Critical Thinking Is So Important – It Needs To Be Taught And Discussed

Do you get a feeling sometimes or even overall generally that you really aren’t sure whether you can trust what someone is telling you? I’m actually past that point – except for good friends that I have known for some time and who I trust and respect, I either don’t believe what I am hearing or I certainly question its basis. This makes decision making more difficult and time intensive.

Some people simply without any discomfort lie as a matter of course – these people are missing a personality gene or trait – you may have seen survey results that seek to quantify how many times a person on average is lied to each day. The numbers are stunning. But I’m not even talking about that. At a different lower level you have things like the speaker’s spin, overstatement or exaggeration, intent to persuade, the speakers omission to state other important information, alternative or contrary information, preconceived belief or prejudice, lack of reliable factual support, and false, contrived or erroneously limited possible choices or explanations, et al. Defending on the severity these might be considered intentional fraud, constructive fraud, deceit, negligent or innocent misstatement or misrepresentation, or some other form of dishonesty.

Your only option or defense is to critically think about, consider, and evaluate what you are hearing. Alternatively, you might say that you need to actively question what you are hearing or being told. But it takes time, effort and interest – it isn’t the easy approach.

Can you critically think about something if you have little background or personal experience with that issue or topic? Sometimes I hear people say that you cannot comment about something because you haven’t experienced it. I specifically disagree, although the point has some relevance. Lack of information or personal experience makes critical thinking and evaluation more difficult. But you certainly can still use your own good judgment, consider possible alternatives to what you are being told, gather additional information including alternative or contrary information, and question the speaker about his or her position, alternatives, and basis for statement or opinion.

Frankly, I have to say that listening to the news, or salespeople, or politicians, just as examples, tends to drive me crazy sometimes as their information and statements can almost always be rebutted or at least questioned. Who has the time for that? And maybe that’s their point – you don’t have the time.

From my audit committee guide, the following is a summary of the business judgement rule for board directors – you will note that it’s significantly based on informed, critical thinking:

In summary, as a general principle the business judgment rule provides that a director should undertake his or her duties:

-In good faith, with honesty and without self-dealing, conflict or improper personal benefit;

-In a manner that the committee member believes to be in the best interests of the corporation and its shareholders; and

-With the care, including reasonable inquiry, that an ordinarily prudent person in a like position would use under similar circumstances.

Reliance Upon Other People Under the Business Judgment Rule

In the course and scope of performing his or her duties, a director must necessarily obtain information from and rely upon other people. The director is not involved in the day-to-day operations of the business. The director provides an oversight function. Pursuant to the business judgment rule, a director is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, prepared or presented by any of the following:

-Officers or employees of the corporation whom the director believes to be reliable and competent in the relevant matters;

-Legal counsel, independent accountants or other persons as to matters that the director believes are within the person’s professional or expert competence; or

-A committee of the board on which the director does not serve, as to matters within that committee’s designated authority, so long as the director acts in good faith, after reasonable inquiry as warranted by the circumstances, and without knowledge that would cause reliance to be unwarranted.

You can find more information including Tate’s Excellent Audit Committee Guide on my blog at http://directorofficernews.com, and also on my trust, estate, conservatorship and elder abuse litigation blog at http://californiaestatetrust.com.

 

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Ethical imperatives for every board | Listed Magazine

I recently moderated an address by Andrew Fastow, the former CFO of Enron, and followed up by delivering a keynote on the role of the board in ethics, tying in aspects of Mr. Fastow’s speech. What f

Click on the following link for the article: listedmag.com

Dave Tate, Esq. comments. I usually don’t find lists useful – there are just too many of them that lack detail. For unknown reason, nevertheless, I decided to real this article by Richard Leblanc. I recommend that you also read the article, at least for the purpose of stimulating serious thought. You might also consider providing the article to your executive officers, board, audit committee, internal audit and legal counsel.

“Ethics” is kind of one of those vague areas that lacks specifics. It is easier to focus on prudent business judgment (including the business judgment rule) and legal and regulatory mandatory requirements. Factually, Richard’s 10 points actually do that, but under the heading of “ethics.” Also consider the comments at various of the 10 areas about the need for independent evaluation and representation, the ability to obtain independent outside assistance, and the use, oversight and hiring of the internal audit function – these comments are all very worthwhile for consideration.

Thank you for reading. Dave Tate, Esq., San Francisco and throughout California, civil, trust, estate, conservatorship and elder abuse litigation, and contentious administrations, blogs: http://directorofficernews.com and http://californiaestatetrust.com

Tate’s Excellent Audit Committee Guide Sept. 2, 2015 Updated (139 pages)

The following link is to my Audit Committee Guide, updated September 2, 2015, to include additional internal audit materials and links, 139 pages in total. Please read and pass this material to anyone who would be interested, Tate’s Excellent Audit Committee Guide 09022015

Dave Tate, Esq. (San Francisco/California)
Blog, D&O, Audit Committee, Risk Management and Compliance: http://directorofficernews.com
Blog, Trust, Estate, Conservatorship & Elder Abuse Litigation: http://californiaestatetrust.com

Lessons Learned from the Transition to COSO 2013

Protiviti has shared with us a useful Top 10 Lessons Learned from Implementing COSO 2013. I especially like this section: It is presumed that everyone understands that a top-down, risk-based approa…

Click on the following for the discussion: normanmarks.wordpress.com

A good COSO 2013 discussion from Norman and Protiviti.

Dave Tate, Esq. (San Francisco/California)

My other blog: trust, estate, conservatorship and elder abuse litigation, http://californiaestatetrust.com