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BDO in the Boardroom

Latest episodes

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May 30, 2024 • 15min

Audit Firms Changing Their Business Models– What Audit Committees May Want to Know

Key Takeaways:One of the roles of a board of directors is to continually assess the company and make decisions in the best interest of sustaining value for the long-term.Decisions to change business models should be weighed against the core purpose of the organization.Significant strategic changes necessitate the board to broadly evaluate the impacts on significant internal and external stakeholders. References: SEC Chief Accountant Statement: Audit Independence and Ethical Responsibilities: Critical Points to Consider when Contemplating and Audit Firm RestructuringBDO as an ESOP Company
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Apr 11, 2024 • 24min

Measuring Culture Within Your Organization

Key Takeaways:Culture is a team sport that requires the right data for the right stakeholder (including the Board). Protecting culture is just as important as strengthening your culture. There is a measurable ROI to culture. A proxy for culture is measuring organization effectiveness.Resources:     Nominating & Governance Committee Priorities for 2024: Excelling in Board Leadership CalPERS, Schroders Launch Framework Tying Human Capital Management and Value
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Feb 5, 2024 • 31min

Are You Prepared for New Sustainability Laws in California?

Key Takeaways:While simple in structure, these new requirements have complex implications for companies, many of which may not be already gathering and reporting this level of climate data.The laws were years in the making but have now pre-empted the country-level SEC climate rules that many have been anticipating. Scope 3 reporting will be required for some companies, which includes the full value chain. Third-party assurance will be required in some cases.Even though the full extent of the requirements won’t come into force until 2030, the first requirements will be in 2026 covering the year 2025, so companies should get started now.Resources:Prepare Now: California Climate Laws Impact Thousands of BusinessesSustainability and ESG Regulations Are GrowingThe Greenhouse Gas Protocol: Measuring Scope 1, 2 and 3 EmissionsPreparing for the Proposed SEC Climate Disclosure RuleBDO Sustainability and ESG Services
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Dec 21, 2023 • 21min

Governing the Embrace of AI Benefits and Risks within Your Business

Key Takeaways:Establishing a “safe” environment for AI isn’t just a protective stance, it is itself a strategy that accelerates innovation, builds trust, and ensures long-term success.In making the decisions to address entity- readiness to greenlight AI initiatives, boards’ due diligence includes: understanding how competitors, customers, employees as well as supply chains are using or would like to use/leverage AI; establishing a robust management risk management and oversight governance framework that provide appropriate mechanisms to protect proprietary data; and ensuring internal organizational parameters of AI use consider ethics, explainability, data reliance/privacy/security, talent/expertise, and strategic fit; andapplying standardization for consistent and ethical development and deployment.
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Dec 5, 2023 • 23min

How Technology Enablement Can Magnify A Positive Impact on Audit Quality

Key Takeaways:Using AI and predictive capability is not new but generative AI brings AI to the mainstream due to its human-like communication and ease of accessibility to companies of all sizes. For boards to properly oversee AI risk, they need to require management to establish a model risk management process along with a model risk governance framework around AI implementation that includes standardization of algorithms, governance and ethical considerations as well as validation of data inputs and outputs.Moving to AI changes the human role and underscores the need for a strong risk culture and exercising of healthy skepticism to contend with potential bias, complexity and lack of integrity within both data sets and AI algorithms.Underlying data sets must be of high quality and representative of population they are intending to serve – free from bias, properly labeled and annotated.Boards, management and auditors will need to continue to stay apprised of what is sure to be a continually evolving standard setting and rule-making environment as technologies continue to evolve.
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Nov 15, 2023 • 19min

