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PCAOB Rules to Improve Transparency by Disclosing Engagement Partner Name and Information about Other Audit Firms are Approved by SEC

David Tate's insight:

I'm posting this for information only. In truth, I don't believe this is or should be a big deal, and I don't understanding why it had to become such a process to get it approved.

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Want Better Nonprofit Board Cultures? Look for Four Behaviors–Part I

Want Better Nonprofit Board Cultures?  Look for Four Behaviors–Part I | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
Want Better Nonprofit Board Cultures? Look for Four Board Behaviors--Part I By Eugene Fram Board cultures can be difficult to modify or change in for-profit and nonprofits. A new McKinsey study demonstrated the strength of the board culture in three different levels of board operations—ineffective, complacent and striving. * Differentiated achievement seems to be largely…
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Dave Tate, Esq. comment: this is a discussion that is relevant for all boards and board committees.

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Dave Tate, Esq. comment - this is a relevant discussion for all boards and board committees. Question: can the external auditor audit culture? Can the internal auditor evaluate or test culture?

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Extra Protection for Independent Directors: Wealth Security Policy | Woodruff-Sawyer & Co.

Extra Protection for Independent Directors: Wealth Security Policy | Woodruff-Sawyer & Co. | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
A question that often comes up for independent directors at public companies, private companies and even nonprofits is: What happens if the company has nothing left to protect me? Maybe …
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Dave Tate, Esq. comment - a very important topic for audit committee members and independent directors, from Priya Cherian Huskins at Woodruff-Sawyer. Enjoy. Dave Tate, Esq., San Francisco and throughout California - see also my blog for a link to Tate's Excellent Audit Committee Guide, updated January 2016.

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Internal Auditors Not Giving Enough Risk Insights

Internal Auditors Not Giving Enough Risk Insights | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
CFOs and audit committee chairs are not getting enough insights into corporate risk management from their companies internal audit function, according to a new survey.
David Tate's insight:

Dave Tate, Esq. comment. The results of this survey really shouldn't be surprising. There isn't even agreement on what risk management is or a recommended process.


Risk management is a collaborative effort. If I'm on a board risk committee or on audit committee that has been delegated initial risk management oversight, yes, I'm going to request and expect executive management and internal audit to not only provide comments and evaluations about risk management, and also about the processes that are being used, and that should be updated and used.


However, as a risk or audit committee member, I'm also going to provide my comments about what I need to see and receive in that regard so that I am comfortable that what I am receiving allows me to perform my oversight responsibilities. Okay, so if internal audit isn't giving enough risk insight as the article indicates, why is that, and what must be done to correct that dynamic? Those are questions that the risk or audit committee members must ask and act upon to satisfy their responsibilities as required by the business judgment rule, statutes, regulations, rules and the committee charter.

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How Can Internal Audit Support the Growing Responsibilities of the Audit Committee?

How Can Internal Audit Support the Growing Responsibilities of the Audit Committee? | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
Recent 2015 audit surveys report some interesting findings about the current role of audit committees. They highlight not only how complex the world of risk management and oversight has become in the corporate world, but also the enormous breadth of responsibilities that the audit committee is expected to bear.
David Tate's insight:

Dave Tate, Esq. comments: although this is a very brief article, the topics and issues listed are large and complex. The article also offers no help at resolution. But, these issues are here to stay for boards and audit committees. Every internal audit function is different - some are qualified or partially qualified to help with these issues, whereas some are not. For some additional information, see Tate's Excellent Audit Committee Guide (January 3, 2016, version, 183 pages) at http://wp.me/p75iWX-q.


Best. Dave Tate, Esq. (San Francisco and California. See also my other blog re trust, estate, conservatorship, power of attorney and elder abuse litigation and contentious administrations at http://californiaestatetrust.com, and my website at http://tateattorney.com.

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Top 10 Topics for Directors in 2016: Audit Committees

Our team of litigators, dealmakers, and policy lawyers and advisors provide a comprehensive suite of services for global companies and local individuals.
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Dave Tate, Esq. comments - this discussion by Akin Gump has three points for audit committees (increased disclosures, new accounting rules, and increased scrutiny) - I agree with all three - all three relate to already-existing audit committee responsibilities - but point to the need for audit committees to be sure that their processes are up-to-date and are increasing.

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The Whole World is Watching. Are You?

The Whole World is Watching. Are You? | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
MIS|TI
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Dave Tate, Esq. comments - an interesting discussion about the SEC's new whistleblower award to a person who never worked at the company. When a whistleblower gives notice to the company, it's of course very important for the company and the board, most likely the audit committee, to investigate the allegations. For my website, blog links and Tate's Excellent Audit Committee Guide see http://tateattorney.com.

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Can Nonprofit Boards Learn from the Recent Carnegie Hall Disruption?

