Roles and Responsibilities for an Audit Committee

Questions for Audit Committees to Consider

• Has the audit committee recently reviewed and updated the audit committee charter?
• Does it incorporate changes in the regulatory, legal, or general business environments or changes in the company’s governance structure?
• Does the audit committee annually evaluate the independence of its members?
• Does the financial literacy self-assessment reflect recent developments?
• Have the audit committee, senior management, and the chief audit executive reconciled their expectations for the internal audit function?
• Is the full board, not just the audit committee, participating in risk oversight and discussing the most material risks and how they are being monitored?
• Are all non-GAAP financial measures reconciled to appropriate GAAP measures?
• Does the audit committee hear directly from the management executive who has day-to-day responsibility for compliance matters?
• Has the audit committee established expectations regarding the nature and method of communication with the independent auditor?
• Have the board and audit committee addressed education in the company’s corporate governance guidelines, in accordance with NYSE listing standards?
• How does the audit committee review and approve related-party transactions? Is this process documented?
• Does the audit committee have sufficient knowledge of the industry and business to form the foundation for effective fraud oversight?

See more at: http://www.corpgov.deloitte.com/site/us/audit-committee/roles-and-responsibilities/

Roles and Responsibilities for an Audit Committee

Questions for Audit Committees to Consider

• Has the audit committee recently reviewed and updated the audit committee charter?
• Does it incorporate changes in the regulatory, legal, or general business environments or changes in the company’s governance structure?
• Does the audit committee annually evaluate the independence of its members?
• Does the financial literacy self-assessment reflect recent developments?
• Have the audit committee, senior management, and the chief audit executive reconciled their expectations for the internal audit function?
• Is the full board, not just the audit committee, participating in risk oversight and discussing the most material risks and how they are being monitored?
• Are all non-GAAP financial measures reconciled to appropriate GAAP measures?
• Does the audit committee hear directly from the management executive who has day-to-day responsibility for compliance matters?
• Has the audit committee established expectations regarding the nature and method of communication with the independent auditor?
• Have the board and audit committee addressed education in the company’s corporate governance guidelines, in accordance with NYSE listing standards?
• How does the audit committee review and approve related-party transactions? Is this process documented?
• Does the audit committee have sufficient knowledge of the industry and business to form the foundation for effective fraud oversight?

See more at: http://www.corpgov.deloitte.com/site/us/audit-committee/roles-and-responsibilities/

Three Stages of Sustainability Leadership

May 26, 2010

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Strategy & Leadership

Sustainability

There are three stages to implementing sustainability initiatives in an organization, each requiring different organizational capabilities and leadership skills, according to Christoph Lueneburger, who leads the Sustainability Practice at Egon Zehnder International GmbH, and Daniel Goleman, an author, psychologist and science journalist, in an article written for MIT Sloan Management Review.

Those three stages are:

–Phase 1: Making the case for change

The key challenge here is to make a clear and compelling case for change by collaborating and influencing others to gain buy-in from key stakeholders, they say.

The initial mandate for the sustainability leader may just be expressing the need to act.

–Phase 2: Translating vision into action

During this stage, the task is to translate high-level commitments into a comprehensive change program with clearly defined initiatives and targets, according to the authors. By the end of this phase, the organization will be tracking economic, environmental and social metrics over the business planning cycle.

At this point, the sustainability leader must develop a comprehensive program of targeted initiatives that can be tracked using clear metrics, and must take corrective action when performance falls short of expectations, while prioritizing efforts that generate the most value for the organization over the business planning cycle, they say. Here, commercial results are critical and leaders must understand how to turn sustainability into an advantage in the marketplace.

See more at: http://www.environmentalleader.com/2010/05/26/three-stages-of-sustainability-leadership/

Proxy Topics

Shareholders are assuming a more active voice in the boardroom. Many proxy statements include shareholder proposals that showcase this interest. We have seen proposals for greater activism in such areas as director voting policies, director nomination, compensation, and company policies on sustainability.

