Questions to Ask at Your Upcoming Board Meeting

Boards are in a prime position to assist their organizations by asking questions that help management evaluate options and consider varying perspectives when making challenging decisions. There is a routine to most Board meetings, with agendas and a lot of important information to go through. Take advantage of each Board meeting cycle and capitalize on the time you have together with your fellow directors, as well as with senior management, to discuss and collaborate on the evolving business risks and strategies today.

Weaver, knowledgeable in advisory services, offers several topics to incorporate into the discussions at your next board and committee meetings, to generate productive discussion and illuminate prospective opportunities as well as challenges.

1. Has the organization examined its banking relationships and liquidity risks in the current economic climate?

Current interest rates and the overall economic environment have stressed many financial institutions, which may create a liquidity concern for some organizations. It may be time to evaluate the financial stability of your financial institution.

• How diversified is your bank (or banks)? Consolidation of a bank’s portfolio to a specific sector or industry may create a liquidity risk for the institution.
• Is there a risk of consolidation of your bank into a larger bank and how could that impact your relationship, terms, and collaboration?
• Are your business partners (customers, vendors, investors, stakeholders) at risk to encounter liquidity issues?

Whether liquidity is a significant concern for your organization, periodically assessing and discussing the effectiveness of your banking relationships is healthy.

2. How has the company assessed and validated internal control over sustainability reporting?

On March 30, 2023, The Committee of Sponsoring Organizations of the Treadway Commission (COSO) released a study and guidance for organizations to achieve effective internal controls over sustainability reporting based on COSO’s widely used Internal Control-Integrated Framework. As the focus on sustainability reporting grows across the investing community and with regulations over climate disclosures impending, the publication of this adapted framework is timely.

• Is there consistency in how the data and information reported within the organization’s Sustainability report is derived?
• What protocols exist currently to ensure that data and information reported is accurate and reliable?
• Has the company amended prior sustainability reports? If so, what was the cause for the amendment and could it have been prevented?
• What questions, comments, or feedback has the organization received from stakeholders relating to its sustainability report?
• Has the organization begun a process to formalize, document and evidence internal controls over sustainability reporting?

3. Is the audit committee fully leveraging its relationships with internal audit?

The Internal Audit function should report directly to the Audit Committee and collaborate with the Committee to ensure that their actions align with the Committee’s needs.

• How often does the Audit Committee make requests of Internal Audit to evaluate or validate information, risk management activities, or operational practices of the organization on its behalf?
• What was the process performed by Internal Audit to develop the annual Audit Plan and allocate budget and resources to projects for the year?
• Does the Internal Audit plan seem adequately balanced between compliance, assurance, and advisory engagements?
• How is Internal Audit utilizing data analysis to more effectively execute audit engagements as well as provide valuable information back to the Audit Committee?

4. Does our Board of Directors composition reflect current requirements and our own commitment to diversity?

Nasdaq’s board diversity rules for public companies have been approved by the SEC and will take effect over the next several years. The new listing standards will require each Nasdaq-listed company, subject to certain exceptions, to have at least two diverse board members or explain why it does not. This requirement, along with growing focus on ESG-related reporting and disclosure, creates discussions for the Board and Senior Management.

• Does the organization have a diverse Board or goals to become more diverse?
• Are there skills or abilities that if added to the Board would be beneficial to the organization that could be evaluated in new, diverse Board members?

5. Does the board have an adequate understanding of the various compliance requirements of the organization and how management ensures compliance is achieved?

Businesses today are faced with a myriad of compliance issues and requirements that must be managed for the organization to be successful. The board plays a key role in providing oversight and emphasizing the importance of compliance across the company. Ask yourself and your fellow board members:

• Is the board confident in its understanding of the operational, financial, technological and regulatory compliance requirements facing the organization?
• What policies, programs and monitoring activities has management put in place to ensure compliance is effectively maintained?
• Are the mitigation activities currently in place commensurate with the risk associated with individual compliance requirements?
• Have any relevant compliance requirements for the organization changed in recent periods?
• Has management experienced a failure in compliance? If yes, how was identified and remediated?
• Have you evaluated your compliance vulnerabilities?

Weaver offers information and insights to prepare for your next board meeting. We can help you ask the right questions and determine appropriate plans of action based on topics and trends as they unfold. Subscribe to our monthly insights for articles and information to help you review your organization’s operations and prepare for change in an uncertain world. Contact us for information about these areas of Board governance.

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