Home > Uncategorized > Current Five List Of Recommended Improvements In The Area Of Public Company, Nonprofit Entity and Governmental Entity Risk Management And Governance

Current Five List Of Recommended Improvements In The Area Of Public Company, Nonprofit Entity and Governmental Entity Risk Management And Governance

Current Five List Of Recommended Improvements In The Area Of Public Company, Nonprofit Entity And Governmental Entity Risk Management and Governance

David Tate, Esq. (May 14, 2011, San Francisco)

Email: tateatty@yahoo.com

Website: http://davidtate.us

            Everyone who is involved in risk management or governance can come up with a long list of good recommended improvements, some of which also could realistically occur.  And, of course, it takes the leadership and the push of an influential group to get movement in these areas; nevertheless, here is my current five list of recommended improvements in the area of public company, nonprofit entity and governmental entity risk management and governance.

            1.    In the course of the audit of a public company, a nonprofit with gross receipts/revenues of $2 million or more, or a governmental entity, the outside auditor performs an evaluation and report over the entity’s risk management and risk management processes, based on predetermined risk management and risk management process criteria and standards to be agreed upon.  The evaluation results and report are made public.  The risk management and risk management process criteria and standards which are to be evaluated by the outside auditor are made public.  All outside auditors performing such an evaluation and report use the same criteria and standards to evaluate and report upon the entity’s risk management and risk management processes.  An outside auditor shall have no liability exposure for this work; however, the auditor’s work is reviewed by an outside organization to be determined, such as by the SEC, the PCAOB, peer review, or other organization or means.

            2.  Either the CEO and the Board Chair positions are held by separate people with the Board Chair being one of the independent directors, or the CEO and an independent director are Co-Chairs of the Board with the independent director running the agenda and the meeting.  If the CEO is a Co-Chair of the board, the CEO is nevertheless not present in executive session.  The board’s independent directors make the determination whether the CEO and Board Chair are separate or are Co-Chairs.

            3.  Public company directors shall take a minimum of 24 hours of annual continuing professional education relating to boards and directors, at least 8 hours of which shall relate to fiduciary duties and responsibilities.

            4.  Public company boards and committees shall retain legal counsel to be paid for by the company.  Different counsel can be retained for the board and for the various committees.  How to use the services of legal counsel is up to the discretion of the respective board and committees.

            5.  In the course of the audit of a public company, a nonprofit with gross receipts/revenues of $2 million or more, or a governmental entity, the outside auditor performs an evaluation and report over the entity’s governance and governance processes, based on predetermined governance and governance process criteria and standards to be agreed upon.  The evaluation results and report are made public.  The governance and governance process criteria and standards which are to be evaluated by the outside auditor are made public.  All outside auditors performing such an evaluation and report use the same criteria and standards to evaluate and report upon the entity’s governance and governance processes.  An outside auditor shall have no liability exposure for this work; however, the auditor’s work is reviewed by an outside organization to be determined, such as by the SEC, the PCAOB, peer review, or other organization or means.

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