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Governance beyond the boardroom: Insights for finance leaders · PwC's accounting podcast

• 0:00
  SPEAKER_01: Thought leadership from PWC's National Office.
• 0:10
  SPEAKER_01: Hello, and welcome to PWC's Accounting Podcast.
• 0:13
  SPEAKER_01: I'm Heather Horn.
• 0:15
  SPEAKER_01: In today's episode, we're discussing how organizations can strengthen governance in an increasingly complex business environment.
• 0:22
  SPEAKER_01: As reporting, risk management, technology, and disclosure decisions become more interconnected, controllers, chief accounting officers, and other finance leaders are playing a growing role in helping organizations establish clear accountability, effective information flows, and strong decision-making processes.
• 0:42
  SPEAKER_01: Joining me today are Karen Robinson, a director, and Matt Disappee, a managing director, and PWC's Governance Insights Center.
• 0:49
  SPEAKER_01: Together, they're going to share some practical insights on what effective governance looks like in practice, common challenges organizations are facing, and key takeaways from COSO's recently released corporate governance framework.
• 1:03
  SPEAKER_01: With that, let's get started.
• 1:05
  SPEAKER_01: All right, that was a mouthful of information.
• 1:07
  SPEAKER_01: Thank you guys for joining me today.
• 1:10
  SPEAKER_00: They gave you a laugh there, huh?
• 1:11
  SPEAKER_01: Yes.
• 1:13
  SPEAKER_01: So before we dive into things today, I ended that discussion by talking a bit about COSO.
• 1:19
  SPEAKER_01: And I thought that would be a good place to start our conversation because we are going to keep relying on that and referring to it during our discussion today.
• 1:28
  SPEAKER_01: So I know that the two of you helped to just actually develop this guidance in collaboration with Go COSO.
• 1:36
  SPEAKER_01: So can you share a bit about what it relates to and how companies should be thinking about it?
• 1:42
  SPEAKER_02: So, Heather, I think it's first, um, it's important to just start with why does this guidance matter so much right now?
• 1:49
  SPEAKER_02: Um governance expectations have evolved quite a bit.
• 1:54
  SPEAKER_02: Um, but at the same time, as you mentioned, the business issues have expanded and they have become much more connected.
• 2:02
  SPEAKER_02: And boards are so boards are overseeing strategy, risk, resilience, culture, technology, data.
• 2:08
  SPEAKER_02: I mean, the list goes on.
• 2:10
  SPEAKER_02: And um, and many of these um governance models um have really developed in pieces over time.
• 2:17
  SPEAKER_02: And so the structures, the roles, and the information flow may not be as clear or coherent as they need to be in today's environment.
• 2:25
  SPEAKER_02: And so what the COSO guidance does is um, well, first of all, COSO is known for internal control, ERM, and fraud risk management, but the publication really steps back and looks at the broader governance picture through the lens of board oversight.
• 2:41
  SPEAKER_02: I do want to make that clear.
• 2:42
  SPEAKER_02: Um, but it gives boards and management just that common language to assess whether governance is fit for purpose.
• 2:49
  SPEAKER_02: And I think finance leaders can really use this guidance.
• 2:54
  SPEAKER_02: Um, like I said, it's written primarily for board, but board oversight depends on that information and analysis and the implementation support that's provided by executive management and key functions.
• 3:06
  SPEAKER_02: And so I think the, you know, finance controllers, CAO teams, they're central because they sit right in the middle of all that information that the board and audit committees get get.
• 3:16
  SPEAKER_02: So they really play a big role in governance.
• 3:18
  SPEAKER_00: I think that's actually really important is that idea that corporate governance isn't just at the board level.
• 3:24
  SPEAKER_00: You know, governance does happen inside of the organization as well.
• 3:28
  SPEAKER_00: And, you know, there's a really interconnected and strong relationship between the board being able to offer effective oversight and getting the right information for management and understanding sort of how that process flows together.
• 3:40
  SPEAKER_00: All too often you think about like governance GRC and management, corporate governance of the board, and even, you know, sort of most of the governance guidelines or other documents out there sort of treat those two separately.
• 3:51
  SPEAKER_00: And I think that that really is the opportunity here is to think about it a little more collectively and start to bridge the gap between the two.
• 3:59
  SPEAKER_01: So, one question for you, because I think when people think about COSO more broadly, they're thinking about their internal control structures, all this documentation and you know, the processes that are functioning each quarter.
• 4:12
  SPEAKER_01: So if I'm a company and I'm thinking about this in particular, how would I be considering implementing this?
• 4:21
  SPEAKER_01: And then we'll dive into some of the detail, but I think a big picture would be helpful.
• 4:26
  SPEAKER_00: Well, and I think that implementing this is an important phrase to sort of pause on because it gets to sort of what this is and what this is, right?
