Blockchain Offers Solutions in the Global Coffee Market

One Seattle startup, Onda Origins, is using blockchain technology to track their coffee from bean to cup, according to GeekWire.

Onda uses blockchain, which acts as a distributed ledger, to create transparency for customers, who can see exactly where their coffee comes from, and for growers to get maximum revenue out of every bean they produce.

“We can revenue share back to those growers and reward them a second time for the environmental or social good they’re bringing to the world,” says Paul Tupper, co-founder of Onda Origins. “Consumers are driven by that, and we can make a system that reflects the values people think they’re buying into. A backbone of experiential marketing makes it feel true and traceability proves that it is true.”

Onda had to find creative ways to make sure their first growers got paid, and that became more challenging as it looked to expand to larger growers and different locations. Using blockchain makes it easier to work across borders and languages barriers.

“As we expanded our offerings into cooperative models or small holders in locales where we didn’t have linguistic capacity, we could never guarantee that the actual trail was leading back to the producer,” says Scott Tupper, Onda co-founder. “That led to a couple disappointing situations where we didn’t know how to reconnect with the growers. Blockchain offers an ability, through auditing chain of custody on a ledger, to make sure that we are following product all the way through and that we will always have access to the growers.”

“Sustainability stories from origin, whether that’s environmentally sustainability or community sustainability, were being leveraged for really high price points on the consuming end but that price wasn’t shared back to the grower, even though they are bringing value,” says Paul Tupper.

Starbucks is also exploring the option of using blockchain technology for a similar bean to cup pilot program. They will launch the program with select coffee farmers in Costa Rica, Colombia and Rwanda. This will allow growers to log and share real-time information along the journey of coffee beans to develop and demonstrate over the next two years how data platforms can give coffee farmers even more financial independence and confidence.

“Many years ago, our controls and transactions were all done by paper, and today we are even talking about blockchain technology,” says Ronald Peters, executive director of the Costa Rican Coffee Institute. “This shows us that, more than being at the front of every technological advancement, having the information and being flexible and adaptable are important.”

“The promise of connecting coffee farmers to coffee drinkers is an extraordinary leap in transparency and accountability, and it speaks volumes about Starbucks commitment to creating a product that is good for people and for the planet,” says M. Sanjayan, CEO of Conservation International.

BDO Releases Inside E-Discovery & Beyond Survey

Chicago-based BDO USA (FY17 net revenue of $1.4 billion) released a survey, Inside E-Discovery & Beyond.

BDO’s Inside E-Discovery & Beyond survey examines the opinions and insights of more than 100 senior in-house counsel about how the evolving digital landscape is spurring changes in their approaches to e-discovery, information governance, compliance and cybersecurity.

“Ultimately, today’s corporate counsel must take a holistic view of their organization’s digital risk profile – assessing risk based on data flows, cross-functional interdependencies and global operations – and play a proactive, rather than reactive, role in risk-based strategic planning,” says Stephanie Giammarco, partner and technology and business transformation services practice leader.”

Nearly half (47%) of senior counsel list Big Data among their top three e-discovery-related issues, a substantial increase from just 28% a year ago. Almost half (48%) of survey respondents are currently using technology-assisted review, an increase of eight percentage points from last year. In addition, 31% report using analytics across the electronic discovery reference model, and 23% leverage mobile document review.

“Implementing a data retention and disposition strategy as part of the ordinary course of business prior to the preservation duty kicking in is a great way to control the amount of data subject to discovery. This simultaneously enhances the ability to quickly develop an early understanding of what information is available and to begin to contain the likely scope and ultimate cost of the entire e-discovery process,” says George Socha, EDRM co-founder and managing director in BDO’s technology and business transformation services.

The General Data Protection Regulation (GDPR) could take legal by surprise: 48% of survey respondents claim GDPR is not applicable to their organization. Chances are high that many of these companies are wrong.

“It behooves every organization – whether they touch EU personal data or not – to regularly review how information is used and managed to maximize its value and minimize risk. GDPR is just the catalyst for a higher standard of data privacy and protection to which every company should aspire,” says Karen Schuler, BDO national information governance practice leader.