Can Nonprofit Boards Learn from the Recent Carnegie Hall Disruption? | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
Can Nonprofit Boards Learn from the Recent Carnegie Hall Disruption? By: Eugene Fram The costly upheaval between Carnegie Hall board and staff appears to be slowly moving toward resolution. * But, for decades, other types of large nonprofit organizations have imperfectly resolved the issues that have arisen at Carnegie Hall without similar spectacles. Examples: university…
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Dave Tate, Esq. comments. I am forwarding this discussion by Eugene because it is a good, short discussion for thought. The discussion doesn't get into the situation at Carnegie, but does have relevant comments for nonprofit boards. Although issues impacting nonprofit boards can be similar to or the same as issues that impact for profit boards, there definitely are differences, as Eugene notes. Enjoy.

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Importance of Audits of Internal Controls

Importance of Audits of Internal Controls | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
David Tate's insight:

Dave Tate, Esq. comment. Internal controls are one of the keys to financial statement reliability, but the PCAOB has found a relatively large number of deficiencies in audits of internal controls. If I'm on an audit committee, and I have to rely in part upon other people in the performance of my oversight responsibilities, I want to be sure, from the external auditor, internal audit and management, that internal controls are as they should be. 

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Unicorns, Down Rounds, and Independent Directors | Woodruff-Sawyer & Co.

Unicorns, Down Rounds, and Independent Directors | Woodruff-Sawyer & Co. | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
It’s 2016, and frankly, people are concerned about the valuations of venture-backed private companies. More than 140 “unicorns” exist today–private companies that have been valued at more than $1 billion. …
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Dave Tate, Esq. comment. A good article from Priya Cherian Huskins, and she suggest in these situations, consider having independent directors sooner rather than later.

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Taking Advantage of New Safe Harbor Against Discovery Sanctions | Lexology

As your company wrestles with how to manage the virtual mountains of electronically stored information (ESI) that are created in today's workplace…
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Dave Tate, Esq. comment. Isn't your audit committee also an audit committee of investigation, or at least oversight? This article provides a good discussion about the new rules.

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FASB issues new financial instruments recognition and measurement standard

FASB issues new financial instruments recognition and measurement standard | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
FASB issued a standard Tuesday that makes targeted changes to existing GAAP for the recognition and measurement of financial instruments.
David Tate's insight:

Dave Tate, Esq. comments. Close on the heals of news of new derivative accounting and reporting rules for audit committees to oversee (see my January 2, 2016, post), the FASB has issued new Accounting Standards Update No. 2016-01 for Financial Instruments. This standard covering recognition and measurement is 226 pages. Have fun reading and understanding these changes. This has been in the works for a long time - it has taken years to write - the effort began before the 2008 financial crisis. The new standard is effective for fiscal years beginning after December 15, 2017; however, audit committees and auditors already should be aware that there is a spotlight on financial instruments. Audit committees need to be on their toes on this.

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Want Better Nonprofit Board Cultures? Look for Four Behaviors–Part I

Want Better Nonprofit Board Cultures?  Look for Four Behaviors–Part I | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
Want Better Nonprofit Board Cultures? Look for Four Board Behaviors--Part I By Eugene Fram Board cultures can be difficult to modify or change in for-profit and nonprofits. A new McKinsey study demonstrated the strength of the board culture in three different levels of board operations—ineffective, complacent and striving. * Differentiated achievement seems to be largely…
David Tate's insight:

Dave Tate, Esq. comment - this is a relevant discussion for all boards and board committees. Question: can the external auditor audit culture? Can the internal auditor evaluate or test culture?

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David Tate's curator insight, April 11, 12:03 PM

Dave Tate, Esq. comment: this is a discussion that is relevant for all boards and board committees.

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New Governance Guidance Stretches Thinking on Ethics, Risk, and More

​The King IV draft code has much to say about governance, risk management, compliance, and assurance.
David Tate's insight:

This article by Norman Marks discusses parts of the new King IV code that concentrate on culture, ethics and risk. It's interesting for thought with respect to your own organization. It is and has been long well-known that all three corporate areas, culture, ethics and risk management, are instrumental to business performance and legal compliance.

 

And although these areas are discussed, and significant strides have been made in or discussed about risk management during the past couple of years, there still are no universally recognized standards or criteria to evaluate or audit how the business is doing in these areas.

 

I have long been surprised that the auditing professions, external and internal, have not jumped on these areas and also governance.

 

Best,

Dave Tate, Esq. (San Francisco and California), http://auditcommitteeupdate.com, http://californiaestatetrust.com, http://tateattorney.com

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How audit committees can take the lead in stemming third-party risks -

The risks associated with doing business globally include third-party bribery, fraud, or supply-chain issues.

 

Dave Tate, Esq. comments - this is a reasonably good, short, general discussion with some ideas for addressing third-party risks. Third party risks of all kinds have been in the news. Without doubt, these are risks that need to be addressed with effective processes and policies. I do take exception to one sentence in the discussion: "PwC recommends that audit committees take the lead on third-party risks, noting that these types of risks are not always covered by a company’s traditional internal controls or enterprise risk assessments." Instead, audit committees have oversight responsibility. The audit committee can take and sometimes, perhaps many times, is tasked with taking the lead in oversight, as a committee of the board. However, the overall board also remains responsible for risk management oversight. The executive officers, legal counsel, risk management, internal audit, management, employees and other people take the day-to-day lead. But this article is good for thought.  