• 4:34
  SPEAKER_00: This is not a checklist for good guidance, for good governance, right?
• 4:37
  SPEAKER_00: It's not something where you can go through and say, okay, I've done this, that, and every sort of recommendation.
• 4:41
  SPEAKER_00: There are no recommendations, right?
• 4:43
  SPEAKER_00: The the um concepts and the concepts in practice that are presented in the document are presented as examples of way that a company in the US or globally in any sort of governance operating environment might choose to have the principles show up in their business.
• 5:00
  SPEAKER_00: But I think Karen sort of leaned into this from the beginning, right?
• 5:03
  SPEAKER_00: That idea of you know governance needs to be fit for purpose and structured appropriately given where a company is its evolution, public or private, large, small, growth, um, you know, sort of, you know, uh long-term resilience, all of those factors need to play into it.
• 5:21
  SPEAKER_00: Um, and so it's not the recipe for good governance.
• 5:24
  SPEAKER_00: It's not, you know, it's very much a tool.
• 5:26
  SPEAKER_00: And I think you mentioned this to have a common language so that management teams and boards together can understand how they've adopted the appropriate governance structures intentionally for them today.
• 5:39
  SPEAKER_02: Well, and I'll just add, I think what's unique to this guidance is there is a section called management enablement considerations.
• 5:47
  SPEAKER_02: And that's important because it talks through these board principles, but then really how can management support and enable the board across the 12 principles?
• 5:56
  SPEAKER_02: And so you think about how they can apply it using the that information on what questions is my board or audit committee going to ask me?
• 6:05
  SPEAKER_02: What information should I be giving them?
• 6:07
  SPEAKER_02: It kind of helps you kind of frame that up for each of the for each of the areas of board oversight.
• 6:12
  SPEAKER_01: So then you guys would say this is a resource document that can be used by boards.
• 6:17
  SPEAKER_01: And then today we'll focus in on how management can be using it, but it's really something they should familiarize themselves with and almost benchmark against.
• 6:26
  SPEAKER_01: Is that fair?
• 6:27
  SPEAKER_01: Or again, just trying to understand before we dive into the details how people should be thinking about using it.
• 6:32
  SPEAKER_00: I think it's familiar yourself with yes, use it as a reference material, right?
• 6:38
  SPEAKER_00: When something comes up, you can go there and you can say, Oh, how can I help understand this in my context, right?
• 6:43
  SPEAKER_00: Um, I think it should be used as a conversation starter.
• 6:46
  SPEAKER_00: So anyone can either pick up any of the individual principles and you know, it's a longer document.
• 6:51
  SPEAKER_00: I think it's like 40 pages if you print it out, but each principle is actually only about two pages.
• 6:55
  SPEAKER_01: Okay.
• 6:55
  SPEAKER_00: Right.
• 6:56
  SPEAKER_00: So you can go into any one of these topic areas and pick it up and use it as a conversation starter, right?
• 7:01
  SPEAKER_00: So there's a principle in there on technology oversight, right?
• 7:05
  SPEAKER_00: Um, and AI is a topic that's being used discussed everywhere all the time these days, right?
• 7:12
  SPEAKER_00: And there's elements in there that you can pick up and say, well, as we're thinking about our AI governance practices, what are some things that we should consider or, you know, stress tests, whether or not they're appropriate, right?
• 7:22
  SPEAKER_00: So it's that resource and tool that you use as you're tackling these issues.
• 7:26
  SPEAKER_00: It's not something that you use as a um guideline for how to tackle it, right?
• 7:32
  SPEAKER_01: Yes.
• 7:32
  SPEAKER_01: All right, very helpful context.
• 7:34
  SPEAKER_01: So, with all that said, then let's turn to what this means really for accounting and finance professionals, because specifically, you know, one of the things we keep we talk about a lot is the fact that all of the issues the companies are dealing with today really are cross-functional.
• 7:49
  SPEAKER_01: I deal a lot with sustainability, that's clearly a cross-functional um issue, but you know, you have a lot of issues that go across finance, legal, tax, treasury, all of these different groups.
• 7:59
  SPEAKER_01: And so, from a governance perspective, how should um, you know, companies effectively connect these different organizations and not be going across or or making sure that you're not operating in different silos?
• 8:15
  SPEAKER_00: Yeah, and um, Karen, I'll take a little bit and I'd love to hear sort of you you build on this because I think that's one of the core themes of the document, right?
• 8:23
  SPEAKER_00: Is that you know governance is you know how an interrelated set of board oversight topics sort of come together and cascade down into the management um operate and operations in a way that brings the functions together and almost acts as a forecasting mechanism on some of these things.
• 8:41
  SPEAKER_00: And and you know, you mentioned sustainability.
