Hollinger audit committee had “no finance experts”

The Conrad Black trial has been good theatre, and the latest coming out of Chicago doesn’t disappoint.

Testifying at the trial of former Hollinger chairman Conrad Black, a former member of the company’s audit committee has testified that it kept watch over company finances for four years without any financial experts.

Economist Marie-Josee Kravis, sat on the committee during the time that Black allegedly helped steal $60m (£30m) from the company.

She said that no one on the audit committee between May 1999 and May 2003 had the financial experience required by its governing charter.

Kravis is referring in part (I’m assuming) to the best practices of an audit committee as outlined by the AICPA, which stipulate at least one member of the audit committee be designated a financial expert. The decision tree to determine whether a member qualifies as a financial expert can be found here (PDF).

Basically a financial expert is someone who is an accountant or auditor, has taken an accounting or auditing program or course, has experience in auditing or as a controller or financial officer of a company, has experience assessing a company’s financial statements, or has experience supervising the accounting function in a company.

On top of that, they must be familiar with GAAP, the function of an audit committee, internal controls, and how those apply to the company in question.

My question is: Why would you want anyone who doesn’t meet those standards on the audit committee?


Conrad Black vows to regain business empire

From the Globe and Mail:

Conrad Black has vowed in a court filing to regain control of what remains of his business empire, but he’s also worried there might not be much left.

This struck me as a bit strange. I have to admit my experience with court filings isn’t extensive, but I just assumed they were pretty formal, standard documents. I didn’t think they could be used for vengeful, rhetorical purposes by the filer, but somehow Conrad made it happen. I wish they’d give the direct quote from the filings where he vows to get it all back.

But I digress. What really interested me once I read further:

Last week, Lord Black filed a motion in an Ontario court asking a judge to compel Ravelston‘s receiver, RSM Richter Inc., to explain how it is protecting the firm’s assets. Lord Black alleged Richter and new managers at Hollinger International and Hollinger Inc. have spent $250-million over the past three years on professional fees. He also alleged the firms have lacked focus and devoted their time to “examining the past to see if there are litigation ‘assets’ that can be pursued.”

Basically, Hollinger is going after Black for misappropriating the company’s assets, and by doing so, Black believes they are paying too many legal and consulting fees. The litigation assets, I would imagine, are Black’s thievings, and the lawyers have probably been hired to figure out how Hollinger can get some of it back! Oh what a tangled web.