The Board of Directors and Audit Committee Guide to Fiduciary Responsibilities: Ten Critical Steps to Protecting Yourself and Your Organization

The Board of Directors and Audit Committee Guide to Fiduciary Responsibilities: Ten Critical Steps to Protecting Yourself and Your Organization

The Board of Directors and Audit Committee Guide to Fiduciary Responsibilities: Ten Critical Steps to Protecting Yourself and Your Organization

The Board of Directors and Audit Committee Guide to Fiduciary Responsibilities: Ten Critical Steps to Protecting Yourself and Your Organization

Synopsis

More than three million people serve on boards and audit committees in the U.S. alone. But huge risks come with these coveted jobs. SEC scrutiny is at an all-time high, with boards and audit committees now held liable to for acts of fraud and other corporate malfeasance- even if they had no knowledge of wrong-doing in the organization.

This essential guide mitigates the risks and dramatically increases the effectiveness of boards and audit committees by uncovering 10 crucial steps every governing body should take, including:

Cultivate independence

Build a balanced team

Leverage independent advisors

Address stakeholder concerns

Direct the external audit

Approach risk proactively

Spearhead fraud deterrence initiatives

Promote accountability

And more

Comprehensive and practical, this book simplifies complex corporate governance standards, and helps readers satisfy the requirements of board service while protecting themselves and the organization.

Excerpt

In the wake of the 2001 collapses of Enron, WorldCom, and Arthur Andersen, professionals, lawmakers, and stakeholders alike turned their focus to issues such as corporate governance, accountability, and transparency, pushing C-suite executives, managers, and board members to more closely scrutinize the inner workings of businesses. In the decade since, however, corporate malfeasance has remained in the headlines, with attention-grabbing collapses of such corporate stalwarts as Lehman Brothers, which in 2008 accounted for the largest bankruptcy in U.S. history—and nearly brought down the entire U.S. economy.

According to the 2011 Performance and Accountability Report by the U.S. Securities and Exchange Commission (SEC), the SEC filed 735 enforcement actions covering a broad spectrum of financial wrongdoing during the fiscal year ended September 30, 2011. This represented an 8.6 percent increase from 2010—more cases than ever previously filed by the SEC’s Division of Enforcement in a single fiscal year. Those enforcement cases, and those from 2010, resulted in $3.6 billion in penalties and disgorgement (i.e., the repayment of illicit gains), with many of the financial wrongdoings falling under the general oversight of audit committee activities.

Despite some notable business failures and enormous fines, boards of directors have done much to improve the accountability and transparency of the companies they oversee. In fact, strong boards and audit committees can do—and have done—much to help build great companies. Because many organizations do not impanel a separate . . .

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