The Board of Directors and Audit Committee Guide to Fiduciary Responsibilities
Ten Critical Steps to Protecting Yourself and Your Organization
Authors: Sheila Moran, CPA, CFE, Ronald Kral, CPA, CMA
Pub Date: July 2013
Print Edition: $34.95
Print ISBN: 9780814431665
Page Count: 240
e-Book ISBN: 9780814431672
Buy the book:
From the Introduction
The audit committee is responsible for overseeing internal and external audit functions, financial reporting, and disclosure. Any publicly traded company in the United States listed on a stock exchange must maintain a qualified audit committee whose members consist of independent outside directors, and disclose if they have at least one financial expert, or otherwise, to explain why they do not. The audit committee is the most commonly referred to standing committee of the board—and for good reason: This is the group of individuals that ensures primary oversight of an organization’s financial reporting process and internal controls. As the board committee that is assigned primary responsibility to protect investor interests, the audit committee is a key component of the corporate governance structure. Yet failures and weaknesses in corporate governance arrangements are commonly cited as being behind business catastrophes, including the financial crisis of 2007–2008 that brought the world to the brink of economic chaos.
Boards of directors and audit committees must do all they can to ensure that proper corporate governance strategies are in place, that transparency is embedded in the organization’s culture, and that financial reporting processes are followed to the letter. Successful board and audit committee members must:
* Understand and satisfy regulatory and legal expectations of board service.
* Equip themselves with tools to direct both internal and external auditors.
* Learn how to identify the leading financial reporting distortions.
* Find out how to build an effective team as a board and audit committee.
* Know what to ask when invited to join a board or committee.
* Protect stakeholder interests by reducing organizational exposure to adverse events through risk-management and fraud-deterrence activities.
* Prepare for bad news with a crisis media-action plan.
* Balance stakeholder interests concerning executive compensation and employee relations.
* Explore the effects of management influence over board oversight duties.
The Board of Directors and Audit Committee Guide to Fiduciary Responsibilities provides specific guidance that helps committee members satisfy the requirements of serving as board members while protecting themselves and their organizations. It offers practical advice to anyone who wants to fulfill his or her duties without adverse legal, reputational, or financial repercussions. Readers will find insight and actionable recommendations regarding the audit committee’s role in management and audit oversight.
The book boils down the voluminous, highly technical guidance provided to board directors into ten easily understood and achieved action steps:
1. Nominate independent directors
2. Establish a culture of action
3. Evaluate the audit committee
4. Direct the external audit
5. Scrutinize the financial statements
6. Leverage internal audit and outside resources
7. Satisfy regulators and other stakeholders
8. Address risk proactively
9. Spearhead fraud-deterrence initiatives
10. Expect the unexpected
These ten actions should not be thought of as discrete, sequential steps. Rather, they cover essential topics that, when performed together, provide a composite set of governance strategies that give audit committee members and board directors the necessary peace of mind to know that they are fulfilling their at times daunting responsibilities. Each of these steps is equally important, with no consideration of value implied by the order in which they are presented.
Good governance by the audit committee is a game of endurance. It requires a systematic approach that must be continually updated and monitored to address emergent threats. As a director, you can be sure that scrutiny of the execution of director and audit committee duties will continue to increase in direct proportion to the level of the public’s distrust of financial reporting.
This book presents an authoritative, reliable framework that audit committee and board members can follow to ensure that they are fulfilling their fiduciary responsibilities in a responsible yet efficient manner. By following the steps outlined, audit committee members can protect themselves and their fellow directors, as well as the company’s reputation and stakeholder interests—most importantly those of shareholders.
Excerpted from THE BOARD OF DIRECTORS AND AUDIT COMMITTEE GUIDE TO FIDUCIARY RESPONSIBILITIES by Shiela Moran and Ronald Kral. Copyright © 2013 by Shiela Moran. Published by AMACOM Books, a division of American Management Association, New York, NY. Used with permission. All rights reserved. http://www.amacombooks.org.
Search the full text of this book
Search Full Text of
For single copy purchases of any AMACOM title, you can connect directly to the online retailer of your choice, from the list below, to buy the title you have selected. Most of our links will take you directly to that title on the site, making your shopping experience easier. You can also visit your local retailer, and if the book is not on their shelves they can special order it for you.
Retailers: Please contact us to change or add a listing.
Buying in Bulk?
We have very competitive discounts starting at 5 copies, as well as personal service, for bulk orders. Simply contact our Special Sales Department. Call 800-250-5308 or 212-903-8420 and ask for Special Sales. You can also email: SpecSlsWeb@amanet.org