With regard to direct communication between shareholders and the board of directors and responses to shareholder concerns, public companies are now expected to have communication procedures that are consistent, clear, and candid and allow for a two-way dialogue. More companies are including policies for shareholder communication on their websites and providing mechanisms for communication through portals, e-mail, interactive webcasts, and the annual meeting.

See more at: http://www.corpgov.deloitte.com/site/us/nominating-corporate-governance-committee/proxy-topics/

Fault Lines: How Hidden Fractures Still Threaten the World Economy Raghuram Rajan

Fault Lines: How Hidden Fractures Still Threaten the World Economy Raghuram Rajan Monday, June 14, 2010 | 4:30 p.m. - 6:00 p.m. Milken Institute 1250 Fourth Street Santa Monica Map Video of this Forum will be available on the Milken Institute's website shortly after the event ends. In 2005, Raghuram Rajan was one of the first to publicly predict that a global financial crisis was brewing. Now he is focused on preventing the next one. At a Milken Institute Forum, this leading economic thinker will discuss his new book, Fault Lines: How Hidden Fractures Still Threaten the World Economy, in which he makes his case for what caused the financial crisis and lays out what he sees as the next steps. The winner of the Fischer Black Prize for the economist under 40 who has made the most significant contributions to the theory and practice of finance, Rajan faults the financial sector and regulators - but also the social inequalities that caused politicians to foster an explosion of credit, as well as the export-driven countries that count on foreign consumers to overspend. Incentives to take on risk were out of step with the dangers they posed. Instead of heavy regulation, Rajan says, the incentives for Wall Street need to change so that punishments for losing money are in line with rewards for earning it. The co-author of Saving Capitalism from the Capitalists, Rajan is a professor of finance at the University of Chicago's Booth School of Business and former chief economist at the International Monetary Fund. Rajan is also an economic adviser to the prime minister of India. Fault Lines will be for sale at the forum, and Rajan will sign copies.

There is no charge for the Forum, but preregistration is required. To RSVP, please register online. There is no need to register to view the archived webcast. For questions, call 310-570-4605. Reserved seating is available for Milken Institute Associates. If you are not currently a member of the Associates and would like to join or receive more information, click here. Parking is not available at the Institute. Two-hour free parking is available in Public Parking Lot No. 1 on Fourth Street, immediately adjacent to our building. The Milken Institute is an independent, nonpartisan economic think tank whose mission is to improve the lives and economic conditions of diverse populations around the world. This Forum is part of our effort to present multiple perspectives on current business and public policy issues. Videotaping, recording or photographing this event is prohibited without the prior approval of the Milken Institute. Other upcoming Milken Institute events: 2010 State of the State Conference October 19, 2010 Milken Institute 1250 Fourth Street Santa Monica, CA 90401 If you do not wish to receive further updates on research and news from the Milken Institute, please e-mail us at database@milkeninstitute.organd indicate which address or addresses you want to be deleted from our list. This communication may be considered an advertisement for certain purposes.

Advanced Negotiation Workshop: Deal Design & Implementation

For over 25 years, the Program on Negotiation at Harvard Law School has taught people from around the world how to improve their skills as negotiators. This year, from June 14-18, you have the chance to attend the Advanced Negotiation Workshop: Deal Design and Implementation. Register now!

Taught by Guhan Subramanian, the only person in Harvard history to hold tenured positions at both HLS and HBS, and David Lax, Managing Principal of Lax Sebenius LLC, this intensive workshop gives participants a systematic framework and tactical tools for effectively navigating their way through complex business deals.

Listen to some of the things past attendees are saying about the Harvard Negotiation Institute:

“Without a doubt the greatest tool I am bringing to my organization this year; thank you!” -Mauricio Espinosa, Chief Executive Officer, G20, Inc

"The simulation exercises, combined with the real-life negotiating experiences of the speakers, do a great job of translating negotiation concepts into real world, practical applications." -Heather Freeman, Manager, Financial Evaluation, Merck & Company, Inc.

“If I implement what I have learned, I will be a fundamentally more confident and skilled negotiator.”-Lois Mary van Waardenberg, General Manager, RHE (Australia)

Click here to register!