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Fuzzy-Math Accounting Gets Fresh SEC Scrutiny

Fuzzy-Math Accounting Gets Fresh SEC Scrutiny | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
It s generally accepted that a lot of accounting isn t, well, generally accepted.
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Dave Tate, Esq. comments. Fuzzy-math v. fuzzy-reporting v. fuzzy-presentation v. fuzzy-accounting? Viewing the issue as an attorney, CPA and audit committee member, each situation must be evaluated on a case-by-case basis. If the rules aren't absolute, or are vague, discretionary or subject to interpretation, you are going to have these differences, and it doesn't mean that the company did anything wrong - it might simply mean that the SEC has a viewpoint that is different than the company and the company's external auditor. The accounting/auditing pronouncement authorities are shifting to a more "principles" based accounting approach, and away from some of the exact rules. I have previously commented that this "principles" based approach, which was the approach at the time when I first became a CPA, also may lead to more uncertainty and discretion. Most likely these situations will be increasing in numbers. 

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‘Internal audit is crucial to assessing impact of corporate culture’

‘Internal audit is crucial to assessing impact of corporate culture’ | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
Internal audit’s mandate is much broader than external audit’s, says Richard Chambers of Institute of Internal Auditors
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Dave Tate, Esq. comment.


I'm going to disagree with Mr. Chambers on this one. I believe it is better for external audit to be auditing this issue - which is an issue that external audit already should be taking into consideration when designing the audit and the extent to which management and the accounting and internal control functions can be relied upon.


Although internal audit could be assigned a task or project relating to culture, on this topic I would keep the task or project very specific. Internal audit does also work and interact with management and executive management - assessing culture might detrimentally impact those relationships. I would however recommend that internal audit be more involved in risk management, which could involve culture but in a different context.


Audit committee, D&O, risk management, etc. blog: http://auditcommitteeupdate.com

Website: http://tateattorney.com

Trust, estate, conservatorship and elder abuse litigation blog: http://californiaestatetrust.com



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Top 10 Topics for Directors in 2016: Risk Management

Our team of litigators, dealmakers, and policy lawyers and advisors provide a comprehensive suite of services for global companies and local individuals.
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Do You Have a Contrarian on Your Team?

Do You Have a Contrarian on Your Team? | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
A divergent opinion can lead to more creative and better decisions.
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Dave Tate, Esq. comments - good for thought - every board and management situation is different anyway - but also, did anyone say that there shouldn't be or can't be contrarian views on a board or committee? Look at the business judgment rule - there's nothing there about all having to agree. One vote per person. My website: http://tateattorney.com.

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Making crisis simulations matter | Deloitte | Focus on | Crisis Management Services

Making crisis simulations matter | Deloitte | Focus on | Crisis Management Services | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
This issue of Focus on discusses the importance of crisis simulation and how to manage a maturity-based approach. It offers insights for getting started as well as examples of simulations in action.
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Dave Tate, Esq. comments - I'm passing this along as food for thought. It is fairly basic, but I like the second paragraph, which you might want to use to help you consider simulations that might be useful from the audit committee, board, and management perspectives. And here is the link to my website which contains links to my two blogs (this blog, and the blog for trust, estate and elder abuse litigation): http://tateattorney.com.

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Trados: What Happens When Venture Capital Interests and Director Fiduciary Duties Collide | Woodruff-Sawyer & Co.

Trados: What Happens When Venture Capital Interests and Director Fiduciary Duties Collide | Woodruff-Sawyer & Co. | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
Some sales of private companies are terrific events. Big valuations can lead to all investors getting paid, not to mention dancing and high-fives all around. But what happens when the sale is a sad one?
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Dave Tate, Esq. comments. This is a Woodruff Sawyer December 2014, article, but it remains timely for director of private company fiduciary duties. It's a very good read. And I have to add, obviously after reading this, if you are a private company director, you need to be sure that you have a good lawyer.

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PCAOB Adopts Rules Requiring Disclosure of the Engagement Partner and Other Accounting Firms Participating in an Audit

PCAOB Adopts Rules Requiring Disclosure of the Engagement Partner and Other Accounting Firms Participating in an Audit | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
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Dave Tate, Esq. comment. Developments for audit committees to know. But shouldn't additional information also be given about the work and extent of the work performed by the other accounting firms?

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The Rising Threat of Social Engineering

The Rising Threat of Social Engineering | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
From the 2015 PLUS Webinar “What's Next on the Alternative Asset Manager Risk Horizon?,” panelists Neil Lipuma (Hiscox) and Machua Millett (Marsh) discuss social engineering and how that growing risk impacts both cyber and fidelty/crime coverage. PLUS members can view this entire Conference session in the PLUS Multimedia Library.
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Dave Tate, Esq. comments. In addition to the cyber insurance and social engineering discussion, I found this interesting for the speaker's discussion about a company suing it's own employee.

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The Role of Bank Board Risk Committees in Company Performance - Deloitte Risk & Compliance - WSJ

The Role of Bank Board Risk Committees in Company Performance - Deloitte Risk & Compliance - WSJ | Tate - Law, Liability, Risk Management, Governance, D&O and Business | Scoop.it
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