

In this episode, Stevens breaks down the four contrasting personality types of finance teams vs. clinicians and offers strategies for improving communication in the entire organization.

Cannabis-related products and companies squarely live in a world of a perpetual gray area. To help clear up the opaque nature of banking by cannabis-related businesses on this episode of Weaver: Beyond the Numbers, host Shelby Skrhak sits down with Rachel Mondragon, Weaver Senior Manager in Regulatory Compliance specializing in financial institutions, to discuss.

The federal Controlled Substances Act makes marijuana a schedule 1 prohibited drug, plant and all, but recent legislation has given states new ability to delineate parts of marijuana, from medicinal CBD all the way to whole decriminalization. The legality of it is gray, so banks, credit card companies, and other financial institutions have kept their distance.

"Understandably, you have financial institutions thinking of banking this type of client but they're obviously hesitating," Mondragon said. "Part of that is lack of knowledge and understanding when we make a distinction between marijuana, THC, and CBD."

But that's left legitimate CBD businesses to make due as an all-cash organization, despite the industry's rapid growth and proliferation across the United States. With many cannabis-related businesses needing banking and very few banks serving these customers, there's an opportunity.

"For bankers that are looking at potentially banking this type of customer, there is profit to be made," Mondragon said. "Financial institutions can't deny that there are other financial institutions that have taken this leap, saying 'These people have to bank somewhere. We're going to go into this niche and we're taking that risk.' But it's still a risk-based decision."

On this new episode of Weaver: Beyond the Numbers, the Texas economy is our subject matter of focus as we look at the state's economic durability and why the Texas Legislature placed a large bet on that fiscal sustainability. Host Shelby Skrhak sat down with Weaver's State Government Practice Leader Adam Jones for his expert insight and what that means for residents and business owners in the years to come.

Evaluating the Texas Business Cycle Index from 2007 until today, Texas remains an economic juggernaut even amid an oil decline, Jones said, noting an unbelievable 6.6 percent change in Texas' real gross domestic product.

That strength comes despite sustaining one of the state's largest natural disasters in Hurricane Harvey, which pulled on the state budget in a big way.

"The legislature spent an unprecedented $6.1 billion from the Economic Stabilization Fund, known commonly as the Rainy Day Fund," Jones said. "Harvey was arguably the largest rainy day the state has ever had."

But school finance was an even larger expenditure, giving $6.5 billion in increased aid to school districts and $5.1 billion in school district property tax reduction. Jones said these expenditures are a departure from the state's usually conservative spending ideology, and may signal a shift in the political ideologies of the government's elected officials themselves.

"The dynamism of Texas never really stops," Jones said. "It never stops being a topic of conversations, a destination for families and immigrants trying to make a new start. Dynamic is a pretty good summation of the Texas economy and the state as a whole. "

Jones also discussed the state's role in the upcoming 2020 Presidential Race and a recent in-depth Economist article that pitted California against Texas in many ways.

On this episode of Weaver: Beyond the Numbers, we spoke about the increasingly important topic of IT compliance programs. To provide insight and expertise was Brett Nabors, IT advisory services partner with Weaver.

There’s no question that IT compliance programs are essential to companies in any industry. Much of this intense scrutiny is due to emerging threats and cybersecurity.

“IT compliance is now becoming part of the financial statement reports because of the focus on cybersecurity risk. However, IT compliance is more than just IT security. It’s one factor. What makes it so central now to leadership is that executives can no longer be blind to what’s happening in IT. They have a fiduciary duty and must contend with regulatory requirements,” Nabors said.

This means many companies are updating their IT compliance programs, which Nabors recommended.

“There is a lot more reliance now on third parties to perform IT functions of securing and processing client data. Failure to meet control or regulatory criteria can leave an organization exposed. So, everything needs to be monitored, and there must be oversight to limit errors. Companies also find there is a direct correlation between revenue and IT processes in these situations," he said.

The IT compliance role is also changing as the industry landscape does.

“There are multiple responsibilities for those in IT compliance. A lot of it is oversight and meeting basic security needs for the organization and compliance with things like Sarbanes-Oxley and System and Organization Controls," Nabors said.

Get more expert advice and information from Brett about how IT compliance impacts all areas of business by listening to the podcast.

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