• 8:44
  SPEAKER_00: I wish there was a little bit more of this around the sustainability practice that said, hey, the sustainability team over here that's producing the report should be much closer to the management team and understanding sort of how these things translate into ROI.
• 8:56
  SPEAKER_00: And we could go for days on sort of how that might have been a missed opportunity in the space, right?
• 9:02
  SPEAKER_00: But I think it highlights why when you you know use this tool to sort of think about these things interrelated, you actually hopefully, you know, not only address risks and manage that side of things, but you unlock opportunities, right?
• 9:14
  SPEAKER_00: Governance is both sides of that coin, right?
• 9:16
  SPEAKER_00: I don't know.
• 9:17
  SPEAKER_02: Yeah, no, I would just say, I mean, we just like we coach boards and board committees on sharing information and transparency and not having kind of the silos, because if the board doesn't have the full picture from its committee structure, they can't make good decisions.
• 9:32
  SPEAKER_02: It's the same with the executive management, the management level.
• 9:35
  SPEAKER_02: And so I think having that sort of from a culture standpoint, having that culture that executives feel like, you know, there aren't those silos, to break down those silos and really increase coordination and communication across functions, I think is really important.
• 9:50
  SPEAKER_02: Even if an uh issue is identified in one function, recognizing that it affects a lot of other things.
• 9:57
  SPEAKER_02: And so bringing the people in at the right time.
• 9:59
  SPEAKER_00: I like that.
• 10:00
  SPEAKER_00: And I think a great example would be sort of at the board level, you do a lot of intentional cross-committee memberships, right?
• 10:07
  SPEAKER_00: There's got to be someone from the audit committee on the risk committee and vice versa, right, to make sure that that information flow.
• 10:13
  SPEAKER_00: We don't always do that so well at the management level, right?
• 10:16
  SPEAKER_00: The the committee is sort of inside of the silo.
• 10:19
  SPEAKER_00: And so, you know, using this idea of, you know, maybe we should bring a cross-silo sort of committee membership at the right levels of management to make sure those insights are happening, right?
• 10:29
  SPEAKER_00: Because your supply chain impacts your pricing, impacts your margins, impacts all everything else, right?
• 10:34
  SPEAKER_00: And so you need to, you know, apply that governance principle down sort of into the organization.
• 10:39
  SPEAKER_00: And I think finance is as an opportunity actually to be one of those cross-pollinators because so much of what happens across the organization bubbles up to that choke point.
• 10:49
  SPEAKER_01: Yeah, I mean, it's naturally is already interacting across the organization.
• 10:53
  SPEAKER_01: And I think one of the things that's really interesting in the report is that it's really emphasizing then how effective governance governance really depends on this information flow, escalation, bringing all of this these things together, accountability.
• 11:08
  SPEAKER_01: And so, what are some of the points then that you would highlight there?
• 11:11
  SPEAKER_02: Yeah, I mean, I think you first step back and think the board can only be as effective as the information that it receives, right?
• 11:18
  SPEAKER_02: It's heavily dependent on set information and reporting.
• 11:22
  SPEAKER_01: And so um and then sorry, I have to pause here because it seems so obvious, but and yet it's such a critical point to make is that they only know what they're being told.
• 11:32
  SPEAKER_01: And so if you don't have those good processes, it automatically is going to start breaking down.
• 11:37
  SPEAKER_02: Exactly.
• 11:37
  SPEAKER_02: And so that is where management comes in and making sure that that information is um balanced, complete enough, accurate, and also timely, um, so to enhance better oversight and decision making at the board level.
• 11:51
  SPEAKER_02: And so um, I think, you know, thinking through the support functions that obviously create the reporting for board and audit committees, um, and making sure that information flow and the communication channels are open.
• 12:04
  SPEAKER_02: I mentioned identifying issues close to close to where they arise, but involving the right functions early on and creating that synthesized view for executive management.
• 12:14
  SPEAKER_02: I think that's one thing that I consistently hear from boards is they might get a report from risk, they might get a report from internal audit, compliance, they're all saying something different about the same risk.
• 12:26
  SPEAKER_02: So really coming up with sort of that synthesized view for the board, and then the packaging makes all the difference for the board and audit committees and turning in, you know, whether it's laying out a simple executive summary of what is the issue, what are they asking the board to do with that information, which is really important as well.
• 12:45
  SPEAKER_02: And then talking through the risks and the alternatives that management looked at.
• 12:49
  SPEAKER_02: And then more importantly, too, is just what is management's recommendation so that the board can bounce ideas off of each other around those recommendations.
• 12:57
  SPEAKER_01: So then are you guys seeing that companies are rethinking how they're dealing with disclosure or you know, your recommendation of like, well, you shouldn't give three different reports on the same thing.
• 13:08
  SPEAKER_01: It should be one integrated report.
• 13:10
  SPEAKER_01: That's easy to say, but not very easy to do.
