Headline FeedsE-Commerce Times Talkback
|
|
See Full Story
A well-rounded board is an absolute necessity in these economically trying times. The average board of today usually consists of at least one person who has expertise in the company's business; a high-profile person who brings credibility and gravitas to issues; a financial person who, among other things, can chair the audit committee; and an attorney who has experience with corporate governance matters. There is, however, somewhat of a newcomer to the lineup of board members. That newcomer is the strategist.
In the boardroom, knowledge is power
Posted by: zEthics 2010-02-05 09:10:04 In reply to: Theodore F. di Stefano
What do Lehman Brothers, Bear Stearns, General Motors, BofA and AIG have in common with Enron, Worldcom and Tyco?
The board was blind-sided by fraud and misconduct.
To the board, information is knowledge, and knowledge is power. How can anyone expect the board to oversee management if the executive management team is allowed to filter the information they receive?
The housing bubble began to burst in 2006. Yet it wasn’t until late 2007 when Pricewaterhouse told AIG executives that the company “could have a material weakness.” Uncertainty about the accuracy of the company’s financial statements weren’t disclosed to investors and the public under SEC rules until 2008.
Even with losses from AIG’s Financial Products mounting, the 2007 year-end filing stated, “management believes” it could raise the billions of dollars needed to meet “anticipated cash requirements.”
Yeah, the $180 billion in cash and loans it received from taxpayers just a few months later.
Recent discussions in the CompliancEX group of LinkedIn conclude:
1. Employees are afraid of disclosing the truth for fear of losing their job and/or jeopardizing their career.
2. The executive management team filters the information they disclose to the board.
3. The information disclosed by independent outside auditors and consultants to the audit and governance committees is not always timely, and is often “watered-down.”
Corporate governance reform will remain illusive until public companies expand their board-level reporting to the audit and corporate governance committees to fully disclose the business practices of the company and its executive management team? An independent third party should provide board-level reporting to prevent the executive management team from filtering the information. The board-level audit and governance committees should use this information as a check and balance with disclosures made by independent outside auditors and consultants.
The board was blind-sided by fraud and misconduct.
To the board, information is knowledge, and knowledge is power. How can anyone expect the board to oversee management if the executive management team is allowed to filter the information they receive?
The housing bubble began to burst in 2006. Yet it wasn’t until late 2007 when Pricewaterhouse told AIG executives that the company “could have a material weakness.” Uncertainty about the accuracy of the company’s financial statements weren’t disclosed to investors and the public under SEC rules until 2008.
Even with losses from AIG’s Financial Products mounting, the 2007 year-end filing stated, “management believes” it could raise the billions of dollars needed to meet “anticipated cash requirements.”
Yeah, the $180 billion in cash and loans it received from taxpayers just a few months later.
Recent discussions in the CompliancEX group of LinkedIn conclude:
1. Employees are afraid of disclosing the truth for fear of losing their job and/or jeopardizing their career.
2. The executive management team filters the information they disclose to the board.
3. The information disclosed by independent outside auditors and consultants to the audit and governance committees is not always timely, and is often “watered-down.”
Corporate governance reform will remain illusive until public companies expand their board-level reporting to the audit and corporate governance committees to fully disclose the business practices of the company and its executive management team? An independent third party should provide board-level reporting to prevent the executive management team from filtering the information. The board-level audit and governance committees should use this information as a check and balance with disclosures made by independent outside auditors and consultants.
The Unique Role of the Board Strategist
Posted by: Teddistefano 2010-02-06 04:55:11 In reply to: zEthics
Great comments. Yes, knowledge is power and it's not good enough to have a great board. The board can't be kept in the dark by executives and by the auditors. Generally, I must say, that a good board can tell if info is being withheld from them. Please look at some of the articles that I've written on board service for the E-Commerce Times: http://www.ecommercetimes.com/perl/search.pl?x=0&y=0&query=%22theodore+f.+di+stefano%22
They should address some of the issues that you brought up.
Good luck! Ted di Stefano
They should address some of the issues that you brought up.
Good luck! Ted di Stefano
