An internal investigation can be a powerful tool in the hands of a well-advised board. Such investigations can serve a variety of purposes, including: (i) uncovering weaknesses in existing compliance procedures; (ii) determining why a major project failed; (iii) ferreting out corporate misconduct; (iv) substantiating a whistleblower complaint; (v) preparing to respond to an inquiry by a governmental agency; (vi) determining how to respond to a shareholder letter demanding the initiation of derivative litigation against company officials; or (vii) signaling to shareholders, auditors or other constituencies that the company takes certain issues or allegations seriously.

The contours of an investigation and the need to retain independent counsel, outside accounting consultants and other professionals will vary depending on which of these purposes the investigation is intended to serve. These issues will be analyzed in more detail in an upcoming issue of the Monitor.