Audit Committee Istitute Sposored by KPMG Assessmet of the Board Whe usig a facilitator, care eeds to be take if the idividual is i some way coflicted due to the closeess of their relatioship with the Board. The assessmet exercise could be carried out at a special meetig of the Board or at some form of away-day. The results of the self-assessmet ad ay actio plas arisig should be reported to the Board for further discussio. Compaies may wish to tailor this checklist to the specific circumstaces of their Board ad orgaisatio - givig more weight to some aspects of the self-assessmet tha others. Appropriate weightig will be iflueced by a umber of factors icludig, but ot limited to: It is iteded that each board member will complete this selfassessmet questioaire idepedetly. The Chairma of the Board or a exteral facilitator should, after collatig the resposes, lead a discussio o the key poits arisig from the questioaire ad feedback ay matters of iterest - focusig o those areas which clearly eed improvemet or where there is great variatio i aswers. the Board s terms of referece; the orgaisatio s strategies ad risk assessmets; its cotrol eviromet; the outcomes of previous self-assessmets; the stage of maturity of the Board; t he views of stakeholders o the orgaisatio s corporate goverace performace; ad curret ad emergig treds ad factors. Board chairme may wish to adapt the questioaire such that the full questioaire is carried out o a cyclic basis say every three to five years. I the iterveig years, they may chose to evaluate the Board s effectiveess either by meas of a geeral discussio aroud the Board table, or by use of a shorteed form of the questioaire. Assessmet of the Board 1
A. Creatig a effective board More satisfied Less satisfied 1. Are you satisfied that the board has clearly documeted its role ad resposibilities (e.g. schedule of matters reserved for the board, split of the chairma s role ad that of the sceo)? 2. Are you satisfied that board members, both idividually ad collectively, uderstad what is expected of them (eg determiig the compay s strategic aims)? 3. Are you satisfied that all o executive directors are idepedet of the orgaisatio s maagemet ad exercise their ow judgemet; voice their ow opiios; ad act freely from ay coflicts of iterest? 4. Are you satisfied with the process by which board members are appoited? 5. Are you satisfied with the appropriateess of the successio plas i place? 6. Are you satisfied that board members, as a whole, have sufficiet skills, experiece, time ad resources to udertake their duties? 7. Are you satisfied that there is sufficiet diversity i the boardroom (e.g. diversity of experiece, balace betwee o executive ad executive directors is appropriate)? 8. Are you satisfied that board members have a sufficiet uderstadig of the orgaisatio ad the sector i which it operates? 9. Are you satisfied that all board members demostrate the highest level of itegrity (icludig maitaiig utmost cofidetiality ad idetifyig, disclosig ad maagig coflicts of iterest) 10. Are you satisfied with the level of secretarial support placed at the board s disposal? 11. Are you satisfied with the process i place to make fuds available to the board to take idepedet legal, accoutig or other advice whe it reasoably believes it ecessary to do so? Assessmet of the Board 2
B. Ruig a effective board More satisfied Less satisfied 1. Are you satisfied that the board has i place a set of objectives that seek to ehace its effectiveess? 2. Are you satisfied with the chairma s leadership style (eg, are they decisive, ope mided ad courteous; do they set a good example, allow members to cotribute ad hold members to high stadards; do they relate well to other members/attedees, deal effectively with disset ad work costructively towards cosesus)? 3. Are you satisfied that the board s workload is dealt with effectively? 4. Are you satisfied that board members work together costructively as a team? 5. Are you satisfied that board meetigs are coducted i a maer which ecourages ope discussio, healthy debate ad allows each board member to clearly add value to discussio ad decisios? 6. Are board meetigs coducted i a atmosphere of creative tesio? 7. Are you satisfied that the relatioship betwee a) the board ad b) the CEO, CFO ad members of the seior maagemet team strikes the right balace betwee challege ad mutuality? 8. Are you satisfied that the board s discussios ehace the quality of maagemet s decisio makig (eg, does the board egage those reportig to the board i dialogue that stimulates ad ehaces their thikig ad performace)? 9. Are you satisfied that the board s schedule of matters is up to date ad regularly reviewed? 10. Are you satisfied that the board s meetig arragemets (eg, frequecy, timig, duratio, veue ad format) ehace its effectiveess? Assessmet of the Board 3
11. Are you satisfied that the board s meetig ageda has sufficiet iput from all board members? 12. Are you satisfied that board meetigs allow sufficiet time for the discussio of substative matters? 13. Are you satisfied that board meetig agedas ad related backgroud iformatio are circulated i a timely maer to eable full ad proper cosideratio to be give to the importat issues? 14. Are you satisfied with the quality of the board papers (eg, ot overly legthy ad clearly explai the key issues ad priorities)? 15. Are you satisfied that the board has the appropriate committees with ecessary chargers? 16. Are you satisfied that the board is adequately iformed of each committee s activities? 17. Are you satisfied that private meetigs without the executive directors preset are useful? 18. Are you satisfied that the board s meetig miutes are clear, accurate, cosistet, complete ad timely? 19. Are you satisfied that outstadig actios arisig from board meetigs are properly followed up? 20. Are you satisfied that the processes i place for esurig the board is kept fully iformed o all material matters betwee meetigs (icludig appropriate exteral iformatio eg emergig risks ad material regulatory chages) is workig effectively? Assessmet of the Board 4
