I am very pleased to have the opportunity to work with all of you as the new leader of PwC’s Center for Board Governance and the Investor Resource Institute.
The current business environment poses many challenges and opportunities for directors in their governance role. Cybersecurity, board composition and activism are the hot topics, but an underlying theme of an increased need for trust and transparency is also emerging.
In my interactions with investors and thinking about the broader spectrum of shareholders, it is apparent that many elements of governance are significantly nuanced, without black or white solutions, and that increased interaction between directors and shareholders is needed to close the expectations gap.
That is why you are going to see more articles in BoardroomDirect sharing views from the lens of investors. I hope to provide you with some perspectives from the investor community that will help you fulfill your role as a director. Or, at the very least, give you something to think about.
When trouble comes knocking: Dealing with investigations
Corporate investigations are on the rise, and the expectation is for these fact-finding exercises to be appropriately and objectively governed. Often, this responsibility falls to independent members of the board of directors. More likely than not, audit committee members will be asked to oversee an investigation at some point. For most, it is not a matter of if, but when.
Issues triggering an investigation are broad and can range from claims of financial reporting fraud, conflicts of interest, harassment, and violations of laws and regulations to retaliation against whistleblowers. In addition, the increased prevalence of cyber-attacks against corporations in recent years may trigger the need for investigations into the nature, timing, and extent of the breach. And the heightened focus on bribery and corruption by regulators around the globe has triggered many inquiries regarding these issues.
“Investigations are often directed to the audit committee since they usually play a key role in overseeing the company’s compliance activities, including the allegations submitted through the whistleblower hotline,” said Don Keller, partner in PwC’s Center for Board Governance. He added that at many companies, the audit committee is often charged with overseeing IT, so any issues that fall into this domain are often the responsibility of the audit committee to investigate as well.