ABSTRACT
How do effective directors ensure they understand the accounts and accounting policies as well as their responsibilities for the accounts as directors of the entity?
Based on a framework of global corporate governance best practice, which can be used in all organisations anywhere in the world, this chapter of Questions To Ask (QTA) in the boardroom gives a high-level but succinct introduction to accounts.
Publication of the annual and interim accounts is a critical component of a board’s accountability to shareholders and other stakeholders. Making sure directors understand their responsibilities is essential.
The chapter considers what directors should do and ask to ensure they understand the accounts. It talks about the accounting standards that must be complied with. Many countries have adopted International Reporting Standards (IFRS) or IFRS with some limited adjustments, or other similar national standards. It describes documents for review by the board, risk disclosures, elimination of biases, materiality, and accounting policies. It finally describes difficult measurement judgements, fair value estimates, impairment tests, undisclosed commitments, and contingencies.
It advises directors to, once accounts have been presented for approval, sit back and consider if all the issues discussed by the board have been properly addressed and represented.
The chapter’s introduction leads into outlining the key Questions To Ask in the boardroom, giving the reader further insight into how to initiate discussions about the practical details requiring the attention of the board.
