Blog: Not Just any Board
by Genevia Gee Fulbright, CPA, CGMA
November 12, 2015
How to Avoid Slipping into Darkness
It was so quiet in the room that you could hear the wings of a hummingbird flutter as guest speaker, Weston Smith, shared his story along with words of wisdom and warning to a crowded room of corporate directors at the most recent Speaker’s Program hosted by the National Association of Corporate Directors Research Triangle Chapter (NACD-RTC).
Members and guests experienced one of the most eye-opening sessions on the importance of corporate governance and why board directors must always ask probing questions regarding the performance of the company and have internal and external auditors report directly to the audit committee and board.
The speaker, Weston Smith, who is now building a reputation as an ethics evangelist, is the former CFO of Health South and also known as a whistleblower and convicted felon for his role in a $ 2.7 billion accounting fraud.
Smith reminded the audience to never forget that as a board director you are representing and protecting the interests of the shareholder and the company.
Several nuggets Smith suggested to help board directors reduce or at least identify incidents of potential financial scandals:
Understand the various types of estimates contained in the company’s financial statements and ask to have the individuals responsible for making the actual entries speak to the board to walk it through the process, risks and overall controls.
Pay attention to “Red Flags” such as restricted access to information, avoidance of any bad news reporting, push-back from the CEO or other Executives if the Board Directors wish to speak directly to Internal or External Auditors or other significant staff members without the CEO present.
Understand how the company’s leadership gets compensated and make sure attention is given to budget analysis, acquisition decisions and the competency of the accounting department, especially the compliance/internal auditors and financial reporting teams.
Have regular executive sessions without the CEO present and always ask open-ended questions.
As board directors some of the most important duties include hiring a talented, ethical CEO to run the company and external auditors to report on results and make you aware of any material weaknesses.
If the goal is to protect and represent the shareholders’ short and long-term interests the more engaged and successful companies will have board members who assist with developing the overall strategic direction of the company while at the same time managing oversight of corporate governance.
Editor’s Note: Genevia Gee Fulbright, CPA, CGMA, a former director for NACD-RTC, a bank and a 3-star start-up mutual fund is the President of two firms headquartered in Durham, NC - Fulbright & Fulbright, CPA, PA and Fulbright Knowledge Alliances, Inc. Fulbright, a guest blogger for NACD-RTC can be reached at email@example.com or (919) 544-0398.
Location and Time
Sheraton Imperial Hotel, RTP
4700 Emperor Blvd
Durham, NC 27703
7:30AM - 9:30AM