How to Prompt Management to Get the Most Out of Data Analytics

Key Takeaways:Leveraging data analytics for strategic decision-making: Use of data analytics in the boardroom to is becoming increasingly important to help directors make informed, evidence-based decisions that drive growth and efficiency. By incorporating data-driven insights, businesses can better understand their customers, optimize operations, and identify new opportunities.Overcoming challenges in implementing data analytics: Organizations need to be prepared to face significant challenges when adopting data analytics, such as data quality, integration, and fostering a data-driven culture. Listen to best practices and practical advice for overcoming these obstacles and ensuring a successful analytics implementation.Board’s role in promoting data-driven culture: The board can play a critical role in promoting a data-driven culture within the organization. By asking the right questions, setting expectations, and ensuring alignment with business objectives, boards can support management teams in harnessing the full potential of data analytics for the organization’s success.
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Oct 26, 2023 • 18min

Automation: How to Unlock Corporate Value

Boards need to work with management team to continue to identify and prioritize opportunities in automation to enhance all aspects of operations, product development and service delivery. Challenges in implementing automation need to be identified and incorporate into a strong change management program to ensure enterprise-wide acceptance and adoption.Boards can play a significant oversight role in the automation process by helping management establish guardrails – policies, protocols and controls – and require reporting back on progress as an accountability mechanism in driving change. Become and remain familiar with emerging automation technologies and methods to be competitive and optimize the business’ capabilities.
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Oct 17, 2023 • 22min

AI’s Impact on the Evaluation of Audit Risk

Key Takeaways:1. Approaching embedding AI into a service delivery model requires: Identifying and prioritizing AI business processes and use cases that align with your business objectivesAssessing the feasibility and potential impact of each use caseDeveloping a detailed implementation plan that contemplates the steps, resources, and timelines required for successful AI adoptionKeeping cybersecurity at top of mind as well as quality assurance approaches. 2. Adoption and use of AI requires encouragement of curiosity and innovation tempered with a good understanding of the risk and challenges AI poses to current methods of obtaining and authenticating data.3. Compliance with regulatory standards needs to factor into AI change management along with corporate culture, policies and procedures regarding the use of AI.4. Auditors are currently embracing AI in measured approaches – e.g.: Leveraging digital assistants as a gateway to demystify technologies and to bring the talent pool up to speed on the basics – what it is, how they work, and general best practices.Using generative AI environments to streamline and further standardize the firm’s service delivery models and build capacity.Embedding AI into existing tools to surface unusual and irregular transactions that the humans may otherwise miss as quality focused.Considering AI-powered image recognition in verifying physical assets and reconciling with financial records.
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Oct 2, 2023 • 13min

Automating the Annual Audit

Key Takeaways:Use of technological automation in the audit can yield increased efficiency, improved accuracy, consistency and quality. Complexity, data quality, lack of flexibility, resistance to change and over-reliance on technology are challenges to automating auditing procedures that need specific consideration.Auditors are intentionally and systematically focusing on automating aspects of the audit that build capacity and streamline systems but that also focus on feedback and enablement of adoption.Board members should be asking auditors about automation use cases and recommendations for improvements to apply to their own financial accounting, reporting and controls areas.
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Sep 28, 2023 • 13min

Applying Data Analytics – Benefits and Challenges for the Annual Audit

Key Takeaways:Service delivery models demand that auditors demonstrate their efforts are directed principally to potential risks and anomalies and areas of higher risk.Boards that derive the most value from audits that leverage data analytics are those that have pretty specific views of what constitute outliers or anomalies for the business and that understand the auditors’ demonstrations of how their analytic tools can quickly surface and identify risks and patterns that may not be immediately apparent through traditional audit methods. Boards have potential opportunities to enhance both the value of the audit as well as the reporting information provided by management – e.g., address disparate systems, enhance limited data hygiene and inexact controls around data. Greater scrutiny of information, including relevant controls over data and data integrity, requires auditors to focus on modernizing their professionals’ experience, as well as audit technology development, as they are the agents of change in enhancing audit quality. Boards should be asking their auditors to show them the value that data analytics is providing and become better informed as to: how difficult is the data to extract; how much cleansing is necessary; does it reconcile; how well is it controlled; etc.

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