• 13:12
  SPEAKER_01: So what are you seeing in terms of how companies are reacting to this?
• 13:16
  SPEAKER_00: I think I I hear a lot, and I'm sure you do too, Karen, that companies are trying to rethink these things, but there's a lot of inertia around the way things have done, especially if it's worked, right?
• 13:28
  SPEAKER_00: It's very easy to rethink things when there's been uh an incident or something that that sort of forces you to do that post-mortem and say, hey, this probably could have been better.
• 13:38
  SPEAKER_00: It's a lot harder to do that proactively.
• 13:41
  SPEAKER_00: And so that's and you need a tool or some sort of catalyst to have that discussion.
• 13:46
  SPEAKER_00: That's where I think the guiding principles actually can be really helpful, right?
• 13:49
  SPEAKER_00: Because they can be that tool to say, hey, does our disclosure committee practices really escalate the right things in the right way, both externally, but then connect it back to what's happening to the board, right?
• 14:00
  SPEAKER_00: Because we now know we know every board member is getting a Google alert for the companies that they sit on, right?
• 14:06
  SPEAKER_00: And so they're hearing information that's coming out through the disclosure channels as much as they're hearing is what's coming out through the management team.
• 14:14
  SPEAKER_00: And that should make sense, but I don't know that that's a disciplined process, right?
• 14:19
  SPEAKER_00: A lot of the disclosure committee approaches, you know, were early days of the internet or or you know, under different disclosure regimes.
• 14:27
  SPEAKER_00: And so making sure that like that's one of those easy things of saying, like, hey, do we have a process to make sure the way that these two things come together does.
• 14:36
  SPEAKER_01: Well, and I guess to that point then, well, how do you differentiate or what differentiates organizations that are doing this well and those that are not?
• 14:45
  SPEAKER_02: I I mean, I think the first, and I I may have already said culture, right?
• 14:49
  SPEAKER_02: Culture does matter.
• 14:50
  SPEAKER_02: And this is where you build that cultural culture where people can raise issues early on and think that they're believe that their concerns are valued and that, you know, if you escalate something to executive management, that it's not being ignored.
• 15:03
  SPEAKER_02: So setting that expectation up front so that people are not afraid to escalate things.
• 15:08
  SPEAKER_02: Um, I think clarity also matters on just what types of issues require escalation and what those thresholds are and where do you take them?
• 15:16
  SPEAKER_02: Um, making sure that all employees know what the what that pathway is.
• 15:21
  SPEAKER_02: Um, and then again, the follow-through.
• 15:23
  SPEAKER_02: Um, I, you know, as an employee, you want to see that something has happened when you escalate something, um, at least or at least know what that response was.
• 15:31
  SPEAKER_02: So being clear and tracking that in the resolution to that.
• 15:34
  SPEAKER_02: And again, the finance role has a huge um piece of that because they can help document, follow-up, and really connect issues to reporting and internal control implications.
• 15:45
  SPEAKER_00: I want to amplify something you said, which is that culture influences governance and governance influences culture.
• 15:52
  SPEAKER_00: Those two things are interrelated.
• 15:54
  SPEAKER_00: And the companies that are doing this well recognize that and pay attention to it, right?
• 15:58
  SPEAKER_00: So you don't just put in a governance structure and say, hey, we got the governance right, it's all gonna work, right?
• 16:03
  SPEAKER_00: Um, and you don't just, you know, undertake a cultural, you know, um shift or transformation, which a lot of companies have done, right?
• 16:11
  SPEAKER_00: Um, and say, okay, everything's gonna work now, right?
• 16:13
  SPEAKER_00: But you actually think about that intersection between culture and governance and pay attention to the way things are working, right?
• 16:20
  SPEAKER_00: And that that's sort of how you actually find the value there.
• 16:24
  SPEAKER_01: So then if a company is thinking about the governance over disclosures and sharing information, because it's sort of one thing, right, that you mentioned um issues bubbling up, but then okay, then they have to bubble one more level, right, to get to the board level.
• 16:40
  SPEAKER_01: So what types of things are effective companies thinking about when they're um thinking about the governance over the information that does get disclosed at the board level?
• 16:50
  SPEAKER_00: So one thing I'll I'll throw out there that's uh a little bit different that folks might not have heard as much is the idea of doing scenario planning around this, right?
• 16:57
  SPEAKER_00: And you know, everyone's used to doing scenario planning around things like a cyber incident or those types of things.
• 17:03
  SPEAKER_00: There are other issue uh events that can lead to disclosure requirements where you might need to do an analysis to see if there's an AK that needs to be issued or something like that, right?
• 17:13
  SPEAKER_00: And doing that type of scenario analysis where you have the discussions about, you know, should the board have been aware of this before we filed, or, you know, when do we do bring in the executive management team and those sorts of things actually leads to better practices and make sure not only that you're ready, but that you've thought through these things.
