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Governance Forum
The current climate of credit crunch and bank bailouts will bring the focus firmly on to corporate ethical standards. There is already a talk of a more vigorous regulatory regime in the Western economies. ACCA has already given great importance to Corporate Governance and Ethics in its Professional Accountant (P1) exam at the professional stage. Given this background, we have established a governance forum with Ms. Julie Garland McLellan, a leading governnace consultant based in Australia. This forum will discuss contemporary issues in Corporate Governance, board and director behaviours, and ethics. These topics are also featured in Julie's newsletter 'The Director's Dilemma' which can be viewed on www.mclellan.com.au . All AccountingClassroom participants are welcome to subscribe free of charge to the newsletter on the website.
The Director‘s Dilemma
Suellen is a director on a not-for-profit board. One of her colleagues is a long standing board member and widely respected across the organisation for his contribution. Suellen is worried, however, because he often proposes contractors or suppliers to undertake work for the company.
She asked about this in a meeting, suggesting that the contracts which ensue should be noted as related party transactions and that he should declare a conflict of interest when his friends are awarded work by the company. Her colleague reacted with great anger and shouted that there was no conflict as he received no money for making the introductions and it was management and not him that awarded the contracts. Suellen is aware, however, that management usually act upon his suggestions and that on every occasion she has investigated there has been no tender process to solicit comparable offers. Often the work awarded was not planned until the suggested contact was introduced.
Suellen believes that her colleague is not taking commissions but she feels uneasy and would like to implement some more robust procedures. She is aware, however, that the issue has the potential to split the board and that her colleague will become aggressive if she raises the issue again.
What should Suellen do?
Posted : 13 January 2009
Arvind Mittal, Delhi NCR
Suellen should contact each of her colleague individually and try to convince by giving some examples. May be they react in little friendly manner and lend her ears.
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