Monday morning sure looks fine: Mattel, pillow talk, more mistakes, Trump, Reddit IPO, and Autonomy on my mind
I rested up over the weekend after a great trip to New York, worked on my lectures for Univ of Miami, but news marches on.
...Slowly light strengthens, and the room takes shape.
It stands plain as a wardrobe, what we know,
Have always known, know that we can’t escape,
Yet can’t accept. One side will have to go.
Meanwhile telephones crouch, getting ready to ring
In locked-up offices, and all the uncaring
Intricate rented world begins to rouse.
The sky is white as clay, with no sun.
Work has to be done.
Postmen like doctors go from house to house.
CBS Corporate Governance Program
It was a lovely time last week in New York with Professor Shiva Rajgopal and 24 attendees of the Columbia Business School Executive Education Corporate Governance Program: Developing Exceptional Board Leaders program where I presented, "What Should Audit Committees Know: The Mattel Case". Thanks to Shiva and Stephanie LoTempio the Associate Director of Executive Education at CBS, for hosting me.
I believe the messages resonated with the group, which represented many different kinds of companies from all over the world. A few things we discussed seem to have really rocked their world:
1. When we looked at where the Mattel audit committee members that presided over the scandal are now, I noted that one remained on the board, two bailed early before the restatement and SEC enforcement action, and one had completely eliminated all mention of his Mattel board tenure from his LinkedIn profile!
2. The attendees, and Prof. Rajgopal, were surprised to learn that the prosecution of PwC partner Joshua Abrahams was delayed given the Supreme Court challenge to the SEC's power to pursue defendants in its own in-house tribunal rather than in federal court, SEC v. Jarkesy.
3. Almost everyone wondered why and how the Mattel CFO had escaped any meaningful discipline.
Late last week, internal audit expert Richard Chambers noted on LinkedIn that Lyft had acknowledged that it had issues that needed to be investigated, after the recent massive error in its earnings release.
Chambers wrote more about the Lyft typo here.
I mentioned to my Columbia students last week that it is important for board members, especially Audit Committee members, to meet with the company's Chief Audit Executive (CAE) regularly, to make sure meetings happen without company executives as often as possible, and to know whether the Internal Audit function was a "career" shop or a "rotational" shop. (A co-sourced or outsourced internal audit function changes the calculus but a career vs. rotational philosophy will influence the approach to outsourcing.)
It looks like the Lyft CAE is a career internal audit professional. So, in my opinion, there’s a better chance of an independent assessment of process weaknesses that led to the flub and of developing good recommendations for remediation.