Helping the company focus on long-term performance, navigate technology-driven disruption and digital transformation, and be attuned to corporate culture and other reputational risks should be high on board agendas in 2018, according to U.S. audit, tax and advisory firm KPMG LLP’s Board Leadership Center (BLC).
Drawing on insights from the Center’s work and interactions with corporate directors and business leaders throughout the year, the BLC’s On the 2018 board agenda highlights six items for directors to keep front and center in the months ahead:
- Help the company keep focused on long-term performance.
- Expect disruption to continue full-force with technology and “digital” at its core.
- Be sensitive to risks posed by the tone at the top and organizational culture.
- Learn to live with cyber risk and refine boardroom discussions about cyber risk and security.
- Promote effective shareholder engagement, including engagement with activists.
- Focus on building a board that is designed to align with a company’s future needs—recognizing that diversity and healthy turnover are key.
“Navigating near-term risks and opportunities while staying focused on long-term performance will be particularly challenging in 2018,” said Dennis T. Whalen, leader of the KPMG Board Leadership Center. “Whether it’s digital disruption or cyber security, the business implications of environmental and social issues, or designing the right board for the company’s future, the year ahead will require focused, yet flexible board agendas.”
In addition, KPMG’s On the 2018 audit committee agenda highlights risk and regulatory issues that should be high on audit committee agendas. In addition to their primary focus on financial reporting integrity and audit quality, key areas of focus for audit committees in the year ahead include monitoring the company’s implementation of major accounting changes, such as the revenue recognition and lease accounting standards; the finance organization’s leadership and bench strength; and the audit committee’s workload and effectiveness.
“The new year is a good time to step back and re-evaluate whether the audit committee’s agenda and focus have kept pace with changes in the business and regulatory environment,” said Jose R. Rodriguez, partner in charge and executive director of the KPMG Audit Committee Institute. “Financial reporting, internal controls and compliance, and audit quality are first and foremost. Audit committees will also want to stay focused on disclosures related to the implementation of the new revenue recognition, leasing, and financial instruments standards and tax-related developments that may impact the company. Helping to set the right tone from the top should also be a priority.”