New Audit Committee Report Released

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Report of the NACD Blue Ribbon Commission on the Audit Committee

The Audit Committee

This morning, Mary Pat McCarthy, executive director of KPMG’s Audit Committee Institute, led an excellent discussion on NACD’s recently released Report of the NACD Blue Ribbon Commission on the Audit Committee.

The panel was composed of the experienced and knowledgeable co-chairs of the Report: Dennis Beresford, director of Fannie Mae, Legg Mason, Kimberly-Clark, and NACD; and Michele Hooper, director of UnitedHealth Group, AstraZeneca, Warner Music Group, PPG Industries, and NACD. 

The regulatory environment has dramatically changed for the audit committee, since the Report was last updated in 2004. In response, NACD commissioned a rewrite of the Report, which is already a top seller. According to Mary Pat McCarthy, “clearly, [this] one report will benefit all.” 

Beresford stressed that while the Report is not a “guide to audit committees,” it provides invaluable guidance on leading issues, such as: the audit committee’s responsibility in risk oversight, the relationship between the audit committee and the internal and external auditors, and setting the agenda.

For the full report include the 10 principles, visit our bookstore.

Michele Hooper
Dennis Beresford
Mary Pat McCarthy
Michele J. Hooper, Director, UnitedHealth Group; PPG Industries, Inc., Warner Music Group Corporation, AstraZeneca PLC, NACD Dennis R. Beresford, Director, Fannie Mae, Legg Mason, Kimberly-Clark, NACD Mary Pat McCarthy, Executive Director, KPMG’s Audit Committee Institute, and U.S. Vice Chair, KPMG LLP

Judgment, Values and Integrity

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Norman Augustine

Norman Augustine

“Wow. In the past sixteen minutes I learned everything there is to learn for an MBA!” Thus spoke NACD President and CEO Ken Daly, in response to panelists Ken Duberstein (former Reagan chief of staff)  and Norm Augustine (retired chairman and CEO of Lockheed Martin) expounding on their philosophies of “Courageous Board Leadership,” on the final morning of the annual NACD Corporate Governance Conference.

Augustine’s philosophy is straightforward: “Find quality people, tell them what you want, and get out of the way.” Quality people are those who have “enthusiasm, intelligence, and respect for others.”

The Honorable Kenneth M. Duberstein

The Honorable Kenneth M. Duberstein

Duberstein said that “a good leader empowers those around him to do their jobs better.” Leadership, he said, is “judgment, values, and integrity.” A good leader seeks “people who are independent but loyal to the mission.”

All panelists agreed that “professional skepticism” applied in the appropriate way, is healthy to the success of any enterprise. All believe that, while it is not necessary to agree with one another, board members should serve in a collegial fashion, get along, and respect each other.

Globalizing the Board

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Susan Schwab, Former U.S. Trade Representative, Speaking at NACD Conference

Susan Schwab, Former U.S. Trade Representative

Today’s luncheon session, “Globalizing the Board,” featured Ambassador Susan Schwab, former U.S. Trade Representative. Her overarching message to conference attendees?  Building the right board means bringing a “global mindset” to the table.

“Why should you care” about globalization? Ambassador Schwab pointed out that “ninety-five percent of the world’s consumers live outside of our borders.” Boards need more than “token representation” of international individuals on the board. It also requires global literacy and “a strong international I.Q.”

The Ambassador then discussed a series of questions boards should ask themselves in evaluating their global I.Q.  These included:

  • Do you have a sense of future and current prospects tied to global markets, i.e., partners, manufacturers, suppliers, distributors, etc.?
  • Do you know how to protect your intellectual property abroad?
  • Do you take advantage of U.S. assistance in doing business abroad?

As the Ambassador stated: “Access to global market trade is crucial” to our country’s economic future. Corporations must be prepared with knowledgeable boards ready to provide guidance in the international marketplace.