Good governance and audit committees - "trust and verify"

At today’s NHF Board Member’s Conference plenary on leadership and governance Oliver Nyumbu (a management consultant and the Chair of St Basil’s) quoted Ronald Reagan's words on arms control negotiations and applied them to the role of boards: “Trust and verify”.

Reagan wasn’t known for his words of wisdom but this got me thinking about disarmament verification, audit committees and governance more generally …

Oliver Nyumbu was spot-on with the relevance of that quote.

When board members (or governors or trustees or whatever) sit around a big table with senior managers (who have the huge informational advantage from being there 200 plus days a year), trust is inevitable - or board members would never sleep.

So do board members actually verify the assurances and information that they get?

When I do audit committee training at FE colleges and housing associations, I emphasise that the audit committee is there to give comfort (or wave a warning flag) to the rest of the board on the robustness of the information that they get. Too many audit committees see themselves as there to give senior managers and/or auditors a hard time – rather than to verify what they are being told by managers.

It always seems a little strange to me that being on the audit committee is avoided and dreaded by so many board members. Being on that committee, board members can harness the time, effort and reports of auditors for the purposes of verification. Audit committee members should be best informed and equipped members of the board.

Arguably the whole board can play a role – they need to be critical friends, confident to challenge senior managers.

Sadly some boards fail to do that. (And, of course, some chief executives want just that – they prefer rubber stamps.)