• 17:32
  SPEAKER_00: And so that's one area where you can take a really discrete sort of activity that you might, you know, think is for the more of the big risk, right?
• 17:40
  SPEAKER_00: But it works, it works elsewhere too.
• 17:43
  SPEAKER_00: Um, and there's a lot of value through through running through those paces before you have to run through them.
• 17:48
  SPEAKER_02: And I would just add, that it starts with a board, but executive managed to you, and just setting the expectations of what does need to be bubble up.
• 17:55
  SPEAKER_02: Um, I mean, we talk a lot in our world around authority matrix, you know, approval authority matrix, but really kind of documenting what does that look like in practice, um, again, so that there's clarity on when that needs to happen.
• 18:09
  SPEAKER_02: And I think it does start kind of at the top as to what those expectations are and what what's important to them, what they hear from hear um from management.
• 18:18
  SPEAKER_01: So when you're talking about big risks, one that comes to mind, of course, is technology and data.
• 18:23
  SPEAKER_01: And I know that there is one specific guiding principle that's dedicated to technology and data oversight.
• 18:30
  SPEAKER_01: And so, from that perspective, what types of governance conversations should finance organizations be having related to AI, technology, data, and otherwise?
• 18:42
  SPEAKER_00: Yeah, I think it's interesting you picked up on that because you you think about sort of guiding principles for corporate governance, right?
• 18:48
  SPEAKER_00: You don't necessarily think that technology gets called out, sort of you're like, but technology has become something for every organization that really embodies that idea of being embedded everywhere.
• 19:00
  SPEAKER_00: And it's very easy when you've got a spider like that to you know miss the opportunity to think about sort of holistically the way that technology is being used, where it's showing up.
• 19:12
  SPEAKER_00: And that's especially true in the finance function, where you're seeing these transformations happen, not only in platforms, but in the introduction of new technologies in AI and those sorts of things, right?
• 19:24
  SPEAKER_00: And so the opportunity is there to apply the same basic governance principles that you do to every day-to-day activity, right?
• 19:33
  SPEAKER_00: What's the access, what's the validation, what's the documentation, how do you do change management around technology, right?
• 19:40
  SPEAKER_00: So that you're getting the value and the that the technology presents in terms of opportunities for efficiencies, you know, um, more deeper insights and those sorts of things.
• 19:50
  SPEAKER_00: But you're also, you know, protecting against some of the risks around data quality, access, um, you know, putting humans in the loop and making sure that you know that how the uh results were actually developed from the operational realities to what gets reported out, right?
• 20:10
  SPEAKER_00: Because the more you add technology in there, the more the easier it becomes to sort of miss those opportunities where something's getting transformed a little bit differently than you thought.
• 20:19
  SPEAKER_00: And when you aggregate that, it starts to become a problem, right?
• 20:23
  SPEAKER_00: And so being thoughtful about the way that you put governance in around responsible AI use, around, you know, clear understanding of data quality and when technology is used and the like can be really important.
• 20:36
  SPEAKER_02: Well, and I think the guidance also really highlights, though, not just from a risk perspective, but looking at it from an opportunity and risk perspective and really encouraging boards.
• 20:44
  SPEAKER_02: I think when we work meet with boards today, it's always around responsible use, but thinking about it from a strategic standpoint, starting there too, on how can it support the business?
• 20:54
  SPEAKER_02: And I think it's it's good to mention too, from a board governance perspective, I mean, the board and audit committee, they don't need to understand every technical detail around these platforms, um, but they do benefit from understanding where AI is being used and how management is governing those issues and obviously the risk and controls.
• 21:13
  SPEAKER_00: And I think this is actually one of those key areas where when we talked about sort of escalation and information flow, the way technology is showing up at the board today is a little bit ad hoc, um, right?
• 21:25
  SPEAKER_00: Or it's being dumped in in one committee's lap, a la sustainability, right?
• 21:30
  SPEAKER_00: But but but we learned it, we learned from the sustainability lesson that when these issues cut across the entire business, you should be thoughtful about how the board engages with the issues, where it does, so that there's a cohesive story, but you're aligning the activities, right?
• 21:45
  SPEAKER_00: Most, for instance, you know, most companies changed the name of their compensation committee to be some form of compensation and human resources or human capital committee over the past five years.
• 21:57
  SPEAKER_00: I think there was some concept of what that.
• 22:00
  SPEAKER_00: Meant.
• 22:01
  SPEAKER_00: You know, but for now with the you know AI and sort of how it's impacting your human capital and your workforce, there's something very real for that committee to deal with in terms of you know that side of how they've expanded their mandate.
• 22:15
  SPEAKER_00: Um and you know, so it means that AI can't just sit in the audit committee or adjust in the risk committee.
• 22:19
  SPEAKER_00: They got to get it over there.
