CPAs are beginning to see some familiar faces in corporate boardrooms--including their own. Until recently, most boards were made up largely of CEOs of other organizations. In the past few years though, board members' backgrounds have become more diverse, and more CPAs are serving as directors, in part because of concern over corporate fraud and other accounting and auditing issues. The Sarbanes-Oxley Act requires all public companies to have an audit committee made up solely of independent directors. All members must be financially literate, and the company must identify at least one "audit committee financial expert" or explain why it doesn't have one.
This new rule should have resulted in large numbers of companies adding board members with these skills, particularly former audit partners and current or former CFOs. That hasn't happened yet, but I believe this will change and more such appointments will follow in the next five years. In this article I'll share my experiences as a corporate board member and explain some of the dos and don'ts for CPAs who want to join the ranks of accountants heading to the boardroom.
A SEAT AT THE TABLE
I joined my first board in the fall of 2001, and I'm now a member of three: Kimberly-Clark Corp., Legg Mason Inc. and MCI Inc. (formerly WorldCom). I am chairman of the audit committees of all three companies and also serve on the governance/ nominating committees of two.
Being a board member has been the most interesting experience of my professional career. I get involved with a broad range of business matters and have the opportunity to learn about many new areas. It's like getting a real-world MBA through on-the-job training. Beyond the interesting nature of the work, there's also the prestige. And it's not a bad part-time job; director fees already are generous and are getting better as responsibilities increase.
Quite a few accountants have spoken to me about becoming directors. They are interested but don't know how to get started. After all, director positions just don't appear in newspaper help-wanted ads. So how do you go about becoming one? Two of my opportunities came through personal contacts; they were referred to me by a retired senior partner of an accounting firm who was unable to consider them himself. So the message is to keep in touch with the high-profile people you know who already serve on boards and make sure they know you are interested.
My third position came through an executive search firm specializing in board searches that contacted me. In addition to search firms, the AICPA, Financial Executives International, the National Association of Corporate Directors and other similar groups keep registers of interested CPAs. But the best approach is to network with business associates, law firms, investment bankers and other professionals.
Of course, it's important to remember being a director can be a stressful job if the company gets into trouble. And if things really get bad, you could be sued and lose your entire net worth. But doing your homework and generally taking this responsibility seriously will protect most directors from serious legal exposure.
Good news: A company has contacted you to gauge your interest in a board position. Assuming you've had some initial interviews and the company has shown a strong interest in having you join its board, the nature and amount of due diligence you undertake has to be a personal judgment. There's no specific approach that fits all circumstances. However, a few steps you should consider taking are
* Meet with the company's senior officers and as many board members as possible. Are these people you'd feel comfortable working with? Do they seem genuinely interested in having you join the board? Do they have a specific role in mind for you?
* Introduce yourself to the accounting firm engagement partner and ask him or her about the company's accounting practices. …