Proper and continuous auditing of your corporate board or committees is a major component of good corporate governance, as it monitors that the decision-makers are acting in a way that has the company’s best interest in mind and that they’re held accountable when they aren’t.
But with so much to do, forgetting to check on some essential things happens more often than it should. So if you want to make sure your board or committee is working properly, keep in mind that you shouldn’t make these common mistakes.
Not complying with the established framework
An incredibly basic error that can occur is that the board of directors fails to comply with the regulations set out within the framework of the country of operation.
The board must, therefore, revise its structure and composition to make sure that it complies with the necessary legislative requirements and that the roles assigned are fit for purpose.
Holding on to inadequate members
Certain members that make up the committees, and in particular the board of directors, are incompatible with their position due to a conflict of interest or other aspects of their profile, and therefore must be removed and replaced.
This should be identified as quickly as possible to ensure that the authority of the board and its decision-making powers are not undermined by the fact that they are disregarding their own operating procedures.
To protect the status of the board as a whole, it’s important to check-up on individual members on a regular basis. Through the use of a board management system, this can be added as a periodic task so that that the overall quality of the board is not compromised.
Not Documenting Changes In The Operating Procedures
When a change occurs in the structure of a board or committee, the update must be reflected in its Operating Procedures, because not doing so may have negative implications in the way that the board or committee goes about its decision-making processes, and legal issues may arise when it’s time for a review. This is why it’s so important to implement continuous board auditing to ensure the Operating Procedures reflect the reality.
Lacking auditing altogether
Sometimes boards and committees fail to be audited on a regular basis, so they fail to identify areas where the structure or composition of its members is no longer right. Remember that an effective board is one that continues to look for ways to stay on top of these issues so that its authority cannot be called into question, and make sure that you’re getting audited often enough that no detail will be left to chance.