C. Professioal developmet More satisfied Less satisfied 1. Are you satisfied that ew board members are give a appropriate iductio programme coverig issues like: the role of the director; its terms of referece; members expected time commitmet; a overview of the orgaisatio ad its strategic objectives? 2. Are you satisfied with timeliess ad appropriateess of ogoig professioal developmet received by the board (eg, regulatory matters, director s liability)? 3. Are you satisfied that board members are afforded appropriate opportuities to atted formal courses ad cofereces, iteral talks ad semiars, ad briefigs by exteral advisers such as the orgaisatio s auditors ad lawyers? 4. Are you satisfied that ay iductio ad professioal developmet programmes adequately equip board members to uderstad the busiess eviromet i which orgaisatio operates? D. Strategic foresight More satisfied Less satisfied 1. Are you satisfied that the board devotes sigificat time to determiig (via maagemet ad other sources) the emergig issues that could affect the orgaisatio i the future? 2. Are you satisfied that the board has a good uderstadig of the compay s key drivers of performace? 3. Are you satisfied that the board appropriately uses sceario plaig as a fudametal process i the evaluatio of strategic risks? 4. Are you satisfied that the majority of the board s time is spet o issues relatig to the strategic directio ad ot day-to-day maagemet resposibilities? 5. Are you satisfied that the orgaisatio s purpose (missio) ad visio bee defied ad clearly commuicated to all levels withi the orgaisatio? Assessmet of the Board 5
E. Stewardship More satisfied Less satisfied 1. Are you satisfied that the board uderstads ad fulfils its stewardship role? 2. Are you satisfied that the compay s risk maagemet processes provide to the board a full uderstadig of the high risk issues that could impact the orgaisatio? 3. Are you satisfied that the board uderstads the details of the cotrol assurace framework icludig reportig scope ad timelies? 4. Are you satisfied that board members are fully iformed i relatio to the issues ot covered by the existig Directors ad Officers Isurace? 5. Are you satisfied that there is a adequate policy i place for dealig with potetial coflicts of iterest ad cofidetial iformatio? F. Performace evaluatio More satisfied Less satisfied 1. Are you satisfied that your existig rage of fiacial ad o-fiacial performace measures are broad eough to moitor maagemet s performace? 2. Are you satisfied that your existig performace measures are liked to the orgaisatio s strategy? 3. Are you satisfied that the orgaisatio s performace is adequately bechmarked agaist its peers? 4. Are you satisfied that maagemet s remueratio is appropriately liked to the orgaisatio s performace ad a appropriate peer group? 5. Are you satisfied that the board has i place a appropriate process for regular board, committee ad idividual board member evaluatio? Assessmet of the Board 6
6. Are you satisfied that all actios arisig from performace evaluatio are followed up? 7. Are you satisfied that the board performace assessmet process ehaces board effectiveess? G. Maagig maagemet More satisfied Less satisfied 1. Are you satisfied that the board has a agreed process to adequately support the CEO? 2. Are you satisfied that the board has i place a rigorous process to evaluate the performace of the CEO, with iput from all o-executive board members? 3. Are you satisfied that the board is appropriately egaged i CEO/seior maagemet successio plaig? 4. Are you satisfied that there are appropriate delegatio authorities i place for maagemet ad that they are regularly reviewed? 5. Are you satisfied that the orgaisatio s culture ecourages board members to discuss ageda ad other issues with seior maagemet? 6. Are you satisfied that bad ews is commuicated to the board as it arises? 7. Are you satisfied that the CEO ad seior maagemet receive costructive support from the board? Assessmet of the Board 7
H. Value creatio More satisfied Less satisfied 1. Are you satisfied that the board has clearly idetified the orgaisatio s major stakeholders ad the value each requires? 2. Are you satisfied that there are systems i place to allow the board to measure whether the orgaisatio is creatig or destroyig major stakeholder value? 3. Are fiacial ad o-fiacial value drivers i place to focus o the ehacemet of value? 4. Is your existig decisio makig process (icludig the preset structure of maagemet proposals) adequate to properly assess whether proposals create major stakeholder value? 5. Is your orgaisatio creatig major stakeholder value? 6. Does the board/maagemet have adequate mechaisms for commuicatig with major stakeholders? I. Corporate culture More satisfied Less satisfied 1. Are you satisfied that the board s comprehesio of the orgaisatio s purpose, visio ad strategic pla is reflected i actios take i the boardroom? 2. Are you satisfied that the board plays a appropriate pro-active role i chage? Cotact us If you would like further iformatio o ay of the matters discussed above, please talk to your usual KPMG cotact or cotact: Audit Committee Istitute Irelad 1 Stokes Place, St. Stephe s Gree, Dubli 2, Irelad T: +353 1 410 1160 E: aci@kpmg.ie kpmg.ie/aci 2012 KPMG, a Irish partership ad a member firm of the KPMG etwork of idepedet member firms affiliated with KPMG Iteratioal Cooperative ( KPMG Iteratioal ), a Swiss etity. All rights reserved. Prited i Irelad. The iformatio cotaied herei is of a geeral ature ad is ot iteded to address the circumstaces of ay particular idividual or etity. Although we edeavour to provide accurate ad timely iformatio, there ca be o guaratee that such iformatio is accurate as of the date it is received or that it will cotiue to be accurate i the future. No oe should act o such iformatio without appropriate professioal advice after a thorough examiatio of the particular situatio. The KPMG ame, logo ad cuttig through complexity are registered trademarks of KPMG Iteratioal Cooperative ( KPMG Iteratioal ), a Swiss etity. If you ve received this publicatio directly from KPMG, it is because we hold your ame ad compay details for the purpose of keepig you iformed o a rage of busiess issues ad the services we provide. If you would like us to delete this iformatio from our records ad would prefer ot to receive ay further updates from us please cotact us at (01) 410 2665 or e-mail siobha.mcdermott@kpmg.ie. Produced by: KPMG s Creative Services. Publicatio Date: February 2012. (101878) Assessmet of the Board 8