Can't come for a whole week? Learn more about our 2-day intensive workshop!

View additional upcoming workshops at the Harvard Negotiation Institute.

The Program on Negotiation at Harvard Law School can teach you how to:

• Improve your skills as a negotiator
• Create deals
• Solve problems
• Build strong relationships
• Immediately apply negotiation theory to daily practice

More about Guhan Subramanian:

Guhan Subramanian is the Joseph Flom Professor of Law and Business at the Harvard Law School and the Douglas Weaver Professor of Business Law at the Harvard Business School. He is the only person in the history of Harvard University to hold tenured appointments at both HLS and HBS. At HLS he teaches courses in negotiations and corporate law. At HBS he teaches in several executive education programs, such as Strategic Negotiations, Changing the Game, Managing Negotiators and the Deal Process, and Making Corporate Boards More Effective. Prior to joining the Harvard faculty he spent three years at McKinsey & Company in their New York, Boston, and Washington, D.C. offices. A more extensive biography can be found here.

More about David Lax:

David Lax, A.B., Ph.D., Affiliate, Program on Negotiation. David Lax is Managing Principal of Lax Sebenius LLC, a negotiation strategy and capability-building firm which advises large corporations and governments around the world in complex negotiations including mergers, acquisitions, divestitures, the entry into and exit from joint ventures and alliances, the settlement of shareholder class action lawsuits, and large commercial contracts. Dr. Lax was a professor at Harvard Business School, where he co-founded the Negotiation Roundtable and later served as its director.He is co-author of the recent 3-DNegotiation: Powerful Tools to Change the Game in Your Most Important Deals as well as The Manager as N

Common Purpose How Great Leaders Get Organizations A New Book by Joel Kurtzman to Achieve the Extraordinary

Common Purpose How Great Leaders Get Organizations to Achieve the Extraordinary A New Book by Joel Kurtzman Why do some businesses flourish while others fail? The Milken Institute's Joel Kurtzman provides an answer in Common Purpose: How Great Leaders Get Organizations to Achieve the Extraordinary. Based on years of research, hundreds of interviews, personal observation and interactions with leaders, Kurtzman's new book argues that creating common purpose is the essence of leadership. The author uses example after example to make his point. For instance, CEO Gordon Bethune learned to emphasize one goal at Continental Airlines. He set on-time performance as the company's measure of success and sent every employee a check every time the company was first in on-time arrivals, creating the feeling of a team. And Enron illustrates the need for less hierarchical organizations. Chairman Ken Lay ignored Sherron Watkins' warnings about misstatements in Enron's financial reports, rationalizing that, as chairman, he would know if something were wrong. With new insights on how to approach - and implement - a leadership mind-set, Common Purpose sheds new light on the meaning of leadership, the crucial qualities of leaders and, most importantly, how to lead. Kurtzman is a senior fellow at the Milken Institute; executive director of its SAVE initiative, including the Center for a Sustainable Energy Future; and publisher of The Milken Institute Review. Visit Milkeninstitute.org to learn more. The reviews are in "Through well-told anecdotes and strong logic, Kurtzman convincingly demonstrates that the essence of leadership is the ability to forge, from a disparate group of individuals, 'a creative, dynamic, brave and nearly invincible we.' How does one do that? Not by stepping out in front of the group, describing a vision, and leading the charge forward. Rather, Kurtzman's ideal leader is deep in the mix of the organization, causing its values, objectives, and approaches to be internalized by decision makers at every level." - Julia Kirby, Senior Editor, Harvard Business Review "Kurtzman's insight that there is no 'them' but only 'us' applies to all organizations - a company, sports team, orchestra, research lab, or university. It's a worthwhile message for our political leaders." - Michael Milken, Chairman, Milken Institute "Common Purpose is an insightful and useful road map for piloting a company to its full potential. ... If you're trying to figure out how to lead your company to stay ahead by anticipating change and sustaining growth, read this book." - Rafael Pastor, Chairman and CEO, Vistage International

Milken Institute 1250 4th Street Santa Monica, CA 90401