When Is It Time to Call for an Independent Review?
By: Belinda Lim, Manager, Corporate Finance & Recovery
When a company makes headlines for the wrong reasons, one question tends to follow: Could this have been handled better?
Lately, the answer in many recent high-profile cases has been to bring in an independent party to investigate what has happened. That’s usually the trigger – when a crisis happens. But it shouldn’t be the only reason. An independent review is one of the most useful tools a board has for building trust and enforcing good governance.
At its core, an independent review is simple - independent external professionals with no stake in the outcome examining facts and reporting on what they find. The lack of stake is exactly what gives them credibility. Shareholders, regulators, employees, customers and the public - all tend to trust findings more when the people behind them have nothing to gain either way.
So, when should a company consider one?
A few situations come up often: allegation of fraud, whistleblower complaints, concerns over financial reporting, conflicts of interest or major business decisions that could have a significant impact on the company. It is also worth considering after operational failures or any event that raises questions about whether the right decisions were made.
The common misconception is that many people assume that calling for a review means something has gone wrong. However, it could be used to signal that a board is willing to be transparent, wants to understand what happened and is prepared to act on it. It builds confidence in stakeholders that the board is not one to sweep things under the carpet, gives assurance to whistleblowers to act when they see things not done properly and puts management on their toes. Acting early tends to keep small problems small, rather than letting them snowball.
For directors and business owners, a simple question can help guide the decision: Would an independent view help build confidence amongst our stakeholders? If the answer is yes, it is worth considering.
Good governance isn't just about ticking legal boxes. It's about making decisions that are fair, transparent and genuinely in the organisation's best interest.
In today's business environment, trust is one of a company's most valuable assets. Knowing when to seek an independent review is not a sign of weakness, but a sign of strong leadership and a commitment to doing the right thing.