The Auditors
KPMG International: Meeting the Challenges
As chairman and CEO of KPMG International, Timothy P. Flynn is leading the global accounting network to help clients face the challenges of the post-financial crisis era, including helping them understand their risk profiles. He is dedicated to creating a values-driven culture that fulfills KPMG’s “Promise of Professionalism” to its 135,000 professionals and clients in more than 140 countries. Recently, he served on the Advisory Committee on the Auditing Profession, established by former Treasury Secretary Henry M. Paulson Jr., which made recommendations to foster a more sustainable auditing profession. He says boards will need to do four things to get a handle on risk: “They need to understand the company’s strategy and the risks inherent in that strategy; ensure that management has appropriate processes in place to monitor and mitigate those risks; clearly define and align risk-oversight responsibilities of the full board and its committees; and pay attention to emerging and low-probability risks that could threaten the company’s existence—either near term or long term.” He says it is a challenge directors are on their way to meeting. “Oversight is much more focused and intense than it was just a few years ago,” says Flynn. Global head of audit Henry Keizer agrees. In an interview last year, he said that the more the accounting world changes, the more important the bedrock fundamentals of accounting become: integrity, transparency, and reliability. “Those are the constants. They don’t change,” says Keizer. Taking that message to audit committees is Mary Pat McCarthy, director of KPMG’s Audit Committee Institute and vice chair of KPMG LLP. She is among the nation’s leading voices when it comes to what audit committee members need to do to restore credibility and meet the challenges of risk oversight.
Sharon L. Allen, Deloitte
Sharon Allen is chairman of Deloitte LLP and a 30-plus year veteran of the global accounting firm with $11 billion in annual revenues. Allen’s efforts extend globally as she serves as the U.S. representative on the global governance committee and chairs the global risk committee. She is also a member of the Women’s Leadership Board at the John F. Kennedy School of Government at Harvard, and serves on the board of directors of Catalyst Her colleague, Deputy CEO Robert J. Kueppers, is responsible for regulatory and public policy matters at Deloitte. His 30 years of experience includes his previous position as the senior technical partner with Deloitte & Touche at its national office in Wilton, Connecticut. He also served as national director of the Securities and Exchange Commission.
Samuel A. DiPiazza Jr., PricewaterhouseCoopers
PricewaterhouseCoopers CEO Samuel A. DiPiazza considers the environmental along with his balance sheet, contributing to environmental awareness endeavors, including co-authoring a thought leadership series for the Copenhagen Climate Council along with Duke Energy CEO James E. Rogers, DONG Energy CEO Anders Eldrup, and CLSA Asia-Pacific Markets Chairman Rob Morrison. DiPiazza strongly emphasizes the importance of PricewaterhouseCooper’s code of conduct, sound judgment, and the ability to earn the trust of the company’s stakeholders. Likewise, Catherine Bromilow, lead partner of the corporate governance group at PwC, encourages boards to earn the trust of all of their stakeholders by displaying further disclosure practices as well as sitting down and communicating with their investors.
Cynthia M. Fornelli, Center for Audit Quality
Cynthia M. Fornelli is executive director of the Center for Audit Quality, a Washington-based public policy organization serving investors, public company auditors, and the markets. CAQ was started by the American Institute of Certified Public Accountants in the aftermath of the accounting scandals to restore credibility to the profession and to promote “integrity, objectivity, honesty, and trust” in the audit profession. Fornelli has worked tirelessly in the service of that goal. She recently weighed in on the fair value debate, arguing in the pages of Directorship that the accounting profession needed to continue to support fair value while addressing its shortcomings.
