Administration January 3, 2004

PwC Survey Finds Plenty of Corp. Governance Shifts

March 1, 2004 (PLANSPONSOR.com) - With a bevy of corporate scandals and the resulting Sarbanes-Oxley Act still ringing in their ears, corporate boards at US multinational companies have radically changed the way they do business.
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The latest temperature check of the corporate governance scene at US multinationals through the most recent PricewaterhouseCoopers (PwC) Management Barometer found significant changes – notably that directors are much more hands on than before the scandals.

In addition to risk identification and risk management, senior executives expect their board will have more to say in the following areas:

  • auditor independence issues – 61%
  • reviewing quarterly earnings – 60%
  • the code of conduct – 58%
  • the company’s business structure and transactions – 55%
  • analysts, investors and the media – 32%
  • liquidity issues – 28%
  • off-balance-sheet reporting – 24%
  • related party transactions –    24%

“Management expects the greatest increase in board attention in the areas of corporate risk, financial reporting, ethical issues, and regulations that have sprung up in response to recent corporate scandals,” said Garrett Stauffer, of PricewaterhouseCoopers’ US corporate governance practice, in the announcement.

Among the c-suite shifts picked up by the PwC survey, according to a news release:

  • 72% say their company has established a whistleblower   complaint process, as required by Sarbanes-Oxley, even though this provision is not yet in effect. Only 5% of this report an increase in the number of complaints received and addressed by the audit committee.
  • 64% report that their audit committee reviews the company’s 10-Q quarterly report prior to filing with the US Securities and Exchange Commission (SEC)
  • 63% have made changes or improvements in the skills of their audit committee
  • 57% of audit committees and 47% of boards have performed a self-assessment in the past year.

Also, nearly half (46%) have an auditor evaluation process while 43% have updated their audit committee charter as a result of Sarbanes-Oxley or proposed stock exchange listing standards. A third of audit committees have hired outside advisors to help meet new governance requirement and nearly a third (28%) have appointed, or plan to appoint, a lead director or non-executive chairman, since passage of Sarbanes-Oxley.

“Audit committees have stepped up and given extensively of themselves under a very bright spotlight,” said Stauffer. “The focus on the committee’s skill sets will pay off in a sharper perspective and recovery of some of the extra time that members have invested.”

These findings are from fourth quarter 2003 interviews with 174 CFOs and Managing Directors in the US Additional information about Management Barometer is available at www.barometersurveys.com .

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