ABM Industries Inc. Overview
Question:
Discuss About The Governance Effects On Social Responsibility?
ABM Industries Inc., founded in 1909 by Morris Rosenberg is recognized as a facility management service provider based in United States. Visit on the present standings the business is known for one of the main capacity management service provider employing over “100,000 employees, over 300 offices, and 20 international locations”. Some of the most eminent services of the company includes “facility services, building maintenance services and outsourcing of services to other companies”. “ABM industries” primarily incorporated its services for industrial, commercial, “retail clients and government across international locations and United States” (ABM, 2018).
The study aims to show a critical review of board and executive management of the company with regards to matters pertaining to Corporate Governance (CG). The second aspect has shown a critical review of independence of the auditors of the company. In addition to this, it has discussed whether the position of CEO and chairman are split and its implication on CG of the company.
Based on the Annual report published in 2016, the information pertaining to the officers are “found in Part I, Item 1 of this Form 10-K under” “Executive Officers of Registrant.” Moreover, that additional “information set forth under captions” “Proposal No. 1—Election of Directors,” “Corporate Governance and Board Matters,” “Audit-Related Matters,” and “Section 16(a) Beneficial Ownership Reporting Compliance” (Dias, Rodrigues & Craig, 2017). The information on “executive compensation is incorporated” as per the reference from the information set forth by “Director Compensation,” “Executive Compensation,” and “Corporate Governance and Board Matters”. The schedule for holding annual meeting of the shareholders was done on March 8, 2017 (Files.shareholder.com, 2018).
As per the evaluation of annual report published in 2015, information about executive officers is found in “Part I, Item 1 of Form 10-K under” “Executive Officers of Registrant.” However, the main changes identified with additional information which is set forth as per the captions “Items to be Voted On—Election of Directors,” “Corporate Governance and Board Matters,” “Audit-Related Matters,” and “Section 16(a) Beneficial Ownership Reporting Compliance”. In the latest year the company has used “Proposal No. 1—Election of Directors,”. In a similar way, the executive compensation was incorporated with the referenced information under “Director Compensation for Fiscal Year 2015,” “Executive Compensation,” and “Corporate Governance and Board Matters” in the 2016 Proxy Statement. The schedule for holding annual meeting of the shareholders was done on March 9, 2016 (Investor.abm.com, 2018).
“KPMG LLP”, an “independent registered” “public accounting firm”, has reviewed the “consolidated financial statements” included the “Annual Report on Form 10-K” and, as part of their “audit, has issued their report” and included several provisions on efficiency of “internal control” over financial reportage. Based on the information published in the annual report of 2016 the auditing of ABM industries are subject to conduct tax audits by government authorities across United States and United Kingdom. In case, the company experiences any unfavourable result then one or more such tax audit may adversely impact the taxes and net income. In case of any unfavourable income tax settlement, as per suggested by the audit report, the company may need to use the cash and increase effective tax rate is on period of settlement (Hahn & Lasfer, 2016). In addition to this, as per the report of independent registered “public accounting firm”, the audit of the company has accompanied the preparation of consolidated balance sheets thereby depicting “shareholders equity and cash flows” for each individual year. The audit of the consolidated financial statement also includes the examination of test basis indication supporting and the amount of disclosures made in the financial statements along with valuation of the “accounting principles” used with significant evidences is supported by the management and used for overall evaluation of the financial statement presentation. In addition to this, the audit of the internal control has obtained important information on considerate of “internal control” over financial reporting, risk assessment and material risk. Some of the other significant areas of audit has also performed procedures which were considered necessary in a circumstance (DeZoort & Taylor, 2015).
Corporate Governance and Board Matters
In a similar way, the evaluation of annual report published in 2015, has shown that the registrants certifying officer has disclosed the independence of the auditor as part of the current depictions of the financial reporting and IC and as per the statement published by board of directors. In addition to this, the main independence of the auditor is viewed with “Certification of Chief Financial Officer Pursuant to Securities Exchange Act Of 1934 Rule 13a-14(A) Or 15d-14(A)” and “Certification of Chief Executive Officer Pursuant to Securities Exchange Act Of 1934 Rule 13a-14(A) Or 15d-14(A)” (Tepalagul & Lin, 2015).
