The phrase ‘proper scrutiny’ appears to have grown in prevalence over the recent months and its importance is generally emphasised as critical to maintain good board governance. While proper scrutiny should ordinarily be welcomed by senior management in order to achieve better outcomes for the relevant stakeholders, some resistance could be attributable to the improper use of such scrutiny.

It seems unthinkable that proper scrutiny in terms of governance, which is intended to foster positive and ethical outcomes could be subject to improper use. Nevertheless, the presumption that all scrutiny is proper should be avoided and the likely indicators of improper scrutiny should be recognised as soon as possible.

Possible signs of improper scrutiny are as follows:

• Inappropriate Focus

If the board or a similar oversight governing body appears to be focusing disproportionately on minor issues at the expense of major issues, this could be deemed to be improper scrutiny. The detailed and excessive forensic examination of matters that are arguably lower risk issues could lead to negative outcomes including to foster a climate of distrust between the board and senior management. There is a danger that legitimate scrutiny could be perceived as interference, which might trigger a defensive response from senior management, which in turn could compromise the purifying and enhancing effect of proper scrutiny.

• Inappropriate Approach

The key role of the board to hold senior management to account is unquestionable and the importance of carrying out that function effectively is undisputed. However, depending on the context, an inappropriate approach could be adopted to hold the senior management to account. If the approach adopted to scrutiny is not appropriately tailored to the overall organisational performance, then such scrutiny could easily be deemed to be improper.

The pressure on boards to provide strong challenge to senior management in the light of reported ‘governance failures’ in recent years could inadvertently lead to the adoption of an approach that is overly negative with overbearing criticism. Improper scrutiny usually manifests in attempts by the board to exercise direct control on how senior management should discharge their distinct responsibilities.

• Inappropriate Motives

Covert efforts to undermine senior management could be disguised as legitimate proper scrutiny. While it is highly unlikely that such motives would be the norm. The risk of wrong motives could result in aggressive scrutiny, which seems more intent on assigning faults to senior management rather than a balanced recognition of the appropriate strengths and weaknesses of the relevant proposals for consideration.

The board that is primarily motivated to oppose proposals from senior management rather than seeking to be a constructive critical friend could be characterised as exercising improper scrutiny. Seeking information that is irrelevant and unnecessary to discharge its board responsibilities could be deemed an example of improper scrutiny particularly if it is primarily intended to find faults of senior management. It is critical that senior management do not perceive scrutiny as adversarial as it is likely to influence adversely their engagement with the board.

Although the occurrence of improper scrutiny is uncommon and highly unlikely. Nevertheless, it is helpful to remember that proper scrutiny should be proportionate, constructive, robust, comprehensive, challenging and collaborative underpinned by the right motives.