RSM Partners with Global Tech Platform Plug and Play

Chicago-based RSM US (FY17 net revenue of $2 billion) partnered with Plug and Play, a global innovation platform. As a strategic founding anchor partner for Plug and Play’s newest vertical in cybersecurity and an anchor partner in FinTech, RSM will connect with startups that are bringing innovation to the cybersecurity and financial technology spaces.

Plug and Play invests in more than 150 companies each year and has 28 locations around the world. Some of its successes include PayPal, Dropbox, SoundHound and Lending Club.

“RSM is committed to truly understanding its middle market clients, and bringing them fresh ideas and insights that help them move forward on their strategic goals,” says Joe Adams, RSM MP and CEO. “Having a perspective on new technologies and innovations is critical to fulfilling our role as first-choice advisors to our clients, as they contemplate new ways of doing business to succeed in today’s rapidly changing and increasingly global economy.”

“It is our pleasure to welcome RSM as a new partner in FinTech and as a founding anchor partner in cybersecurity,” says Saeed Amidi, founder and CEO of Plug and Play. “Their commitment to innovation is what we look for in our partners, particularly when they have such a strong position in serving the middle market.”

“Technology and innovation are changing the marketplace, and our firm and our clients need to be informed and agile to seize these new opportunities,” says Bob Jacobson, a consulting partner who will serve as the primary RSM contact with Plug and Play. “Our relationship with Plug and Play will help us advance new ideas that will help our firm and our clients succeed in the future.”

“As the first-choice advisor to the middle market, RSM represents an incredible partner and one who is dedicated to empowering their clients and employees with new innovations,” says Matt Helmers, a FinTech Innovation Manager at Plug and Play who will serve as the primary contact with RSM. “Paired with their advisory capabilities and our local leader, Bob Jacobson, we are extremely excited to collaborate with RSM and provide them with a line of sight to early, growth, and later stage companies offering new innovative technologies.”

IRS Reminds Taxpayers Cryptocurrency Income Is Taxable

Virtual currency transactions are taxable by law just like transactions in any other property. The IRS has issued guidance in IRS Notice 2014-21 for use by taxpayers and their return preparers that addresses transactions in virtual currency, also known as digital currency.

Taxpayers who do not properly report the income tax consequences of virtual currency transactions can be audited for those transactions and, when appropriate, can be liable for penalties and interest.

Virtual currency, as generally defined, is a digital representation of value that functions in the same manner as a country’s traditional currency. There are currently more than 1,500 known virtual currencies. Because transactions in virtual currencies can be difficult to trace and have an inherently pseudo-anonymous aspect, some taxpayers may be tempted to hide taxable income from the IRS.

Notice 2014-21 provides that virtual currency is treated as property for U.S. federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency. Among other things, this means that:

  • A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.
  • Payments using virtual currency made to independent contractors and other service providers are taxable, and self-employment tax rules generally apply. Normally, payers must issue form 1099-MISC.
  • Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a form W-2 and are subject to federal income tax withholding and payroll taxes.
  • Certain third parties who settle payments made in virtual currency on behalf of merchants that accept virtual currency from their customers are required to report payments to those merchants on form 1099-K, payment card and third-party network transactions.
  • The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.

CLA Joins the Wall Street Blockchain Alliance

Minneapolis-based CliftonLarsonAllen (FY16 net revenue of $755.9 million) will collaborate with the Wall Street Blockchain Alliance (WSBA) as a corporate member. CLA will be an active participant on WSBA’s working groups and advising CLA clients, as well as the accounting industry, on blockchain developments and cryptocurrency transactions.

“The WSBA is very pleased to have CLA join us as a corporate member, and we look forward to collaborating with them across the organization to help fuel innovation as they consistently evolve their service delivery model and consider the potential impact of blockchain technology,” says Ron Quaranta, chairman of the WSBA.

CLA’s future innovations team (FIT) is dedicated to keeping the firm on the cutting edge of new technology and disruptors that impact clients, communities and the CLA team. With the surge of cryptocurrencies and blockchain technologies, FIT is taking action to elevate CLA’s knowledge in order to help meet the needs of clients and the marketplace both now and in the future.

“Our collaboration with WSBA allows us to be proactive and prepare for the advancements in blockchain technology that continue to evolve rapidly and create both opportunities and risks for businesses and commerce in the United States and abroad,” says James Watson, managing principal and FIT member.

