Vol 7 Issue 21 November 4 2009

  • Date:04 Nov 2009
  • Type:Boardroom Report

The growing load of audit committees

Audit committees are under more pressure than ever before and their work loads are growing, a new survey by Deloitte has found.

The study, Audit Committee Effectiveness, involved interviews with 100 audit committee chairmen of ASX 200 companies between April and August this year.

It reveals that many boards have delegated their growing compliance burdens to committees, often to the audit committee. In addition, while audit committees had routinely monitored issues like financier management, lending agreements, refinancing debt and bank covenants, these issues have become more complex in the wake of the global financial crisis (GFC) and are now demanding much more attention and scrutiny.

Keeping it in the family

Family businesses are particularly concerned about balancing family concerns with business imperatives, retaining family control and ownership and fairly compensating those family members with active business involvement.

Resolving conflicts among family members and preparing and training a successor are also big worries.

These are the findings of the KPMG and Family Business Australia Survey of Family Businesses 2009.

The value of a correct record

Directors who adopt appropriate record-keeping practices give themselves a fighting chance if ever called to account, suggests Dudley Kneller, a partner at Middletons.

He says cases like the recent James Hardie judgment highlight the importance of correct minute-taking and managing information properly.

Turning a troubled business around

Company turnaround plans can often fail because they are still being implemented by the internal management team or because they do not focus enough on stakeholder management, says Michael Fingland, a director of the Turnaround Management Association of Australia and managing director of Vantage Performance.

He says the US long-term average success rate for business turnarounds is only 30 per cent. The majority of turnarounds in the US fail because companies try to struggle on and do it themselves, rather than get experts in early enough to assist.

Unexpected tax consequences

The Tax Laws Amendment (2009 Budget Measures No. 2) Bill 2009, announced in October by the Federal Government to amend the employee share plan rules, contains an unexpected provision that will affect some existing employee share plans, warns Sally Morton, a tax partner at Deloitte.

Plans that currently offer either a cash or share alternative at the discretion of the employer or where the number of shares to be acquired under the plan cannot be determined until a future event, have not, until now, been subject to tax under the employee share scheme (ESS) rules until a definite share or right to a share is acquired. Such employment benefits will now be taxed under the ESS rules as though they have always been ESS interests.

 

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