Board Impulse Thoughts (BIT) – A little BIT for everybody

35th Board Impulse Thoughts with Norbert Heinzelmann and his expectations of a Supervisory Board.

1. You have been involved in the Board Academy from the beginning - what exactly drives you?

My belief in the need to professionalize supervisory boards in Germany - driven by the increasing complexity of business models, but above all by the increasingly complex framework conditions, not least for internationally positioned groups. For the supervisory board, this also means a growing risk of liability. One example: Currently, "SPAC transactions" - quasi as a shortcut to a "regular" IPO - are in vogue, but hardly any company thinks about what it means to be listed in the USA - which is usually the "target market". In addition to the already difficult issues of international accounting, there are also specific requirements for corporate governance.

2. You are an auditor – what is the deal with “FISG” and the "expert for the audit"?

The Wirecard scandal has ruthlessly revealed what happens when the system fails - and by that I mean by no means (only) our colleagues from Stuttgart - but especially and in particular corporate governance in companies and thus also the supervisory board. The Act provides for a comprehensive further development and realignment of the regulatory requirements for monitoring systems, in particular for the Internal Control Systems (ICS) and Risk Management Systems (RMS) of listed companies. This is not quite as far-reaching as the reaction in the USA at the time with the introduction of "SOX", but at least it makes it clear that strong internal company supervisory bodies are of fundamental importance for good corporate governance.

How are you as a supervisory board supposed to ensure or make sure that the management board in turn ensures that all suppliers comply with the manifold rules?

3. What do you expect from a Supervisory Board?

To always be curious. For all the need for professionalization, to continue to question implausible constellations or figures or answers with common sense. The world and the rules are becoming more and mocomplex - for example, the Supply Chain Act: How are you as a supervisory board supposed to ensure or make sure that the management board in turn ensures that all suppliers comply with the manifold rules? But, if you approach it with common sense: It is not possible that the direct supplier is formally certified himself, but via sub / subcontractors undermines all this again.

4. How should the Supervisory Board ensure this?

That can only be done via processes and systems. Processes that ensure that you as a company know who you are working with. "KYC - know your customer" - a term from anti-money laundering that can also be applied well to purchasing: a supplier must be able to prove that he is supply chain compliant (that he does not exploit children, for example). Only then will he be "listed" with the company and enter the "system". This brings us to the processes: an order can only be processed in the company if the supplier is entered in the system - this also prevents "CFO fraud" attempts from the outset. The alleged CFO calls the accountant and instructs him to transfer X million to Company ABC - top secret and very urgent; supposedly because this way a sensationally good deal can be secured. If the company has the appropriate processes in place, the accountant replies: "Dear CFO, I cannot find ABC in our supplier database and therefore cannot transfer the money. I'd be happy to send you through the list of proofs needed for the facility right away, and then I'll personally take care of the facility as a supplier immediately upon receipt." So, the other party hangs up very quickly.

Norbert Heinzelmann, Certified Public Accountant/Tax Advisor, a Director at PWC in Nuremberg and Head of Audit at the Nuremberg office, where he is responsible for international medium-sized companies and family businesses. As a trainer at the Board Academy, he teaches and shares his knowledge in the areas of Reporting, Accounting, Controlling, and Risk & Compliance. He is an expert in the field of IFRS accounting and also advises companies on the optimization of accounting processes, carve-outs and the introduction of reporting management systems.?