• 22:20
  SPEAKER_00: And you've got to think about as a management team, how do we get together first so that we get it there in the right place, right?
• 22:27
  SPEAKER_00: And so that's that sort of connectedness.
• 22:29
  SPEAKER_01: Yeah, Eddie is interesting because you guys, you started with risk, then you mentioned risk and opportunity.
• 22:34
  SPEAKER_01: But since I'm an auditor, I'm going to focus on the risk side of things.
• 22:37
  SPEAKER_01: And if I'm, you know, taking a step back and I'm thinking about the chief accounting officer or the controller, and I'm trying to think about the connection between governance, risk management, and internal controls.
• 22:50
  SPEAKER_01: Is there anything then this new guidance kind of brings together that you would highlight that they should be thinking about?
• 22:56
  SPEAKER_02: Yeah, and one thing I laugh because the last principle, the 12th principle is risk management and internal control.
• 23:04
  SPEAKER_02: That was not on purpose.
• 23:05
  SPEAKER_02: It's not meant to be the you know, the last thing on the list.
• 23:09
  SPEAKER_02: Right.
• 23:10
  SPEAKER_02: And you'll notice in the guidance, risk is mentioned throughout.
• 23:13
  SPEAKER_02: Um, because you to your point, Heather, I mean, they are all connected and they support decision making and strategy and confidence in the business information.
• 23:22
  SPEAKER_02: So um the the board has a responsibility, obviously, to oversee um the approach to risk management and internal control, including the monitoring and assurance activities that support that strategy and resilience.
• 23:35
  SPEAKER_02: Um, and they are risk management identifies what could affect strategy and performance.
• 23:40
  SPEAKER_02: Internal control helps structure how that information is captured and processed and really used.
• 23:46
  SPEAKER_02: Um, and then governance connects that, right?
• 23:48
  SPEAKER_02: The risk and internal control to accountability and the board oversight.
• 23:52
  SPEAKER_02: And so I do think there are some common things that can be asked around risk management are um don't just look at the top 10 list risks and just the internal audit findings, right?
• 24:03
  SPEAKER_02: Like have a discussion on the key risks that are reflected in the board and audit committee materials.
• 24:09
  SPEAKER_02: And then make sure that you, you know, the board has comfort in the controls keeping pace with those changes that we mentioned and systems, AI, integration, transformation, all of these operating models um changes.
• 24:22
  SPEAKER_02: And then the most importantly, I think is is the assurance um aligned, right?
• 24:26
  SPEAKER_02: Is it it, do we do we, does the board have comfort that all of the areas are are covered, as well as um that reporting that gets synthesized from the different silos, so to speak, functions um that gets up to the board, that there's a cohesive story there?
• 24:44
  SPEAKER_00: Oh, sorry.
• 24:45
  SPEAKER_00: No, no, good.
• 24:45
  SPEAKER_00: I just want to add because we've sort of been dancing around it, but um, one of the things that also shows up here is governance using governance is an opportunity for the finance function function to be more connected into the strategy and operations of the business.
• 24:57
  SPEAKER_00: So at that very base level, you know, in addition to sort of everything Karen was saying, you know, using as that opportunity to make sure that you are, you know, adding value as much as you are sort of collecting and helping.
• 25:09
  SPEAKER_01: So I want to rewind then, because at the very beginning, we were talking about the fact that this isn't really intended to be a checklist, but it's a resource for companies.
• 25:17
  SPEAKER_01: But now that we've talked about a few of these topics, then one of the things that comes to mind is many of the discussions, Matt, we've had in the past about the board agenda and governance is just how packed that agenda is.
• 25:29
  SPEAKER_01: And so I listening and thinking, putting myself in the shoes of the board, it almost feels like this is just one more thing to do.
• 25:38
  SPEAKER_01: And so just trying to understand how you guys then are recommending companies can really use this as an effective tool and not just another thing added to the agenda.
• 25:50
  SPEAKER_01: Maybe I'll ask both of you, but go if you want to.
• 25:52
  SPEAKER_00: I would hate if this was just another thing added to the agenda, right?
• 25:56
  SPEAKER_00: Like if you're presenting like a matrix that has like each principle and a check mark or a Harvey ball next to it or something like that, like that that's not sort of where we're going with this, right?
• 26:07
  SPEAKER_00: I think some of it is, you know, the principles can be taken in in bits and pieces, right?
• 26:11
  SPEAKER_00: I like I mentioned they're two-page documents, right?
• 26:14
  SPEAKER_00: You almost standalone is once you understand the structure that you can pick up, you know, throughout the you know, next 18 to 24 months as you're sort of going through your cycles and thinking about it, right?
• 26:24
  SPEAKER_00: You can plan out and say, hey, these are areas where we're going to have a discussion around these topics.
