The accountant of a publicly held company may spend months on process improvement to achieve a one-day close, only to find that it takes well over a month to file the resulting financial statements with the Securities and Exchange Commission (SEC). There are many reasons for the delay, but a key one is the required approval of the Board of Directors.
According to General Instruction D to the Form 10-K, "the report must be signed by registrant, and on behalf of the registrant by its principal executive officer or officers, its principal financial officer or officers, its controller or principal accounting officer, and by at least the majority of the board of directors..." The same requirement holds for the Form 10-KSB, which is for smaller registrants.
And you thought it was difficult to get a supplier invoice approved! In this situation, the signature of company officers is generally not difficult to obtain, since they are located on the premises. However, board members are another matter entirely - they may be located anywhere in the world, and are frequently busy executives who run their own firms. Thus, the financial statement issuance bottleneck shifts from the halls of the accounting department to the boardroom.
Though it is possible to obtain a power of attorney from board members to sign off on their behalf, this is not at all recommended - the intent of the law is for a personal review and approval by board members (though a power of attorney is an excellent idea for lesser filings, such as the Forms 3, 4, and 5). Instead, follow these tips to obtain rapid board approval:
- Obtain only a majority of approvals. It will soon become apparent that some board members return their approvals promptly, while others require constant hounding. Accordingly, focus attention on obtaining approvals only from the most responsive directors, and only issue financials to the other directors as a matter of form, with no expectation of actually receiving their signed approval.
- Schedule conference calls. Public filings are lengthy documents, and directors may have questions about numerous items contained within them. If so, schedule a series of conference calls where the accounting staff is available to answer any and all questions from the directors. There should be more than one conference call scheduled, so that every director will have an opportunity to fit at least one into his or her schedule.
- Schedule continual reminders. Given the short timelines within which financials must be filed with the SEC, the accountant must schedule a series of reminder calls to the board members. This should also involve escalation, so that reminder contacts successively come from the CFO, then the CEO, and then the Chairman of the Board.