BDO in the Boardroom

Key Takeaways: Assess changing reporting obligations: Model how the proposed filer status thresholds, scaled disclosure accommodations, and reporting cadence options could affect reporting deadlines, internal controls requirements, disclosure obligations, and compliance costs. Treat flexibility as a governance decision: Reduced disclosure requirements or optional semi-annual reporting may lower bu...

Target with discipline: A broad board search rarely gains traction. Candidates are better served by defining a realistic target market based on industry relevance, company profile, governance needs, and where their experience is most additive. Articulate a board-specific value proposition: Candidates need to communicate, with precision, why their background matters in the boardroom and how it alig...

Key Takeaways: Boards should recognize that different states of incorporation may require different processes by which shareholders can bring derivative actions against directors and officers. Conducting and demonstrating a fair and reasonable process in the best interest of the company should be the goal of the board. Directors should be knowledgeable about who (e.g., which directors) can be invo...

Key Takeaways: Most significant shifts in public company governance include expectations regarding: Board composition – i.e., skill levels and the balance of generalists and specialists; technology and the need for directors to stay ahead of emerging risks; and timely communication to and engagement with shareholders. Assessing director education and skill enhancement: The overall success of the c...

Key Areas of Focus: Adaptive Governance: A flexible, responsive approach to organizational oversight that has evolved from environmental management to broader applications across nonprofit and for-profit sectors, empowering organizations to maintain resilience in the face of rapid change. Innovation: Recognize that governance is dynamic and requires ongoing adaptation. It isn’t always about disrup...

Key Areas of Focus: Value Proposition of Governance Structures: Distinguish between different governance models to make informed board decisions and expand your board opportunities. Board Skills Needs & Development: Continue to develop broad, adaptable skills to meet evolving board needs and corporate strategy. Due Diligence and Fit: Conduct thorough research on organizations before joining a...

Human Resources and Workforce Impact: Bias in Automation: Ensure that automated HR processes undergo regular audits to identify and mitigate biases, particularly in candidate selection and hiring. Regulatory Oversight: Implement annual bias audits for automated employment decision tools to comply with regulations. Employee Surveillance: Review and update employee monitoring practices to ensure com...

Key Takeaways: Increased Agency and Responsibility: Boards are evolving to take on more agency and responsibility, often driven by a need to be the public face of the company, sign off on increasing disclosures, and develop compensation philosophies. This shift requires boards to embrace themselves as responsible and independent bodies capable of drawing informed conclusions and making decisions t...

Key Takeaways: Maintain Tone at the Top: Boards should confirm that their commitment to compliance and ethical behavior remains strong and consistent, even with the DOJ's pause on new FCPA investigations. This includes consistent messaging throughout the organization. Review Third-Party Risk Management: Companies should reassess their third-party risk management programs to make sure they are not...

Key Takeaways: AI can be viewed as a necessity for growth to drive both cost savings and revenue growth. Establishing a strong governance framework is crucial for managing risks associated with AI, such as data breaches and compliance with regulations like HIPAA and PCI. AI can be used both reactively to address immediate pain points and proactively to predict and optimize future business operatio...

Key Takeaways:    Have a clear understanding of entire supply chain – from where merchandise originates to where it is assembled or manufactured Gather and analyze transactional data to understand the financial impact of tariffs Review the customs triangle levers: tariff classification, country of origin, and value reported to customs Manage the tension between transfer pricing and customs valuati...

Key Takeaways: Engaging with Stakeholders: Consider the importance of addressing every inbound inquiry, whether from activists, institutional investors, or shareholders. This involves methodical rigor and balanced engagement to understand and address the underlying concerns. Evaluating Board Performance: Allows for continuous evaluation of board performance, effectiveness, and skills. This include...

To prepare for potential continuation of and/or changes in tax regulations, boards should be taking a vigilant watch and see approach and monitoring respective timing, effective dates and expiration dates: Confer with management to review financial models – e.g., changes in tax rates, deductions, credits, and exclusions. Get regular updates on tax policy changes to anticipate potential impacts on...

Key Takeaways: The SEC and DOJ are imposing record-breaking financial penalties to hold wrongdoers accountable for misconduct, while also offering credit to those who proactively self-monitor, self-report, and remediate misconduct. As highlighted by recent cases, internal investigation procedures and remedial actions are commonly cited as key factors related to the regulator’s view of cooperation...

Key Takeaways and Tax Planning Points: To prepare for changes in tax regulations, boards should: Confer with management to review financial models – e.g., changes in tax rates, deductions, credits, and exclusions. Stay informed on tax policy changes and reviewing with management to understand realistic scenarios. Consider the possibility of a divided government scenario, which may result in sluggi...

Key Takeaways: GenAI can be used to enhance the efficiency and effectiveness in financial reporting and internal controls over financial reporting. Currently, GenAI can help with tasks such as drafting financial statement disclosures, summarizing key contract terms, categorizing expense transactions, and preparing travel and expense reports. However, GenAI is predictive technology that provides us...

Key Takeaways: Audit Committees should have a playbook when allegations of fraud arise. The Audit Committee’s response level to a particular allegation will depend on the scope of the allegation and the corporate environment. Determining when an independent investigation is necessary and how independent it needs to be is determined by the context of fraud allegations. Timeliness is critical. Care...

Key Takeaways: One of the roles of a board of directors is to continually assess the company and make decisions in the best interest of sustaining value for the long-term. Decisions to change business models should be weighed against the core purpose of the organization. Significant strategic changes necessitate the board to broadly evaluate the impacts on significant internal and external stakeho...

Key Takeaways: Culture is a team sport that requires the right data for the right stakeholder (including the Board). Protecting culture is just as important as strengthening your culture. There is a measurable ROI to culture. A proxy for culture is measuring organization effectiveness. Resources:     Nominating & Governance Committee Priorities for 2024: Excelling in Board Leadership CalPERS,...

Key Takeaways: While simple in structure, these new requirements have complex implications for companies, many of which may not be already gathering and reporting this level of climate data. The laws were years in the making but have now pre-empted the country-level SEC climate rules that many have been anticipating. Scope 3 reporting will be required for some companies, which includes the full va...

Key Takeaways: Establishing a “safe” environment for AI isn’t just a protective stance, it is itself a strategy that accelerates innovation, builds trust, and ensures long-term success. In making the decisions to address entity- readiness to greenlight AI initiatives, boards’ due diligence includes: understanding how competitors, customers, employees as well as supply chains are using or would lik...

Key Takeaways: Using AI and predictive capability is not new but generative AI brings AI to the mainstream due to its human-like communication and ease of accessibility to companies of all sizes. For boards to properly oversee AI risk, they need to require management to establish a model risk management process along with a model risk governance framework around AI implementation that includes sta...

Key Takeaways: Leveraging data analytics for strategic decision-making: Use of data analytics in the boardroom to is becoming increasingly important to help directors make informed, evidence-based decisions that drive growth and efficiency. By incorporating data-driven insights, businesses can better understand their customers, optimize operations, and identify new opportunities. Overcoming challe...

Boards need to work with management team to continue to identify and prioritize opportunities in automation to enhance all aspects of operations, product development and service delivery. Challenges in implementing automation need to be identified and incorporate into a strong change management program to ensure enterprise-wide acceptance and adoption. Boards can play a significant oversight role...

Key Takeaways: 1. Approaching embedding AI into a service delivery model requires: Identifying and prioritizing AI business processes and use cases that align with your business objectives Assessing the feasibility and potential impact of each use case Developing a detailed implementation plan that contemplates the steps, resources, and timelines required for successful AI adoption Keeping cyberse...