As per information published in the annual report of 2016, Maryellen C. Herringer is identified as “Chairman of the Board and Director” and Scott Salmirs as the “President and Chief Executive Officer” of ABM Industries. Henceforth, it can be clearly identified that the position of CEO and chairman are split up in the given situation. This has a significant integration on the corporate governance strategy and distinction between the nonexecutives who are seen to be independent and those who are not. The main implication of this on CG is further seen to be based on better monitoring of the operations and ensure that the company is being run in aggregation with the will of the shareholders. It further ensures that CEO is a administration position which is responsible for driving these operational changes. A board based on independent chair is more likely to be identified for monitoring areas of company which are drifting from its mandates and the split up of the positions heads and ensuring that corrective measures are taken (Duru Iyengar & Zampelli, 2016).
In a similar manner the information published in annual report of 2015, it is clearly stated that Scott Salmirs is the “president and chief executive officer of ABM”. It is also noted that there was no change in Maryellen C. Herringer being the “Chairman of the Board and Director” as on December 17, 2015. Some of the other significant aspects of separation of leadership roles helps in clear division of responsibilities which results in greater balance of power and authority. It also confirms that no one individual has unfettered powers in decision-making. As the chairman is not the “chief executive officer”, CG affairs of the company has been able to maintain a strong and independent element on the board. In several situations, the separation of the roles may lead to aggression for the CEO which in turn may lead to unforeseen events (Yasser & Mamun, 2015).
Conclusion
The discussion on review of board and executive management with in matters of CG has clearly able to state that additional information was set “forth under captions” “Proposal No. 1—Election of Directors,” during 2016, however in 2015 it was set forth as per the captions “Items to be Voted On—Election of Directors,”. Critical review of independence of the auditors of the company has been able to state “KPMG LLP”, an “independent registered” “public accounting firm”, has audited the “consolidated financial statements” included the “Annual Report on Form 10-K” and, as portion of their audit, has issued their report and included several provisions on effectiveness of “internal control over financial reporting”. The internal control has obtained important information on “understanding of internal control over financial reporting”, risk assessment and material risk.
References
ABM – Annual Report. (2018). Investor.abm.com. Retrieved 2 March 2018, from https://investor.abm.com/secfiling.cfm?filingid=1628280-15-9602&cik=771497
DeZoort, F. T., & Taylor, M. H. (2015). COMMENTARY––A Public Interest View of Auditor Independence: Moving Toward Auditor Reliability When Considering and Promoting Audit Quality. Accounting and the Public Interest, 15(1), 53-63.
Dhaliwal, D. S., Lamoreaux, P. T., Lennox, C. S., & Mauler, L. M. (2015). Management Influence on Auditor Selection and Subsequent Impairments of Auditor Independence during the Post?SOX Period. Contemporary Accounting Research, 32(2), 575-607.
Dias, A., Rodrigues, L. L., & Craig, R. (2017). Corporate governance effects on social responsibility disclosures. Australasian Accounting Business & Finance Journal, 11(2).
Duru, A., Iyengar, R. J., & Zampelli, E. M. (2016). The dynamic relationship between CEO duality and firm performance: The moderating role of board independence. Journal of Business Research, 69(10), 4269-4277.
Files.shareholder.com. (2018). Retrieved 2 March 2018, from https://files.shareholder.com/downloads/ABM/6071404334x0x927234/B201F98C-E2D5-4909-BED5-9A6C1A9C45A6/ABM_Industries_Annual_Report-Form_10K_Print.pdf
Hahn, P. D., & Lasfer, M. (2016). Impact of foreign directors on board meeting frequency. International review of financial analysis, 46, 295-308.
Our Company | ABM. (2018). ABM. Retrieved 2 March 2018, from https://www.abm.com/our-company/
Tepalagul, N., & Lin, L. (2015). Auditor independence and audit quality: A literature review. Journal of Accounting, Auditing & Finance, 30(1), 101-121.
Yasser, Q. R., & Mamun, A. A. (2015). The impact of CEO duality attributes on earnings management in the East. Corporate Governance, 15(5), 706-718
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