• 26:29
  SPEAKER_00: Some of these topics, like technology, are going to be coming up imminently if they're not already sort of being discussed at the board level.
• 26:38
  SPEAKER_00: And so then this is a resource that can help you frame that discussion and make sure that you're speaking with a common language, right?
• 26:45
  SPEAKER_00: Most of the topics, I'd argue, if not all of them, are things that companies should be already doing and discussing in their day-to-day activities.
• 26:54
  SPEAKER_00: But governance is a funny thing.
• 26:57
  SPEAKER_00: Every organization inside of the business, every tier, every level tends to use slightly different language to talk about the literally the exact same thing, right?
• 27:08
  SPEAKER_00: And so this can actually help in that translation and make sure that you're talking in a common language, both across the organization and through levels, so that you're you make sure, A, you know what you're talking about and you're communicating clearly, but again, you're moving governance from just being sort of that structural, you know, if you will, somewhat of a risk management tool into something that can create opportunity, right?
• 27:29
  SPEAKER_00: And switch it there.
• 27:31
  SPEAKER_00: So it's not that's a few of the ways.
• 27:34
  SPEAKER_00: And one of the things I'm excited for, Karen, I don't know about you, is also to see how folks get creative in using this.
• 27:39
  SPEAKER_00: Yeah, we we like you said, we worked very closely with CORSO in the development of the guidance.
• 27:45
  SPEAKER_00: We had a lot of very smart people in the room offering their ideas.
• 27:48
  SPEAKER_00: Some made it in, some didn't.
• 27:50
  SPEAKER_00: I am excited for when all of the very smart people that are operating businesses today engage with this and what they come up with because it is a living opportunity.
• 28:00
  SPEAKER_02: Yeah.
• 28:00
  SPEAKER_02: And I think I'm gonna pick up on a couple of things that you said, Matt.
• 28:03
  SPEAKER_02: I think one, having that shared language is really important.
• 28:06
  SPEAKER_02: And what I take away from it is I do feel there's so much guidance out there around governance, but it can be very fragmented.
• 28:14
  SPEAKER_02: I truly think this publication kind of brings everything together in a coherent way for boards on all different areas or primary areas of board responsibility.
• 28:27
  SPEAKER_02: So I think that's really important that you don't feel like, I mean, yes, it's gonna supplement, you know, your regulatory requirements and your listing exchange requirements.
• 28:34
  SPEAKER_02: But it's a nice tool, I think, that boards can use and um and management can use.
• 28:39
  SPEAKER_01: So one thing, a follow-up question then is you talked about the can be used as a tool, all these smart people in the room and all the ideas they brought together.
• 28:48
  SPEAKER_01: So would you say then this is really an evolution of thinking of governance, or it's more so kind of documenting how companies should already be thinking about that?
• 29:01
  SPEAKER_01: If that question makes sense.
• 29:02
  SPEAKER_00: So it does.
• 29:03
  SPEAKER_00: I'd um I'd say it probably sits more towards the documenting than the evolution.
• 29:10
  SPEAKER_00: There's some evolution that sits in there.
• 29:12
  SPEAKER_00: Um, but you know, right now the the sort of current approach, as Karen is alluding to, for especially let's say for US company, right?
• 29:20
  SPEAKER_00: You've got your listing exchanges, you've got federal law, you've got state law, you might have regular regulators that are involved in governance topics.
• 29:28
  SPEAKER_00: You're hearing from your shareholders who have their own perspectives on that.
• 29:32
  SPEAKER_00: You're hearing from other stakeholders these days quite loudly that have their own perspectives on this, right?
• 29:37
  SPEAKER_00: And so there's a lot of different angles, um, but there is no sort of point where you can bring it all together and start to try to think about it.
• 29:45
  SPEAKER_00: And so I think in that sort of element, it does, if you will, document a lot of that in a different way that might allow sort of you to get across the different languages, right?
• 29:56
  SPEAKER_00: Without having to be an expert in all of those different components.
• 29:59
  SPEAKER_00: And it certainly doesn't replace any of that, right?
• 30:02
  SPEAKER_00: But it does help you if you're not someone who's a governance nerd like myself, right?
• 30:07
  SPEAKER_00: Um, these are still things that are important to you and it makes it more accessible.
• 30:12
  SPEAKER_00: I think that that would be it.
• 30:13
  SPEAKER_00: And in doing so, actually does, I think, evolve the discussion a little bit and give opportunity for it to evolve.
• 30:19
  SPEAKER_02: And and there is even one component of the publication, it's called board foundations.
• 30:24
  SPEAKER_02: So there are some foundational elements, Heather, absolutely in this publication, but there are a lot of leading practices that, again, this is a fit-for-purpose document.
• 30:34
  SPEAKER_02: Not every company is gonna choose to implement those.
