2017 CPA-Zicklin Index of Corporate Political Disclosure and Accountability

Introduction to the 2017 CPA-Zicklin Index by Morris Pearl: “In our modern financial system, investors, by necessity, delegate virtually all control over the businesses in which they invest to a board of directors. That board then, perhaps by necessity, perhaps not, often delegates virtually all control to the officers who run the company day to day. That usually works out pretty well. The interests of the officers are generally aligned with that of the shareholders, and most boards have a compensation committee which (hopefully) deals with the obvious conflicts around the pay of the officers. That, however, is not enough. Occasionally the officers use corporate resources for politics, sometimes with disastrous consequences. The practice of spending money on politics can open up the corporation to both subtle and not-so-subtle coercion from government officials. Indeed, the first campaign finance regulations were favored by business people who found themselves under a barrage of demands for money from government officials who had some power over their businesses. There are some things that businesses can do to defend themselves. Chief among those are:

  • An official corporate policy on high level approval of political expenditures. Based on my experience, telling someone soliciting a donation that they are welcome to make their case, publicly, to a board committee, can be great fun.
  • Openness – making records of whatever the business does available to the general public. Based again on my experience, people doing things that they don’t want to be publicly known are often doing things that they should not be doing.

We do not have the ability to end the practice, but by publicly giving companies credit for doing those two things, the CPA-Zicklin Index is making a difference….(Full Report)”.