BTW Talks With ABA President Russ Lawrence Re Proposed Bylaws Change

Russ Lawrence

The American Booksellers Association's Board of Directors is asking ABA bookstore members to consider changes to the association's bylaws that will be put to a vote at the Annual Membership meeting on Friday, June 1, at BookExpo America. The proposed changes to Article VII (Committees and Advisory Bodies) of the bylaws and an explanatory letter from ABA President Russ Lawrence of Chapter One Book Store in Hamilton, Montana, were sent to all Regular Members in an early April mailing that includes the Board of Directors election ballot.

The revised Article VII reflects that the committee overseeing ABA's governance for the last seven years, formerly known as the Audit Committee, has been renamed the Governance Review Committee. Additionally, a new committee, the Audit Committee, is now charged with oversight and monitoring of ABA's financial dealings. (For a detailed look at the proposed Article VII and the current language go to http://news.bookweb.org/news/5123.html.)

Leading up to the bylaws vote, BTW spoke with ABA President Russ Lawrence via e-mail in an effort to provide ABA members with a deeper understanding of the significance of the proposed changes to Article VII.

BTW: What brought about this decision to make these proposed changes to Article VII of the bylaws?

Russ Lawrence: Eight years ago the ABA membership adopted a new set of bylaws, and we have not amended them since. Those bylaws included what proved to be some nomenclature that no longer describes the function of the committee: the bylaws established what was called an "audit committee," but gave it duties that are best described as "governance review."

In the meantime, Congress passed the Sarbanes-Oxley Act, the purpose of which was to regulate some of the corporate accounting (and other) excesses that we saw a few years ago. Few of the provisions of that act apply directly to not-for-profits, but some of them are now recommended by our auditors and others as "best practices" for not-for-profit trade association management, including the establishment of an audit committee as a valuable tool to ensure financial accountability and transparency for the membership.

That's a lot of wonk-talk, but the bottom line is that we need to amend the bylaws to rename what we originally called the "Audit Committee" as the new "Governance Review Committee" and to establish a new "Audit Committee" that will function in the way such committees customarily do.

BTW: Under the proposed changes, the Audit Committee would be renamed the Governance Review Committee: What is the role of that committee, and with the committee's new name, would that role change?

Russ Lawrence: The role of the Governance Review Committee will not change, only the name. It consists of bookstore members, none of whom are currently serving on the ABA Board of Directors, but one of whom has previously served as a Board member. The role of the Governance Review Committee is to review, on an annual basis, the practices of the Board and the Officers, to ensure that they are in accordance with the policies and procedures of the association. Most of those are spelled out in the ABA Policy Manual, viewable on BookWeb. After very thoroughly interviewing selected Officers and Directors, and other relevant parties, it reports annually to the Board, usually with a handful of insightful recommendations to ensure the smooth operation of the association.

BTW: The proposed new Audit Committee would be created in an effort comply with the auditing "best practices" in the wake of the Sarbanes-Oxley Act -- could you tell us what the Sarbanes-Oxley Act is? And why, in your opinion, would it be important to create this new committee?

Russ Lawrence: Frankly, I think I'd rather attempt to explain the Grand Unified Field theory in physics.

Sarbanes-Oxley was passed in 2002 and primarily establishes new standards of accountability for the boards and management of publicly held corporations and public accounting firms. Many of these have no relation to the not-for-profit world, but some of them just make sense, no matter your IRS designation. (Wonk note: the ABA is officially a 501 (c) 6.)

The Audit Committee, when approved, will "assist the Board of Directors in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control, the audit process, and the association's process for monitoring compliance with financial, tax, and accounting laws and regulations."

That's important because the Audit Committee will consist of financially literate individuals, whose sole focus is to ensure the sound financial operation of the association. Board members may bring a variety of talents to the table -- legal, real estate, political, and so forth -- but may not all feel competent to examine a complex set of financial statements. Nor is that their sole focus, though they bear ultimate responsibility for it. This will provide a body which can help carry out that critical function.

BTW: How would members be appointed to the proposed new Audit Committee?

Russ Lawrence: They'll be appointed by the ABA President. At least one may be a sitting member of the Board, and the other two to four members will be chosen for their financial knowledge and commitment to high ethical standards.

BTW: What is one key thing you think booksellers should know about these proposed rule changes?

Can I negotiate for two key things? First, the proposed changes bring our bylaws into accordance with our practice and nomenclature. Second, it will help to ensure members' confidence that the financial operation of the ABA is as competent and transparent as possible.

Questions about the proposed bylaws changes can be addressed to Lawrence at [email protected] or other members of the ABA Board. --Interview by David Grogan