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Effective Audit Committee Disclosures - NACD BoardVision - YouTube
Channel: NACD Online
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welcome to nacd boardvision my name is
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Henry stever and I'm the CMO at NACD on
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this episode of board vision we're going
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to be discussing disclosures
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specifically Audit Committee disclosures
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as they relate to their oversight
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responsibilities of the external audit
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firm joining me today on this episode of
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board vision is Cindy Fornelli the
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executive director of the CAQ and Betsy
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Holden a senior adviser at mckinsey
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Betsy formally was the CEO of kraft
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foods and also currently serves on three
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public company boards western union Time
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Inc and Diageo Cindy the caq recently
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completed its second annual audit
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committee transparency barometer report
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can you give us a little insights about
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why your firm has undertaken this report
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what you're trying to accomplish and
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really some linkages to the SEC from
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what's going on at a macro environment
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perspective sure I'm happy to and it's
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great to be here what we've seen both in
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the United States and globally frankly
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is more and more of a focus on the work
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of the Audit Committee and we looked
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across a small mid and large cap
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companies 1500 and gave a comparison
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over the last two years of the
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disclosures and we've seen in some
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instances real significant increase in
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those disclosures and this does coincide
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with some of the work that the SEC has
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been doing they came out over the summer
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with their concept release on
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disclosures asking questions should
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audit committees be required to make
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enhanced disclosure you've seen the
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PCAOB come out with their dialogue
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giving a list of questions that audit
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committees might want to ask of their
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auditor so there's this real focus on
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the work of the Audit Committee as well
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as how audit committees communicate with
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investors and we wanted to make sure
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that audit committees had the tools as
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they sat down to think about some of
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these things to see what their peers are
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doing and maybe give them ideas for best
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practices Betsy throughout your career
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you've really been focused on
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communications with large companies and
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a lot of different products and services
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can you give us your
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back to share your thoughts from what
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you have heard what your boards are
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hearing from investors on what they're
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looking more for or looking what they're
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not getting so that we can try to
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understand what we're trying what the
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problem is we're trying to solve for i
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guess if i step back i would say i am a
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strong advocate a clear simple balance
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transparent communication with
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shareholders where you're explaining
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what you're doing and why you're doing
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it as it relates to audit I know the SEC
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I know some of the pension funds are
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concerned about it but we are not
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hearing a lot from shareholders of
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concern about this have you seen
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anything change over the last five to
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eight years or more since you've been
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sitting on boards in addition to the
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boards that I serve on I also do board
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evaluations so I've seen a lot of
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different boards over the years and i
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would say number one audit committee
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members that i see really take their
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role very seriously so that to me has
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been a given what i am seeing is i am
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seeing people being much more aggressive
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about benchmarking fees to ensure that
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they're getting value for the dollar i
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am seeing more willingness to tender the
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audit playing a very assertive role in
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ensuring that the lead auditor is the
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right person and with the right
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qualifications and if not taking action
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to make changes there so i am seeing
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those things I'm just seeing a little
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bit more focus and a little bit more
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aggressiveness on some of the areas and
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in the past I've heard a lot of audit
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committee members say that they feel
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that investors are more interested in
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having the dialogue with the board
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because of activist investors so you
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know active to activist investors a lot
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of times go in and say you know we want
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to meet with the board and i think the
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non activist investors say we'll wait a
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minute we'd like to talk to the board
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too and so again because disclosure is
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the foundation for interaction a board
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of directors can't meet with every
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investor and i do think you know it
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could be an opportunity for audit
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committees as part of their normal
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engagement with shareholders to really
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identify what is on their mind and then
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make sure that their disclosure
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appropriate
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addresses it you have to trust that the
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Audit Committee is going to make the
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disclosures that make sense at that
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point in time and can I build on that
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let me just say I mean if I look at the
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people who are on auto committees a lot
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of them are CEOs of major you know major
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organizations CFOs of major
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organizations they're incredibly
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experienced very knowledgeable and they
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spent a huge amount of time and effort
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on oversight of the external auditor
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that is a key responsibility as an audit
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committee member and I really want
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investors to be assured that audit
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committee members are spending a lot of
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time on that as we wrap up this episode
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I'd like to hear from both of you what
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are the real benefits to this I mean
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from an su sees perspective they're
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trying to drive investor confidence got
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it is this really helping drive investor
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confidence I think if it's balanced I do
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think that these types of communications
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and these types of disclosures do
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benefit investors they get a real sense
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of what's going on in the company so I
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think there's a benefit there I think
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that does give investors confidence and
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I would say and I'm curious to know if
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you agree with us if there is a
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discipline to it it's harder to do
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concise crisp clear disclosure than it
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is to put everything in there and so so
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long as it doesn't overburden the Audit
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Committee I think that there is a
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discipline there what is most important
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to our investors at this point in time
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about the oversight of the audit process
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cindy when i look at some of the
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examples that you had in the barometer I
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think those sorts of disclosures are
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really not onerous for companies and if
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that's what investors are looking for i
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think you know audit committees would be
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fine on doing that well that's that's
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good to hear because I do think that's
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what we're hearing investors want yes as
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one investor told me I don't need to
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know how the sausage is getting made I
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just want to know that the sausage yeah
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Betsy thank you so much for your time
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Cindy thank you again for more
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information on the caq barometer please
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visit the caq website on behalf of NACD
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i'm henry stever thank you for joining
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boardvision today
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you
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