Academic journal article Journal of Accountancy

Staying Focused at the Top: One Expert's Perspective on Issues Facing Today's Boards of Directors

Academic journal article Journal of Accountancy

Staying Focused at the Top: One Expert's Perspective on Issues Facing Today's Boards of Directors

Article excerpt

A board of directors has a lot on its plate, especially when the company it oversees does business globally. There are an increasing number of regulations to comply with, from anti-corruption laws to international tax laws, a changing mix of potential threats to the business to consider, and strategic decisions to be made on which new markets or products to explore. With so many pressing corporate governance issues to deal with, it's easy for a board to lose focus.

Olivia Kirtley, CPA, CGMA, is steeped in corporate governance issues. As the new president and board chairman of the International Federation of Accountants (IFAC), she is bringing to bear her knowledge as a business consultant on strategic and corporate governance issues and nearly 20 years of experience as a member of boards of directors to advance the profession.

Her professional path led her from a predecessor of EY to vice president of finance and CFO of Vermont American Corp., a global manufacturer that was publicly traded until taken private by Emerson Electric Co. and Robert Bosch GmbH. In the mid-1990s, she started serving on boards of directors and has since been named by the National Association of Corporate Directors as one of the top corporate directors and governance professionals in the United States. Kirtley currently serves on the boards of three U.S. companies: the financial services holding company U.S. Bancorp; the pizza-delivery chain Papa John's International; and ResCare, a large private service provider to the elderly and people with disabilities.

Here's what Kirtley, a member of the AICPA governing Council and former chair of the AICPA board of directors, said she thinks about corporate governance issues such as attacks by hackers, the looming risk of reputational damage in the age of social media, and international tax laws that can be in conflict:

What's top of mind these days for companies and boards in regard to strategic, risk, and compliance issues?

Kirtley: In today's global and often unpredictable business environment, boards have an important and critical role to play in overseeing strategic and risk issues. Compliance is also a very challenging issue right now with all the regulatory activity and new laws. It is a board's job to make sure the company is in compliance, but, at the same time, board members must maintain focus on the strategic direction of the company, because the world continues to change, and the strategy and the risk change accordingly.

Businesses operate to take risks, because with risks come rewards. You have to decide strategically what the proper level of risk is, what your risk appetite is, and how that matches your people skills. We are in a very complex global environment, and so you have to have the ability to analyze the risks that you are taking and relevant experience in various parts of the world to truly understand what risks are embedded in the strategies that you undertake.

It's very easy to allow compliance issues to dominate your time. You have to be very disciplined so that everyone doesn't get drawn into that very demanding area.

Managing the agenda of a board meeting--how you schedule the meetings, what to bring before the various committees and the board, and making sure that you continuously engage in dialogue about strategy--is an important tool to keep board members disciplined and focused.

Many companies set their agenda for the whole year for all of the meetings in the organization. The governance committee will often review and approve the meeting agendas for the entire year. It's not that they can't be changed based on circumstances, but that's one way to make sure that you're really having a proper allocation of time and that the board is covering everything that is important throughout the year.

How much time are boards spending on cybersecurity right now, and do board members have the technical proficiency to provide adequate governance in this area? …

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