5 Questions Boards Should Ask After an Audit

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External audits usually provide companies with a fresh perspective on their financial health and reporting practices.

It’s important that your board, or more specifically, that your Audit Committee asks the right questions in order to make the most out of the findings you receive.

Here are some of our suggestions for queries we think you should address with your auditor or auditing firm:

1. Did you have any difficulty interacting with employees or accessing information while collecting data?

It’s important that companies establish a culture of forthcoming reporting. If a member of your internal team was not cooperative with the auditor, or if records were extremely hard to locate, you may have some internal issues to address. Additionally, if auditors are unable to obtain thorough records, it could lead to an incomplete report.
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Board Communication: Is Your Solution Effective?

Rather than investigating a forward-thinking board software product, many organizations attempt to create a “free” in-house workaround in hopes of saving on their bottom line. While this option doesn’t have a price tag directly attached to it, it does cost the organization in other ways—namely in efficiency, man-hours, and security.

Goal Solution Concept on Visual Screen

Oftentimes, companies direct their IT departments to set up an FTP, or File Transfer Protocol, network to act as a file sharing server for board members.

These FTPs may accomplish the basic goal of delivering information, but they don’t do much in the way of bettering boardroom communication or decision-making. 

Is it efficient?

Sharing information through an FTP may seem quick and easy, but is it really efficient for boardroom processes? For instance, board books usually get updated multiple times before in-person meetings. With an FTP site, you’ll have to repeatedly load new versions of the document and then alert board members to them. With a board software solution, you can simply amend the existing board book instantaneously.

Not to mention, board members can view the latest version of the board book with or without Internet access—something an FTP site is intrinsically unable to support. Continue reading

Warren Buffett’s 10 Commandments for Board Leaders

Warren Buffett is perhaps the most recognized name in the history of American corporate governance. As the leader of Berkshire Hathaway, a multinational conglomerate holding company, Buffett has become one of the most accomplished businesspersons of all time.

Warren Buffett's 10 Commandments

Because of his immense success, Buffett’s advice carries with it great weight and authority. Many of his essays and letters have been collected for publication, and he’s known among journalists for his quotable quips and reasonable advice for investors.

Recently, a George Washington University professor named Lawrence Cunningham compiled a list of Buffett’s most important guidelines for corporate directors, which was published in the latest edition of NACD’s Directorship magazine.

You can read a condensed and edited version of that article here. These “ten commandments” for business leaders, as Cunningham calls them, are what Buffett cites for his vast amount of boardroom triumphs.
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Understanding the Types of Shareholder Lawsuits

Boards exist to protect shareholders based on the fiduciary duties of care, loyalty, and good faith. If shareholders feel that those duties have not been met by a board or board member, they can take legal action against them.

shareholder lawsuits

The “business judgment rule” protects boards and board members from lawsuits for simply making bad choices. As LegalMatch shares, “The business judgment rule requires that courts defer to the board of directors in business matters.

The only exception to the business judgment rule is if shareholders can show that the board of directors engaged in fraud, illegal activities, or were grossly negligent while managing the corporation.”

In other words, boards are afforded the right to make bad business choices as long as there is evidence they were acting in good faith. If there is a belief that the board or a board member has engaged in one of those wrongful practices, there are two options for types of shareholder lawsuits: a direct lawsuit (also called shareholder class action lawsuit) or a derivative lawsuit.
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Navigating Corporate Bankruptcy on a Board of Directors

corporate bankruptcy

Because board members have a financial duty to their shareholders, the time may come when an insolvent organization must consider the option of bankruptcy in order to protect those investors’ interests.

In many states, creditors are also designated as stakeholders and must be considered, too. Depending on the type of corporate bankruptcy that is filed, board members may continue to operate in their directorial positions.

As an organization approaches the position of insolvency, board members must consider the options in front of them. According to the Houston Chronicle, “Conducting a thorough financial review and seeking professional help are now the primary concerns.

