The Board of Directors – What you need to know for ACCA P1

There are a few basic things you should know about the board of directors when you’re studying ACCA P1 Governance Risk and Ethics. Here are a few of them.

Duties of the Board of Directors

  • Effectiveness – the board must work towards achieving the goals of the organisation.
  • Informed – Directors hsould be provided with the relevant information needed for thier roles in a timely manner.
  • Training – Directors should be suitably trained to carry out their duties. This includes induction training and regular updates.
  • Performance evaluation – Directors should be assessed each year and evaluated for thier performance.
  • Re-election – No director should be in office indefinitely. They should stand for re-election every few years.

Composition of the Board of Directors

  • Division of responsibility – This should be clear
  • Excessive powers – Directors should not have excessive powers
  • Balance – There should be a balance of skills on the board. (e.g. not overloaded with finance experts, or engineering experts)
  • Board committees should be in place (e.g. audit, risk, remuneration etc.)

How should directors get paid?

There should be a formal and transparent system in place for the payment (remuneration) of directors. This should be overseen by the remuneration committee. The director should not be involved in deciding his or her own payment.  The remuneration should be a sufficient level to attract, retain and motivate directors to stay and work well, but it should avoid paying them more than necessary.