The Board’s Evidence

Name: The Board’s Evidence
Author: Abdul Zahir Sheikh

Four Grades · Eleven Rules · Thirty Questions

What Directors Can Actually Know, and How to Test What They Are Told

Most of what a board is told comes from the people it oversees. Four grades, eleven rules and a thirty-question audit show what a board was actually told.

Paperback: 978-9914-776-59-1
Hardcover: 978-9914-776-58-4
eBook: 978-9914-776-57-7

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The book in ten slides

About three minutes; each slide stays up long enough to read

The Board’s Evidence. Most of what a board is told comes from the people it oversees. Four grades, eleven rules and a thirty-question audit show what a board was actually told.

One source, by design. Every board decides on what it is told. Most of what it is told comes from the people it is meant to oversee. Directors meet for a few days a year; executives run the business every day.

Not whether the board was diligent. The book asks what the board had in front of it, who produced it, and whether anyone outside management had tested it. Board packs, minutes, auditors’ letters and judgments answer all three.

The Board Evidence Grade. Every material claim in a board pack is sorted into four grades under eleven rules, with a separate mark for what the pack leaves out.

Carillion, 2017. Graded under the eleven rules, the published minutes of five Carillion board meetings put 33 material claims before the board. Seven reached grade B. None reached grade A.

Governed on a single source. The board was not deceived by one false report. It governed on a single source, and that source failed.

What failed boards were told. Five failures, chosen before any grading: Carillion, Imperial Bank, Chase Bank, Wirecard and Steinhoff, with Tesco as a sixth file. In all five failures, the warning existed in the records before the collapse.

Six sources already held. The board’s own auditors, the people who raise concerns, customers and regulators, the staff who hold the numbers, the letters addressed to the board, and the cash and commitments behind the accounts.

The Board Evidence Audit. Thirty questions in six domains, each scored from 0 to 3 from a document, for a total of 90. Each question names the document that answers it. No document, no score.

Grade what you are told. What boards did when better evidence arrived, the minutes as the record of what they did with it, and what the law in five jurisdictions asks of a director who relies on others.

About the book

Every board decides on what it is told. Most of what it is told comes from the people it is meant to oversee.

That is not a flaw in any one company. It is how boards are built: the directors meet for a few days a year, and the executives run the business every day. This book does not ask whether a board was diligent, independent or well chaired. It asks what the board had in front of it, who produced it, and whether anyone outside management had tested it.

Those questions can be answered from records. The Board Evidence Grade sorts every material claim in a board pack into four grades, A to D, under eleven rules, with a mark for what the pack leaves out. Applied to the published minutes of five Carillion board meetings in 2017, it found 33 material claims. Seven reached grade B. None reached grade A.

The board was not deceived by one false report. It governed on a single source, and that source failed.

The same grade is turned on five boards that failed — Carillion, Imperial Bank, Chase Bank, Wirecard and Steinhoff — and on Tesco, whose board caught a problem within weeks. In all five failures, the warning existed in the organisation’s records before the collapse. The book shows where it sat, and what the board actually received.

It then examines six sources of evidence an organisation already holds: its own auditors, the people who raise concerns, customers and regulators, the staff who hold the numbers, the letters addressed to the board, and the cash and commitments behind the accounts.

Each question names the document that answers it. No document, no score.

The final part turns the findings into a standard: what boards did when better evidence arrived, the minutes as the record of what a board did with it, what the law in five jurisdictions asks of a director who relies on others, and the Board Evidence Audit, thirty questions in six domains, each scored from a document, for a total of 90.

Written by Abdul Zahir Sheikh, a Certified Fraud Examiner and Senior Partner at BDO East Africa with four decades of investigative experience across fourteen countries, it is written for directors, chairs, company secretaries and audit committee members, and for the heads of internal audit, risk and compliance who serve them.

Stop governing on management’s account. Start grading it.