The week’s news included; EY fined £3.5m for audit failings, FIFA to receive $200m following DOJ corruption probe, PayPal to provide crypto services to UK customers, Tim Cook receives $750m payday.
Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- Legal Gazette – Big businesses ‘could outsource less work to external firms’
- BBC News – What’s behind the shortage of lorry drivers?
- City A.M – Are overseas private equity bids good news for the UK?
1. FEDERAL RESERVE MOOTS ENDING STIMULUS
The US Federal Reserve has suggested it may begin easing its stimulus package later this year. While the bank assured that interest rates are unlikely to rise other stimulus measures such as asset purchases will likely be tapered off as the economy continues to recover. South Korea has already raised interest rates and there are concerns the US could follow suit. Inflation in the US has been rising as near 0% interest rates have spurred borrowing and spending. Unemployment rates have fallen to 5.4%, a far-cry from the near 15% levels seen last year.
2. EY FINED £3.5M FOR AUDIT FAILINGS
EY has been fined £3.5 million over failures in its audit of transport company Stagecoach. The issues relate to EY’s 2017 audit of Stagecoach’s rail franchise deal for the East Coast Main Line as well as its insurance and pension schemes. There was insufficient evidence obtained by EY in the audit process and the auditor failed to show adequate “professional scepticism” throughout the process.
The Financial Report Council found however that the failures ” were not intentional, dishonest, deliberate or reckless”. EY’s cooperation along with mitigating factors meant the fine was reduced to £2.2 million. EY’s auditing engagement partner was also fined £70,000 following a 30% reduction.
EY highlighted that it’s 2020 audit of Stagecoach showed no issues but expresses regret that it fell short of required standards previously.
The Big Four accountants have been under pressure to improve standards following several high profile collapses. Two weeks ago, they rejected proposals that would see them share audit work with smaller competitors.
3. APPLE RELAXES APP STORE RULES
Apple has relaxed its app store rules in a bid to settle a lawsuit with Fortnite maker, Epic Games. The tech giant will allow app developers to promote and accept payment for in-app transactions outside of the App Store. Apple had previously prohibited app developers from circumventing the App Store on in-app transactions. Apple’s 30% commission on transactions via the App Store will, however, remain in place. This comes before a ruling on the lawsuit between Apple and Fortnite. Epic sued Apple for running a monopoly and charging excessive commission in breach of competition law.
4. FIFA RECEIVES $200M IN CORRUPTION PROBE
The US Department of Justice has said FIFA will receive $201 million in compensation following a corruption probe. The DOJ launched a probe in 2015 and since then over 50 persons have been charged. To date, there have been 2 convictions while 27 Individuals and four entities have pleaded guilty.
Influential executives from football bodies across the globe have colluded with sports marketing executives. What ensued was a series of corrupt decisions, money laundering offences, fraud, and bribery cases. Sepp Blatter, former FIFA president, was ousted from the helm due to his involvement in the scandal.
Guilty parties will provide compensation to their respective bodies through a new World Football Remission Fund. This fund will help football related projects across the globe. FIFA governs football across the world. CONCAF and CONMEBOL govern football across the Americas and in South America respectively.
5. UBER MEETS WITH UNION LEADERS
Uber is meeting with trade union leaders in the UK for the first time. The unions hope to work with Uber to improve business practices and workers’ rights. This follows the landmark Supreme Court ruling that Uber drivers were workers not self-employed contractors. Uber announced it would recognise the GMB trade union shortly after. GMB can now represent up to 70,000 Uber drivers in workers’ rights discussions with the company.
Both sides have sounded aligned so far, claiming 230,000 drivers across the ride hailing sector were not receiving their legal rights. Uber seems keen to improve its reputation and start a fresh page on its workers’ rights record.
6. PAYPAL TO PROVIDE CRYPTO SERVICES
PayPal has announced that it will provide cryptocurrency services for UK customers. Customers can buy, sell, and hold Bitcoin, Ethereum, Litecoin and Bitcoin Cash on the platform. Purchases can be made for as little as £1, and payments can be made using debit cards and accounts. This is the first time PayPal has offered cryptocurrency services to non-US customers. US customers have been able to make payments to businesses using cryptocurrencies since last year. Last week, Bitcoin crossed $50,000 for the first time since May.
7. EMPLOYER VACCINATION PLANS
Firms are beginning to implement plans for managing staff vaccinations and getting staff back into the office. Deloitte has said all its US staff coming to the office from October must be vaccinated against COVID-19. Goldman Sachs has also set a requirement for all staff to be vaccinated before returning to the office. Staff will also be tested on a weekly basis.
In the airline sector, Delta Airlines will apply a $200 monthly surcharge for unvaccinated staff . This policy will apply to most of its 75000 staff who are enrolled on its health insurance plan. Unvaccinated staff who contract COVID-19 will also be ineligible for sick pay. The airline said average hospital costs for each COVID-19 patient totals $50,000, which is unsustainable for the plan. The financial risk is the primary reason for the move.
These requirements are being implemented by employers in the US. Check out our article exploring issues in the UK.
8. TIM COOK GETS $750m PAYDAY
Apple CEO Tim Cook has received a healthy $750 million payday after 10 years at the helm. Cook received 5 million shares in Apple and sold most of these. This reward was contingent upon how well Apple’s stock performed in relation to other S&P 500 firms. Cook has undoubtedly done a stellar job in this regard. Since he took over in 2011, Apple’s share price has increased 1200% and it became the first trillion-dollar company in 2019. Apple’s valuation currently stands at nearly $2.5 trillion.
Cook has now agreed a new pay packet that runs until the end of 2026. He is worth around $1.5 billion but has pledged to give away his whole fortune before his death.
Bill Gates and Warren Buffet set up the Giving Pledge in 2010, encouraging billionaires to give half of their wealth to charity.
9. AIRBNB PROVIDES AFGHAN REFUGEE HOUSING
Airbnb has announced it will provide temporary housing for 20,000 Afghan refugees. They hope other businesses will do the same. Chief executive Brian Chesky said it was in response to “one of the biggest humanitarian crises of our time”. Airbnb will work with charities and NGOs to help house the refugees. Property owners who host Airbnb locations have long been encouraged to donate stays at their homes for “people in crisis”. The scheme began in response to Hurricane Sandy in 2012. Airbnb claims to have helped more than 75,000 people through the scheme.
10. NO MILKSHAKES AT MCDONALDS
Last week, McDonald’s ran out of milkshakes and some drinks at its 1250 outlets across England, Scotland, and Wales. The shortage is due to supply chain issues largely resulting from the national dearth of HGV drivers. The Road Haulage Association has estimated the UK is 100,000 drivers short. This has been caused by the pandemic alongside post-Brexit immigration changes making migration for foreign lorry drivers prohibitively difficult. Around 30,000 HGV driving tests did not take place last year due to the pandemic.
Nandos also ran out of chicken two weeks ago due to the shortage. Bosses at the UK’s major supermarkets are warning of stock shortages at Christmas. Supermarkets begin stock-building from September in anticipation of the busy Christmas period. They warn the current lack of HGV drivers may potentially hamper this. All supermarkets have ramped up incentives for drivers but there simply aren’t enough drivers as it stands. Supermarkets and food outlets have called on the government to act.