Digital Knowledge - Is Your Board of Directors Keeping Up?

[This article was contributed by Fay Feeney, CEO of Risk for Good]

Social media accounts for 22.5 percent of the time that Americans spend online, according to "State of the Media: The Social Media Report." This is compared with 9.8 percent for online games and 7.6 percent for e-mail. You can read more in the NY Times.

This is a voluntary opportunity for you to keep your board current and relevant. If you’re waiting for a regulatory push to get your boardroom thinking digitally, you may not be ready to take action and learn what is happening 24/7 on computers and mobile devices around the world.

Here are some statistics about digital connectivity to help you consider moving this up as a priority. Digital knowledge leads to opportunities for companies to grow, reach and help their customers, employees, investors and stakeholders. Are your business revenues connected to connectivity in Asia? Has digital connectivity impacted new patterns in:

• Consumer and supply chain behavior?
• Operating model innovations?
• Security and transparency issues?

Connectivity in Asia
The growth in mobile Internet usage is outpacing the rest of the world:

• 45% of metro Chinese are online via a mobile device at least monthly, up 21% from 2010
• 11% of metro Indians access the mobile net monthly, up from just 1% in 2010.
• Japan saw the biggest jump in mobile Internet usage: 57% of adults now have access, up 24% from last year.

So what now?
Are you challenging yourself to look beyond the status quo, to understand how changes are disrupting your business? Is your board doing the same or are they operating in the old twentieth-century mode? Your business is being challenged to expand communications, challenged to attend to shareholder concerns, challenged address issues of trust, challenged take on new technologies (cloud, social media) and much more. You should take the opportunity to push your board to think digitally. Doing so will allow you to succeed in, and meet the needs of, the twenty-first century.

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This article is the second in a series contributed by Fay Feeney, CEO of Risk for Good. Risk for Good helps board chairs and lead directors navigate the disruption to their business from a social, mobile and global world.

Today’s minefields can cost your company: time, money and goodwill. Risk for Good works with your board to evaluate your exposure and leverage the opportunity from: social media, corporate social responsibility, sustainability, board composition, succession and the multitude of other areas where your board needs to manage emerging risk.

Modern boardrooms address these questions before others demand a “comply or explain” response. We use the quiet in our client’s boardroom to prepare thoughtful answers to today’s tough business questions.

If you are interested in contacting Ms. Feeney, you may do so through this blog or the Risk for Good website.

Boardroom Digital Literacy - R U Talking to Me?

[This article was contributed by Fay Feeney, CEO of Risk for Good]

Boardroom protocol is being exposed every day on the internet. Does Rupert Murdoch really think we can't see beyond his prepared remarks to determine for ourselves the "tone at the top" coming from his boardroom?

No need for board activists to add to the conversation from the outside about boardroom happenings. Now we hear directly from the CEO. When Yahoo fired their CEO Carol Bartz, she shared the inside scoop using her iPad. We learned of her accusing Chairman Roy Bostock, of board mistreatment. In the same Fortune interview, she called her fellow directors “doofuses” and said they “f---ed me over.”

It may be surprising to see the boardroom portrayed like this in mainstream media, but imagine what happens when 100 million people on Twitter can now get involved in the conversation.

I know that many people in the boardroom are still on the sidelines about social media. What will it take to get your board ready to tackle their willingness to learn what is happening on the internet? Will it take seeing your company’s name in the news before you add digital literacy to your director’s education? I can see the incredulous look on the directors’ faces when the board is called on for their oversight of digital issues.

I can only imagine a board being characterized as:

“illiterate”: showing or marked by a lack of personal knowledge with the fundamentals of a particular field of knowledge.

Or maybe a board will be portrayed as:

“ignorant”: Lacking knowledge, information, or awareness about something in particular: "ignorant of social media".

Worse yet is as a board leader to know that it is true. So I ask, when are you planning to get digital and social media on your agenda? Who is going to be responsible for taking action to get it on your fall board agenda? Whatever title you have in the boardroom (board chair or lead directors), you are setting the boardroom agenda. Are you waiting for your CEO, Corporate Secretary, Corporate Counsel, Audit Committee Chair to bring resources and spend budget to get this to happen for you and your board?

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This article is the first in a series contributed by Fay Feeney, CEO of Risk for Good. Risk for Good helps board chairs and lead directors navigate the disruption to their business from a social, mobile and global world.