Directors should avoid resigning because those who quit rather than engage themselves in the bankruptcy proceedings are generally viewed as being in derogation of duty.” In other words, board members shouldn’t jump ship during the company’s moment of greatest need.
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The Pros and Cons of Going Public

Going public IPO

If you’re a board member for a large or fast growing company, there may come a time when you and your colleagues will be asked to determine whether that company should “go public.”

Investopedia explains, “Going public refers to a private company’s initial public offering (IPO), thus becoming a publicly traded and owned entity. Businesses usually go public to raise capital in hopes of expanding.”

Companies that decide to go public are not only faced with enormous opportunities to grow their organization, they also have to deal with the downsides or challenges associated with the transition.

According to a survey by The Next Million, these are some of the major challenges of going public:
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What Should You Do After Every Board Meeting?

Your latest board meeting has just ended, but that doesn’t mean your responsibilities are over until the next gathering. In fact, there are several tactics that should be employed after every single meeting to ensure that your board is functioning as effectively as possible.
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Send a post-meeting survey

Send a brief survey after meetings. This 3-5 question survey should ask directors to rate their experience of the board meeting.

Use this opportunity to determine whether board members feel that the agenda was adequately covered and if they have suggestions for future meetings.

It’s important to send the survey shortly after the meeting while the details are still fresh on directors’ minds. (A yearly, more in-depth survey is also a boardroom must.)

Distribute the meeting minutes

It’s important that board directors can quickly and easily review the meeting minutes for accuracy. Board software simplifies this process in a big way and encourages more involvement from directors. Create a clear process for editing the minutes, so board members can follow the time frame.
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How to Strategically Build a Board of Directors

build a board of directors

Outstanding board members certainly don’t grow on trees. In fact, finding the right group of business leaders to impact your organization for the better is a true challenge.

Not only must you consider individual fit and ability, but also how the group will work together. Here are some tips to help you tackle this undertaking in pursuit of exceptional corporate governance.

Think strategically about the organization of your board

Before you can expect directors to think strategically about your organization’s future, you need to think strategically about your board. First, take some time to consider what size board makes the most sense for your organization. Perhaps you’ve been operating with 7 members, but changing to 9 members makes sense for tactical reasons.

Don’t choose a number at random; be sure you can back up the decision with consideration and research. Next, update your board member job descriptions. Make sure that the expectations for directors are clear. You can’t anticipate success from anyone unless you’ve provided them with an outlook for their role.
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Why Boardrooms Need Great Marketing Leaders

Historically speaking, boardrooms have favored business leaders with backgrounds in business strategy and finance. As the technological landscape has progressed, though, they’ve also been eager to embrace individuals with vast experience in cyber risk.

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Marketing and communications professionals, however, have remained on the perimeter of boardroom involvement. But as news and PR cycles continue to grow more powerful, invasive, and easily accessible online, it’s high time for boardrooms to embrace their media-savvy peers as vital corporate leaders.

Just ask United Airlines. In the wake of their current PR nightmare (which involved dragging a man off one of their flights), their CEO released a statement that came across as tone deaf to many readers. Not to mention, United Airlines stock has dropped $1.4 billion in the wake of this crisis.

Combine this event with the recent confusion over two teens who weren’t allowed to fly wearing leggings, and you can bet that the United Airlines’ board isn’t having a very good couple of weeks.
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How-to Revive a Disengaged Board of Directors

Although boardrooms are filled with successful business leaders, they’re still comprised of human beings who will occasionally falter. General disengagement is one of the most common struggles that boards will face.
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It’s not a death sentence, though. A disengaged board is not beyond repair!

In fact, here are some tips for reviving a disengaged board and getting on the path towards a high-functioning and involved leadership team.

Set clear goals

Many leaders are deadline-oriented and need extremely clear objectives in order to know how much effort they need to exert to meet or surpass expectations. Don’t be afraid to set high goals, so your board members feel the push to excel.
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