Compliance landscape will change in financial services industry

What does TARP mean from a compliance perspective? The main implications seem to be indirect. Randy Marshall, Protiviti managing director, says, "The new legislation establishes that misrepresentations (restatements) may be a basis for investigation and recovery of executive compensation for participating institutions in TARP." These are definitely serious issues for the board, albeit not necessarily new ones.   

Taking a broader regulatory and compliance view, however, it's clear that some more profound changes may be in the offing--changes that will test many boards. One example might be the new guidance on FAS 157. If you start tinkering with fair values, the bottom line will be drastically affected in some cases, which brings Sarbox into scope. Beyond that there are definitely some higher-level GRC issues to be worked through, which has vendors and consultants sensing bigger business.  

Consultants have long been somewhat frustrated by the reluctance of audit committees--and to some extent the board--to seek external help. Will the stupendous challenges that lie ahead change that? The issues will be complex as the industry grapples with the bailout, the rise of IFRS and lots of other regulations. Protiviti thinks a huge opportunity looms and it just started a new unit, the Protiviti Financial Crisis Team. This service provides clients with advice on responding to market conditions and updates about market and regulatory changes. We'll see if it takes off.  

Going forward, there will almost definitely be some new regulations that pass in 2009. Reform always follows scandal, and in the current crisis, many in Washington see scandal. So the regulatory situation will remain in flux, which adds another layer to an already complex compliance situation. - Jim