Today’s minefields can cost your company: time, money and goodwill. Risk for Good works with your board to evaluate your exposure and leverage the opportunity from: social media, corporate social responsibility, sustainability, board composition, succession and the multitude of other areas where your board needs to manage emerging risk.

Modern boardrooms address these questions before others demand a “comply or explain” response. We use the quiet in our client’s boardroom to prepare thoughtful answers to today’s tough business questions.

If you are interested in contacting Ms. Feeney, you may do so through this blog or the Risk for Good website.

Data Analytics: Providing Greater Internal Audit Depth During A Turbulent Economy

Data Analysis through Computer Assisted Audit Techniques (CAATs) is an efficient way to test transactions, providing 100% assurance on the effectiveness of Internal Controls. Using basic tools such as Microsoft Excel and Access, advanced tools such as ACL or IDEA, or the tools embedded in ERP applications has been a best practice for years but has often been viewed as a luxury, not a necessity. This year, during this economy, using CAATs has become absolutely critical.

Obviously budget pressures have gone through the roof, resulting in massive global layoffs. Reductions in work force, especially to the accounting department, create enormous pressure on the employees who remain. Requiring employees to take on more responsibility often increases the likelihood of errors and misstatements. Added pressures like salary freezes combined with less oversight can tempt an otherwise honest employee to cut corners or commit fraud. The risk of financial misstatement doesn’t get any higher.

A critical way to respond to these challenges is to increase (or initiate) the use of data analytics. This approach evaluates and monitors data from every transaction processed by a company to identify anomalies. Applying data analytics to review transactions in accounts payable, advertising, freight, health benefits, construction, and other areas can yield hundreds of thousands or more in savings and recoveries. When this process is done by management instead of internal audit, errors are identified sooner and with more precision.

CAATs have been around for more than 20 years and those experienced in using CAATs have had experience ranging from good to fabulous. Unfortunately CAATs have typically been used only by Internal Audit Departments and only on selected audit projects. The inconsistent usages of CAATs make it difficult to maintain the knowledge and experience to make CAATs a regular and sustainable part of the audit process.

With the status of the economy, CAATs have become an essential part of effective Corporate Governance. The first step is gaining the basic knowledge to make CAATs part of the oversight process. The second step is sharing the knowledge throughout the Internal Audit department and management ranks. The third step is imbedding the process into the fabric of the organization to make it sustainable and continuous. Getting more oversight with less effort is possible today by simply leveraging CAATs, a technology most companies already employ.

To learn more about how to make CAATs a routine part of the audit process, please contact Vonya Global for a free consultation. Leveraging readily available software tools in combination with proprietary methodologies, our team of data analysis experts focus data analytics at common problem areas to help our clients recover overpayments and develop a sustainable approach to continuous auditing.

ACL is a registered trademark of ACL Corporation and IDEA is a registered trademark of Caseware IDEA.

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This article was contributed by Joe Oringel and Kim Jones of Visual Risk IQ, a thought leader in Continuous Auditing and Monitoring. For more information on Visual Risk IQ, please visit their web site at www.visualriskiq.com.

NACD Directorship names its Top 50 Companies

The National Association of Corporate Directors magazine, "Directorship", has recently released its list of the top 50 "Best Performing, Best Governed Companies in the Fortune 500." Vonya Global applauds the publications effort to recognize the companies which place an emphasis on Corporate Governance, Ethics, Integrity, and Citizenship. There are hundreds of lists that rank companies based on revenue, profit margin, growth potential, and many other financial and non-financial metrics, but this is the first (and only that we know of) that includes these other, arguably more important metrics to the evaluation equation.

The article stated: "A great employer posts poor earnings or a great profit maker is not a terrific corporate citizen. These facts suggested that something should be done to recognize companies that are both far sighted in terms of corporate governance and producing returns for their shareholders."

The top rated company in the "Nifty Fifty" was Goldman Sachs and their CEO, Lloyd Blankfein, was named the "Directorship" CEO of the Year. Our heartfelt congratulations goes out to Mr. Blankfien and all the other companies which made it on the list.

Vonya Global and the NACD are not related organizations

The 2009 Ponzi Collapse

The great recession of 2009 brought with it 4 times the annual average of Ponzi scheme collapses (according to an AP report). Headlined by Bernie Madoff's $50 Billion blowout, there were over 150 Ponzi's revealed in 2009 compared to around 40 in 2008.

Was the Ponzi collapse a result of better governance or stricter enforcement? No. The economic situation created conditions which made it impossible for the schemes to continue. We still need better corporate governance, enhanced enforcement, and improved detection.