Roles of Directors and Duties of an Audit Committee
The Board of Directors is an organization's or company's governing body that is mandated with the task of ratifying all major decisions. Generally, the Board of Directors handles all issues of major strategic importance to an organization or company. This implies that the Board of Directors needs to be involved, engaged, and supportive in all issues of strategic importance, especially with regards to governance. However, the board comprises of directors who can play a number of several important roles as board members. In contrast, audit committees play a significant role in improving audit quality since these bodies play a crucial role in oversight and monitoring management. This paper examines the important performance-centered roles that directors may play within a board and the significant duties of an audit committee with regards to organizational governance.
Performance-oriented Roles that Directors May Play within a Board
As previously mentioned, the Board of Directors is the governing body of a company or organization and works for the company by handling all matters of strategic importance ("The Board of Directors," 2012). This body must work for the company's or organization's best interests in order to enable the organization deliver on its promises to stakeholders. While the Board of Directors does not necessarily run an organization or company, it works to ensure that the appropriate team is established to handle the organization's daily affairs and activities. In order to achieve this objective, this governing body is made of directors with various roles and responsibilities. Given their various personal attributes and competencies, directors can play a variety of important roles as member of boards.
In essence, directors can play various important performance-oriented roles within a board. One of these performance-related roles of members of the Board of Directors is decision making,...
Board members play a crucial role in the decision making process through providing their opinions and perspectives regarding various issues of strategic importance to the organization or company. Decision making is an important performance-related role of board members since it is the basis through which organizations strategies are determined and carried out. In the process of decision making, each member of the board provides significant insights regarding issues of strategic importance to the organization.
The second performance-related role of board members is to ensure financial accountability of the organization. In this case, board members help ensure that organization's expenditures are in line with the respective functions as well as the overall goal of the company or organization. As result, each board member provides financial accountability through playing a crucial role in the formulation of policies and approval of budgets. For instance, the directors of Home Depot ensure financial accountability through visiting the company's stores, especially those located outside their home state (Sonnenfeld, 2002).
The third performance-related role of members of Board of Directors is to conduct performance review, which sometimes include a complete board evaluation. The performance review, which is conducted as part of ensuring organizational accountability, sometimes involve self-assessments by individual directors or peer reviews carried out by directors on behalf of another or the entire team. The Board of Directors can also conduct this role by appointing governance committees who conduct the evaluations and provide findings to the board. At Home Depot, performance review is conducted by individual members of the board through their visits to each of the company's stores. The individual members of this…