Robert Herz, FASB
The nation’s top accounting rule maker is on the hot seat. Robert H. Herz, re-appointed to a second term as chairman of the Financial Accounting Standards Board (FASB) in 2007, said in an interview with The New York Times that “there were important aspects of our entire financial system that were operating like a Wild West show, huge unregulated opaque markets…The [financial] crisis highlighted how important better transparency around that system is. I would hope that would be a major lesson learned or relearned.” That interview took place just weeks after the infamous hearing in which Congress demanded that Herz revise mark-to-market or “fair value” accounting standards. Now, the nation’s top accountant says the United States may end up with tougher requirements as it weighs a plan to require U.S. companies to value most financial instruments by the ups and downs of the market—notably loans, which make up much of banks’ assets. Heading FASB is no easy task these days, but Herz has shown time and time again that he can handle the pressure and continue to move the nation’s top accounting rules-setter in the right direction.
Edward Nusbaum and Stephen Chipman, Grant Thornton
Come January, Edward Nusbaum will step down as CEO of Grant Thornton as Stephen Chipman takes the helm. Surely, Chipman has some large shoes to fill. While CEO, Nusbaum grew the accounting firm faster than any other large firm, tripling revenues from $400 million to $1.2 billion. Chipman sounds up to the challenge. In a statement announcing the transition, he said: “I will dedicate myself to taking action on a number of fronts, including continuing Grant Thornton’s tradition of providing strong leadership to the accounting profession and speaking out on issues of importance.”
James S. Turley, Ernst & Young
Calling for consistent global corporate governance, Ernst & Young Chairman and CEO James S. Turley urges companies to prepare for the many challenges awaiting audit committees in the new financial environment. He continues to challenge audit profession self-regulation, calling for further oversight to avoid similar economic meltdowns in the future. Global Vice Chairman Beth A. Brooke is no stranger to the boardroom and strongly advocates against a “group think” mentality among fellow directors. In charge of E&Y’s public policy, sustainability, and stakeholder engagement, Brooke believes boards can’t communicate enough with each other, management, and their investors. She is a regular contributor to The Washington Post, advising leaders on how to improve their business as well as providing insight into the complex corporate governance issues that currently face Congress and the Obama Administration.
General Counsels, Corporate Secretaries, and CGOs
Douglas Chia, Johnson & Johnson
Johnson & Johnson’s senior counsel and assistant corporate secretary, Douglas Chia has command of a wide range of legal issues that belies his relative youth. Listed as one of the “Best Lawyers Under 40” by the National Asian Pacific American Bar Association, Chia has compiled an impressive resume. His past legal experience includes separate tenures as an associate at corporate firms Simpson Thacher & Bartlett and Clifford Chance, as well as serving as assistant general counsel with Tyco. Having joined Johnson & Johnson in 2005, the lawyer is well primed for continued successes.
Margaret “Peggy” Foran, Prudential
A household name among corporate governance experts, Margaret “Peggy” Foran has enjoyed a long career in the vanguard of the legal and corporate battlefield. Currently vice president, chief governance officer, and secretary at Prudential Financial, Foran served in the same capacity at Sara Lee and, for the previous 10 years, was senior vice president of corporate governance, associate general counsel, and corporate secretary at Pfizer. Foran sits on the board of trustees at the Securities and Exchange Commission Historical Society, and has in the past served with numerous groups, including the Council of Institutional Investors. She currently serves on the independent advisory board with the National Association of Corporate Directors. A prolific speaker, writer, and overall corporate thinker, Foran makes her return to the Directorship 100.
Coke’s Secret Governance Formula
After passage of Sarbanes-Oxley in 2002, there was a bevy of activity as some companies recruited or named corporate governance officers. The Coca-Cola Co.’s Mark Preisinger was described as one of “the best-kept secrets of the world’s best companies” in a 2006 Business 2.0 cover story. Preisinger joined the soft drink giant in 1984 and served in various public policy-related capacities leading up to his appointment in 2007 as vice president of stakeholder engagement and subsequently to the director of corporate governance role earlier this year. Among his primary responsibilities is to run Coca-Cola’s shareowners affairs program, coordinating relations between Coke and its investors on corporate governance, environmental, and social issues. Preisinger is a regular on the corporate governance circuit. He serves on boards for the International Corporate Governance Network, Millstein Center for Corporate Governance at Yale, and the IRRC Institute. “Today, it takes more than an annual shareholders meeting and a proxy statement to keep investors plugged in,” says Preisinger. “Dedicating re-sources at the right level of the organization is critical to ensure that corporate governance and share-owner relations is something more than just an extension of PR.”
