Seven leading academics issue 21st Century Corporate Governance and Audit Committee Principles
KENNESAW‚ Ga. (May 8‚ 2007) – Seven leading academic experts on corporate governance…
Georgia (May 8, 2007) — Seven leading academics issue 21st Century Corporate Governance and Audit Committee Principles
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Frances Weyand Harrison
Writer: Terri Thornton‚ email@example.com
KENNESAW‚ Ga. (May 8‚ 2007) – Seven leading academic experts on corporate governance issues have prepared “21st Century Governance and Audit Committee Principles for U.S. Public Companies.” Based on their research‚ observations‚ and years of experience in the governance field‚ the authors‚ based at four universities‚ offer the principles to advance the current governance dialog and to continue to promote the interests of investors‚ stakeholders and financial statement users.
The principles update the guidelines the academics published five years ago‚ in the wake of the Enron bankruptcy and widespread governance and financial reporting problems at U.S. public companies – “The 21st Century Governance and Financial Reporting Principles” (March 2002). The 2002 governance principles were endorsed by the Institute of Internal Auditors (IIA). The IIA presented the principles to the New York Stock Exchange in April 2002‚ and distributed them to the U.S. Securities and Exchange Commission‚ American Stock Exchange‚ National Association of Securities Directors‚ National Association of Corporate Directors‚ Financial Executives International‚ and Congress‚ as well as the White House staff assigned to address governance and financial reforms.
“The five−year anniversary seemed like a good time to review these principles – five years after Congress passed the Sarbanes−Oxley Act of 2002; the New York Stock Exchange and NASDAQ proposed and later adopted new listing requirements; the AICPA issued SAS No. 99; the accounting fraud at WorldCom led to the largest bankruptcy in history; and Arthur Andersen LLP‚ Enron’s long−time auditor and one of the nation’s Big Five accounting firms‚ collapsed‚” said Paul Lapides‚ Director of the Corporate Governance Center in the Coles College of Business at Kennesaw State University.
The newly updated “Governance Principles” and new “Audit Committee Principles” (which can be found online at http://www.kennesaw.edu/cgc/21stcentury_2007.pdf) include these guidelines:
Independent directors must be able and willing to be objective in their judgments.
The compensation committee should evaluate the incentives and risks associated with a heavy emphasis on short−term performance−based incentive compensation for executives and directors.
The board should have a process for shareholders to nominate director candidates‚ including access to the proxy statement for long−term shareholders with significant ownership stakes.
All public companies should maintain an effective‚ full−time internal audit function that reports directly to the audit committee.
Section 404 of the Sarbanes−Oxley Act should apply to all public companies‚ and the primary focus of reporting on internal control should be effectiveness.
The board should limit the number of other audit committees on which its audit committee members can sit.
All directors should receive detailed orientation and continuing education to assure they achieve and maintain the necessary level of expertise.
Contributing to the principles are Paul Lapides and Dana Hermanson‚ co−founders of the Corporate Governance Center in the Coles College of Business at Kennesaw State University‚ and James Tompkins‚ Director of Board Advisory Services for the Center; Joseph Carcello‚ Director of Research at the Corporate Governance Center at the University of Tennessee‚ and Terry Neal‚ Research Fellow at the University of Tennessee Center; Mark Beasley‚ Director of the Enterprise Risk Management Initiative at North Carolina State University; and Todd DeZoort‚ Professor of Accounting and Accounting Advisory Board Fellow in the Culverhouse School of Accountancy at The University of Alabama.
For more information‚ contact: Paul Lapides at 770−423−6587 or firstname.lastname@example.org.
A member of the 35−unit University System of Georgia‚ Kennesaw State University is a comprehensive‚ residential institution with a growing student population approaching 20‚000 from 132 countries. The third−largest university in Georgia‚ Kennesaw State offers more than 60 graduate and undergraduate degrees‚ including a new doctorate in education.
A leader in innovative teaching and learning, Kennesaw State University offers undergraduate, graduate and doctoral degrees to its nearly 43,000 students. With 11 colleges on two metro Atlanta campuses, Kennesaw State is a member of the University System of Georgia. The university’s vibrant campus culture, diverse population, strong global ties and entrepreneurial spirit draw students from throughout the country and the world. Kennesaw State is a Carnegie-designated doctoral research institution (R2), placing it among an elite group of only 6 percent of U.S. colleges and universities with an R1 or R2 status. For more information, visit kennesaw.edu.