PowerPoint Presentation

Corporate Governance Dr. R. Jugurnath Director of Audit National Audit Office 8 April 2009 1

Corporate Governance Presentation Structure Part 1 1. Introduction and Definitions 2. Corporate Governance – What/Why? 3. Parastatal Bodies 4. Compliance & Enforcement 5. The Board – Role, Function & Composition 6. Main Actors - Parliament - Chairperson - GM/MD - Directors 1. Board Committee 2

Corporate Governance Presentation Structure Part 2 1. Accountability 2. Accounting 3. Risk Management 4. Auditing 5. Audit Committee 6. Communication & Disclosure 3

Corporate Governance Part 1 4

Introduction Governance Nowadays the terms \"governance\" and \"good governance\" are being increasingly used. Bad governance is being increasingly regarded as one of the root causes of all evil within our societies. Major donors and international financial institutions are increasingly basing their aid and loans on the condition that reforms that ensure \"good governance\" are undertaken. 5

Introduction (cont) Simply put \"governance\" means: the process of decision-making and the process by which decisions are implemented (or not implemented). 6

Introduction (cont) World Bank definition of Good governance Good governance is epitomized by predictable, open and enlightened policy- making, a bureaucracy imbued with a professional ethos acting in furtherance of the public good, the rule of law, transparent processes, and a strong civil society participating in public affairs. 7

Introduction (cont) • Corporate scandals in UK in 1990’s • Sir Adrian Cadbury • King Report, 1994 • Collapse of Enron and WorldCom • Collapse of Parmalat 8

Introduction (cont) Causes of Corporate Failures 1. Over-expansion, especially through acquisitions 2. Dominant CEO and other ‘star performers’ 3. Poor strategic decisions 9

Introduction (cont) Causes of Corporate Failures 1. Poor risk management 1. Weak internal controls; and most importantly 1. Ineffective boards and their audit committees 10

What is Corporate Governance? … a system by which corporations are directed and controlled (Report on Corporate Governance for Mauritius) 11

What is Corporate Governance? (cont) “ … the processes by which organizations are directed, controlled, and held to account.” (Australian National Audit Office, 1999). 12