Eide Bailly Expands Cybersecurity Solutions Through New Relationship with Secuvant

Fargo, N.D.-based Eide Bailly (FY17 net revenue of $269.4 million) partnered with Secuvant to supplement Eide Bailly’s current cybersecurity solutions. The partnership will allow business executives to have cybersecurity programs that speak to them directly about how business-class cybersecurity solutions protect their true business assets and not simply the technical ones.

“Through this relationship with Secuvant, we can now offer a wider range of cybersecurity and allied solutions to strengthen Eide Bailly’s capabilities for our clients. Business executives must be given every advantage in making the right decisions to invest properly in securing their company,” says James Lyons, strategic growth officer of Eide Bailly.

“Our methodology facilitates collaboration between a company’s executives and their IT team, to ensure the organization’s cybersecurity program appropriately addresses business risk, and not just technical risk,” says Ryan Layton, CEO of Secuvant. “We help business leaders understand cyber risk is business risk. This is a perfect fit to the Eide Bailly culture of commitment to stay ahead of client needs. Our blended services and solutions create a very efficient augmentation to how they serve their client.”

“At Eide Bailly, we have very deep resources across our people and technologies. This relationship with Secuvant allows us to focus even better on the things we already do well – basically a holistic skillset our clients need,” says Anders Erickson, director of cybersecurity services for Eide Bailly. “We feel Secuvant has taken the best security frameworks and then mapped cyber risks to business risks. Their methodology helps executives understand how to invest proactively, instead of reactively, in their own cybersecurity. IT teams can’t bridge that gap on their own.”

Additionally, Eide Bailly recently acquired Decipher Forensics as part of their growing comprehensive cybersecurity solutions. The computer forensics and eDiscovery capabilities developed by Decipher Forensics are now fully immersed into resources available to all Eide Bailly clients.

“By adding these capabilities to our relationship, we can jointly provide clients with a solution that helps them find risks, determine the root cause, address the issue completely, put policies in place to prevent further instances and continually monitor to ensure the client’s business is improved and strengthened in an on-going way,” says Todd Neilson, CTO of Secuvant. “Our relationship ensures that all Eide Bailly clients are equipped to see a cybersecurity problem before it happens, remediate it, monitor it and ensure their brand is not hurt by it.”

PwC Partners with The Request Network Foundation

The Request Network Foundation, a company that promotes blockchain technology, partnered with the PwC France and Francophone Africa Blockchain Lab. This partnership offers solutions to clients’ needs onboarding blockchain to their business practices.

“Today we’re taking a chance to experience new opportunities, new technology, new type of management, new mindset of living together, share and collaborate: this is exactly what blockchain promises to us,” says Marie Line Ricard, partner and blockchain lab leader at PwC France.

“We are glad to form a partnership with the PwC France Blockchain Lab, creating a bridge between the corporate and blockchain industries. This partnership facilitates industries to innovate and adopt financial solutions using blockchain technology,” says Christophe Lassuyt, co-founder of Request Network Foundation.

“Combining our cutting edge blockchain technology with the experience of a trusted business partner offers corporations the best of both worlds, allowing a smooth business transformation,” says Etienne Tatur, co-founder of Request Network Foundation.

“The thought leadership group is a great way for us to share knowledge and expertise. We are working very hard to build a common center of excellence dedicated to the financial industry, which will accelerate mainstream adoption of financial blockchain products,” says Christophe Fonteneau, strategic partnerships manager, Request Network Foundation.

SEC Adopts Statement and Interpretive Guidance on Public Company Cybersecurity Disclosures

The SEC voted to approve a statement and interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents.

“I believe that providing the commission’s views on these matters will promote clearer and more robust disclosure by companies about cybersecurity risks and incidents, resulting in more complete information being available to investors,” says SEC chairman Jay Clayton. “In particular, I urge public companies to examine their controls and procedures, with not only their securities law disclosure obligations in mind, but also reputational considerations around sales of securities by executives.”

The guidance provides the commission’s views about public companies’ disclosure obligations under existing law with respect to matters involving cybersecurity risk and incidents. It also addresses the importance of cybersecurity policies and procedures and the application of disclosure controls and procedures, insider trading prohibitions, and regulation fair disclosure and selective disclosure prohibitions in the cybersecurity context.

