It's not often something as prodigious comes up within professional associations, but this unfortunate sequence of events that led to a "governance scandal" can be a lesson to us all to not be too complacent and to ensure that our organisations governance frameworks are resolute.
The professional body is question will remain un-named by PARN as to draw attention to the issue neutrally and to not contribute to any potential reputational damages as a result, however what we will say is that the association is globally recognised was established for over 150 years ago.
The issues began during a quarterly management meeting in December 2018 whereby it was confirmed that the body's overdraft facility was being temporarily extended due to inaccurate forecasting. The management board expressed concerns of the situation at the time but was assured by internal person(s) that there would be no further issues. However, it was not disclosed to the board at the time that global accounting body, BDO, had conducted an internal audit of the body's treasury management.
In early 2019 non-executive directors learned of the audit being conducted by BDO, however a month later at a further quarterly meeting, the board were not presented a copy of the report, neither was it referenced in board papers. One non-executive director was told that a re-audit had been commissioned and would be available at the next quarterly meeting.
Mid 2019 at the next quarterly management meeting the board were finally presented the initial BDO report, but the re-audit report was still absent. A month later the management board met again and the chair announced an internal governance review would be conducted into the handling of the report. At the time, requests for an external review were refused.
In autumn 2019 the governance review concluded that there was no failures in the governance framework and the governing council were "properly informed and updated". Non-executive directors refuted the findings of the internal review and raised such concerns in the prior quarterly meeting, however the draft minutes from the meeting indicated that the matter was concluded, despite the NED's still disagreeing.
Later in 2019 the four NED's submitted a letter to the president outlining the chronological events that had unfolded. All four NED's were shortly after terminated from their roles.
Around Easter 2021 with pressures rising from both media and membership the body instructed for an independent review to take place. Finally, in September 2021, the independent review concluded that governance principles had not been followed by the body and that the NED's concerns had been legitimate, furthermore they were wrongly dismissed. The review outlined 18 specific recommendations to the body.
It is said that a contributing factor was a lack of clarity around the responsibilities of the senior leadership team which led to a lack of scrutiny of key individuals, as a result a power-struggle of sorts ensued escalating the situation unduly. The body were also in part let down by lawyers, who acted to "protect" individuals in the senior leadership team, rather than give advice to the organisation as a whole entity.
Since the independent review was published there have been fundamental changes to the senior leadership team with two senior leaders having resigned, and the body has address the review publicly.
What we can all take from this, is to ensure the rigidity of governance frameworks ensuring there is no room for error and adequate contingency plans for should an issue arise.