• 30:37
  SPEAKER_02: This is meant for public, private, non-for-profit, all different types of entities.
• 30:42
  SPEAKER_02: And so because of that, right, um, it it does have to be fit for purpose.
• 30:47
  SPEAKER_02: But I think there's some really um new developments, I guess, in the publication as far as oversight of culture, for example, um, purpose and culture, oversight of technology and data.
• 30:58
  SPEAKER_02: These are big areas at the board level that I think typically have been more underdeveloped.
• 31:05
  SPEAKER_02: Um, and I think there's some really good guidance um in this, in this publication around pretty two evolving oversight areas.
• 31:14
  SPEAKER_01: And so then if you take a step back, what advice would you guys give if I'm again the controller listening or the um chief accounting officer and thinking, you know, but I want to help spur some improved governance within my own organization or make sure some of these concepts are appropriately incorporated.
• 31:33
  SPEAKER_01: What advice would you give to someone listening who's inspired?
• 31:37
  SPEAKER_00: So read it covered, cover it.
• 31:39
  SPEAKER_00: No.
• 31:39
  SPEAKER_00: Um in fact, uh I'd almost say don't, right?
• 31:43
  SPEAKER_00: Like if you're not fully deep, like use it to start exploring and what start with what you know, right?
• 31:51
  SPEAKER_00: So if you're in the finance organization, starting with the last principle might be a good place to start rather than at the beginning, right?
• 31:58
  SPEAKER_00: Um, so that you can ground your understanding of the concepts and the way they're presented in something that's really tangible for you, and then go explore with the other elements based on sort of what you're dealing with in your day-to-day ways that you might understand how you can get involved or better help your organization in those subject areas, you know, by allowing the document to help translate what you know into some areas where you have an opportunity to provide increased uh support.
• 32:26
  SPEAKER_02: Yeah, I think it's a conversation starter.
• 32:28
  SPEAKER_02: Um, you know, have that conversation with your audit committee, have that conversation with your board around the new guidance.
• 32:34
  SPEAKER_02: And I think for a management, looking at the reporting that they provide to the board and looking at it through the lens of this publication, some of the guidance that's provided.
• 32:43
  SPEAKER_02: Um, as well as, again, we talk about under pressure, right?
• 32:48
  SPEAKER_02: Governance really has to work when you have that disruption.
• 32:51
  SPEAKER_02: And so maybe picking an area or two where if there was a significant, significant development, would the governance action the governance model actually work?
• 33:01
  SPEAKER_02: I think that's a good starting point for for even without reading the publication, right?
• 33:06
  SPEAKER_02: It's just making sure that your governance can support your strategy and um particularly in this area of um disruption.
• 33:15
  SPEAKER_01: So then, Karen, I'll go back to you for this question, but I'll ask both of you if we take a step back then and we've covered a lot of ground, what is sort of a key message that you would um want people to take away from this discussion?
• 33:30
  SPEAKER_02: I I think, you know, just recognizing that, and I think Matt, you probably said it earlier in the discussion that this publication is for primarily for boards.
• 33:42
  SPEAKER_02: But when you think about corporate governance, the governance ecosystem, there's a lot of stakeholders that are involved in this ecosystem.
• 33:50
  SPEAKER_02: And so I just I think management teams actually need to stop thinking that corporate governance is just boards because they play a big role in that.
• 33:59
  SPEAKER_02: And so recognizing that, I think, is step one.
• 34:02
  SPEAKER_01: Yes.
• 34:02
  SPEAKER_01: Great point.
• 34:03
  SPEAKER_01: And Matt, final word swist from you.
• 34:06
  SPEAKER_00: And also once you've recognized that and you've made peace with it, making sure that the governance that you have in place and the processes are intentional and fit for purpose and not just something you do because you've inherited.
• 34:18
  SPEAKER_00: I'm gonna come back to that point because I think it's so important to recognize that a lot of the governance practices were inherited and they might not still be fit for purpose if you were to set them up intentionally.
• 34:30
  SPEAKER_01: Yeah, this is a great time for a fresh start, it sounds like.
• 34:33
  SPEAKER_00: Always a good time for a fresh start.
• 34:34
  SPEAKER_01: Exactly.
• 34:35
  SPEAKER_01: Well, Matt, Karen, such a pleasure to talk to you.
• 34:38
  SPEAKER_01: Thanks so much for joining me today.
• 34:40
  SPEAKER_01: And to our listeners, Slash Ears, thank you as well for joining us today.
• 34:44
  SPEAKER_01: And I would like to mention, we'll make sure that there's a link to the document in the talking points or in the show notes rather, uh, so that people are able to find this and and um access this great resource.
• 34:55
  SPEAKER_01: So thanks to you guys again.
• 34:56
  SPEAKER_00: Yeah, happy to do it.
• 34:58
  SPEAKER_02: Thanks for having us.