Xero Names New CEO

Steve Vamos

Steve Vamos

Xero, a cloud accounting company, named Steve Vamos as its new global CEO. Previous CEO, Rod Drury, will remain with the company as a non-executive director.

“What Rod and Xero have accomplished is rare and remarkable,” says Vamos. “I’m excited to have this opportunity to lead Xero’s growth and development going forward. I have really enjoyed the opportunity to work with the Xero leadership team and we have a clearly communicated strategy, which we are committed to executing.”

Vamos has 30 years of experience including being the former head of Microsoft Australia. Prior to that, he served as managing director of Apple Computer Australia and New Zealand, and in various executive and professional roles at IBM between. Vamos also led the growth and development of an online media business in his role as CEO of Ninemsn, a joint venture between Microsoft and former Australian media company Publishing and Broadcasting Limited.

“Succession planning has been high on the board’s agenda and with the business performing strongly, we believe the time is right to make the transition at CEO level,” says Xero chair Graham Smith.

“Xero has recently achieved a number of key milestones: We’ve achieved positive EBITDA and operating cash flows, consolidated our listing on the ASX and built an exceptional leadership team. It’s now the right time for me to pass the baton to Steve, who has the experience to significantly expand Xero internationally. Steve has demonstrated to the board and me that he has the skills and experience we need to execute Xero’s next phase of growth, while I contribute to strategy as a non-executive director with my passion for product innovation,” says Drury.

New White Paper Identifies Potential Blockchain Implications for Audit and Assurance

A new white paper, Blockchain Technology and its Potential Impact on the Audit and Assurance Profession, from Chartered Professional Accountants of Canada (CPA Canada), the AICPA and Waterloo discusses how financial statement auditing might evolve with blockchain technology and also considers new assurance services and future roles for CPAs. The paper was authored by several leaders in blockchain technology from Deloitte’s U.S. audit and consulting businesses, as well as blockchain leaders of Deloitte Canada, CPA Canada, the AICPA and Waterloo.

The white paper concludes that while blockchains are unlikely to replace judgments by a financial statement auditor, “CPA auditors need to monitor developments in blockchain technology because it will impact their clients’ information technology systems; and work with experts to audit the complex technical risks associated with blockchains. CPA auditors should be aware of opportunities to leverage their clients’ adoption of blockchain technology to improve data gathering during the audit and should consider whether blockchain technology will allow them to create automated audit routines.”

“Change comes quickly,” says Gord Beal, vice president of research, guidance and support at CPA Canada. “Anticipation, early understanding and integration of innovative technologies is critical to the success of our members and the organizations they serve. Blockchain is already starting to affect CPAs and its impact on the profession is anticipated to grow. We are committed to providing guidance to help CPAs navigate these changes and create opportunities for the future.”

“This white paper sheds light on a key technological development that CPA auditors in North America – and around the world should stay abreast of,” says Susan Coffey, Association of International Certified Professional Accountants’ executive vice president for public practice. “Blockchain is bringing new challenges and opportunities to the audit and assurance profession. As the paper makes clear, CPAs will need to evolve their skillsets and knowledge to meet the anticipated demands of the business world as blockchain and other new technologies are more widely adopted.”

“There is no doubt that blockchain technology, cryptocurrencies and smart contracts have captured the imaginations of people around the world,” says Efrim Boritz, professor, School of Accounting and Finance, University of Waterloo, director, UWCISA. “The University of Waterloo’s Centre for Information Integrity and Information Systems Assurance is monitoring developments in this area and conducting research to ensure that we understand the strengths and weaknesses of these technologies – to look beyond the hype – to help decision makers make sound choices when considering the opportunities and risks represented by these technologies.”

The white paper contains a call to action that urges CPAs, including those in auditing, to continue to monitor developments in blockchain technology. Additionally, CPA Canada and the AICPA encourage auditing and accounting standard setters to monitor progress and adoption of blockchain technology in the business ecosystem. The CPA profession needs to envision the future skills that will be required to allow CPAs to meet the demands of the market in a business world where blockchain technology is widely accepted.