Danette Smith, UnitedHealth
As corporate secretary for the board of directors at UnitedHealth, Danette Smith fills a number of roles, including gatekeeper, organizer, communicator, and governance consultant. Charged with keeping existing and new directors up to speed with the board’s responsibilities and legal constraints, the duties of corporate secretaries like Smith usually meet or surpass those of the part-time directors whom they assist. Smith has had her hands full in recent years as UnitedHealth has expanded and acquired new assets to become one of the world’s largest healthcare companies. Having joined UnitedHealth’s corporate legal team in 2004, Smith became corporate secretary in 2007, earning Corporate Secretary magazine’s “Secretary of the Year” honor in 2008.
Paul Washington, Time Warner
Being senior vice president, deputy general counsel, and corporate secretary to the board of Time Warner, Paul Washington may just be one of the hardest working individuals at the media conglomerate. The legal expert has had a multi-variegated career, having logged time as a clerk for the U.S. Supreme Court, a banker, a private attorney, and within the government. He has also served as an adjunct professor of law at Fordham University.
Very interesting and very valuable for my MBA level courses on corporate governance at Lubin School of Business, Pace University. We began offering the first MBA level course on COMPARATIVE CORPORATE GOVERNANCE: A GLOBAL PERSPECTIVE, nearly four years ago. We now have added a second and third governance related courses and have under consideration both a double major for Accounting and Finance majors and a governance MBA. Your publications are very insightful and offer students a “real world” experience with governance and the important role of Directors.
Some years ago I created, edited and published the first texts available in English on all aspects of governance, company law and related industrial relations/labour relations (stakeholder laws)for the 12 major countries of Western Europe.
Professor John Alan James, Lubin School of Business, Pace University
Good job on a tough assignment. Of course no two people will ever agree on everyone who should or shouldn’t be on the list but the one person who immediately comes to my mind, and the minds of many in any discussion of corporate governance, is Robert A. J. Monks.
Bob was instrumental in creating a fiduciary duty for pension a mutual funds to vote in corporate elections. He found Institutional Shareholder Services (now part of the Risk Metrics Group), which many believe has almost monopoly power in advising institutional investors how to vote. He and Nell Minow (who you did include) then set up the LENS Fund, which paved the way for Relational Investors, GO and others on your list. Along with Nell, he then set up The Corporate Library, which you also include. You include several academics, all worthy, but it was Bob and Nell’s book, Corporate Governance, along with another earlier book by R.I. (Bob) Tricker, that virtually created the academic discipline.
I can’t understand how you missed this giant of the field… or maybe he’s on your list and I missed it?
We appreciate Jim McRitchie’s comment on Robert A.G Monks, and his achievements in the context of US corporate governance. In fact, Bob Monks was recognized by Directorship in our 2008 Corporate Governance Hall of Fame, and deservedly so (along with Bill Donaldson, Mike Oxley, Paul Sarbanes, and Ira Millstein). In addition to Bob’s many accomplishments, he also happens to be a first rate fellow and a delightful individual whom we admire and enjoy immensely.
– The Editors of Directorship
“has clearly helped the nation avoid further financial disaster and put the economy on the path to recovery.”
It’s been a year since your article. Perhaps you should reconsider that statement?
I’m going to have to echo Bill’s comment. While there certainly has been a “recovery” in the financial sector, thanks to a VERY generous Fed, the recovery everywhere else is completely lacking. It seems there are two different worlds, and if you’re not part of the financially connected, then you may not have the same view as the one described in the post.
I am glad to see Bob Monks getting a mention. A very impressive character who studied at both Cambridge AND Harvard and despite his many highly influencial positions has retained a salt of the earth personality. A very imformative post overall, thank you.
So here we are just over a year since this report was issued. Wonder where Barack stands now?