The risks related to low-probability, high-impact events such as oil spills and product recalls cannot be overlooked.
These events, although rare, bring with them the possibility of severely hampering or even crippling a company’s operations.A company’s management is not only required to identify these risks, but also to determine whether the controls currently in place are adequate to mitigate them. In order for the audit committee to aid in the identification and mitigation of these risks, it has to fully understand the complexities of the company and of the environment within which it operates. Some of these risks are admittedly not new, but the landscape within which they are to be navigated has been significantly altered, and this may warrant a rethinking or refining of the way in which the audit committee operates.
Corporate secretary can strengthen committee
The corporate secretary can help to alleviate the burden of dealing with added regulations placed on the audit committee by advising the audit committee on the implications of all the changes taking place in the industry. Auditors can provide a periodic summary highlighting the changes in financial reporting requirements, and the related risks. This would be useful in light of new accounting pronouncements and the proposed convergence with International Financial Reporting Standards.The corporate secretary could also spearhead an initiative to create and manage a secure online information portal for the audit committee. This would provide a central repository for reports, research and communication that can be accessed on demand, allowing the audit committee to keep abreast of issues as they unfold. Corporate secretaries have to make sure that the board and its committees are dealing with topics of interest, and that proceedings are appropriately documented. Corporate secretaries should ensure that the agenda is current and topical, and can also help in carrying out action steps such as reassessing the functionality of the whistleblower hotline.
Board portals can certainly help with the extra load required to better inform and support the board and their committee. As an example, uploading a document is a very simple task. Then the system takes over by sending a automatic notice to all members, archiving the document where needed, giving the possibility to members to take private notes attached to it and/or share notes and comments. All those actions by just adding a document, compared to write a “dear members” letter, print it along with the document, print the adresses of all your board members on the large envelop, and… hope someone will be at home to open the door to the Fedex guy or the package will have a second life.