Blog : BOARD TALK
|Posted on August 5, 2013 at 6:15 AM|
There is SO much material brought out around better boardrooms. And much of it is a waste of trees. I found the following just out yesterday - a Sunday in August - and got excited. Take a look.
EY (formerly known as Ernst & Young and applauded in this blog before now) have brought out a paper for Europe's boardrooms entitled 'Greater business challenges call for stronger audit committees.' It is definitely worth a read. (I wonder if they have been reading this blog ..... reassuring to see some of these ideas reinforced, in any case).
For complete transparency, I am - only very recently -also working with EY on something else. But no one drew this paper to my attention. This research was done for EY by Tapestry Networks (with whom I have - somewhat surprisingly - had no contact). Well done to them for such clear and concise writing.
The main ideas here until you have a chance to click on the link above....
- Audit committee's role is expanding - "there is a need for a universal refresh of what the audit committee needs and how we are sourcing audit committee members"
- "Diversity of culture, role and experience is the most important element of an audit committee" the research found
- Boards are adapting their recruiting procedures to find new talent (I'm glad to hear it).
In case you have been in a cave, the changes are necessary because:
- Conditions in which businesses operate continue to fluctuate dramatically, markets are uncertain
- Cybersecurity has risen to the top of the risk agenda
- Great quote from an advisor to boards : "Foreign operations risk is a huge concern for the audit committee. Growth is coming from markets that many executives and non-executive directors in Europe are not familiar with. Bribery and corruption risks in Africa are orders of magnitude larger than they are in Europe. It's all well and good for countries to send out values statements, but they need to understand what those value statements mean." (my emphasis)
- "There's still a feeling of uncertainty in the boardroom - that the economic situation could get much worse very quickly and companies will be back to crisis management." - Audit committee chair
I hope that has whet your appetite - read the paper. Clearly there is a vested interest here in pushing for more accountants in the boardroom. So I find mention of this growing debate (which I can also affirm exists) of interest:
What is the value of financial experts on the audit committee?
"A risk executive remarked that audit committee members need to have an appreciation for how the business functions work together in a holistic way: 'Audit committee members need an understanding of the business the company is in. You need to have an understanding of how finance, IT strategy amd marketing (come) together. But you also need to be able to engage with some level of expertise on something that is purely IT related, or purely marketing related.' (my emphasis)
I reckon we're going to hear the use of the word 'holistic' more around building better boardrooms.
And in considering the characteristics of an audit committee chair, the paper says:
"In many ways, the job of an audit committee chair is more art than science...."
It's a welcome development to take away some of that responsibility for 'artfulness' away from the role of the all-important chairman (let's face it usually a man in UK plc) when it comes to behaviour in the UK's boardrooms.
This blog is sponsored by ICSA Software (technology for the boardroom and beyond) who appear to be asking for nothing in return - so I feel compelled to point out my visit to their site shows a new office in China.