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SERVICES > Risk advisory services > Internal Audit Services | |||
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Corporate Governance - Review and Assessment
Imperative for Organizational Success and Prosperity Over the last decade regulators, institutional investors, and the media have bombarded companies, both public and private, with requests for enhancing governance standards. Regular corporate failures and highly publicized “scandals” will ensure that the governance demands on business leaders will increase and become more onerous. The minimum standards for corporate governance are ever increasing and companies with strong corporate governance structures and policies are valued more among investors and enjoy better terms in trade. Simply stated, good corporate governance makes very good business sense. Direction and Control Corporate governance is the system or process by which organizations are directed and controlled. While Boards of Directors are responsible for the governance of their organizations, internal control is a vital component of the process by which they do so. Effective corporate governance however must include the active and collaborative participation of all its principal champions - the Audit Committee, Board of Directors, statutory auditors, internal auditors, and management. Ensuring that this occurs is fundamental to the Audit Committee’s success. Regulatory Compliance Regulators are recommending that companies acknowledge responsibility for control and risk management, and regularly assess and report on the risks they are exposed to and the effectiveness of internal controls. Securities and Exchange Board of India (‘SEBI’), the apex regulatory body for capital markets in India has issued detailed guidelines on corporate governance. In addition to provisions regarding the Board and its committees, this new legislation makes it mandatory for all listed companies (as per the stipulated schedule of implementation) to report annually on compliance with these guidelines, as well as append the independent Auditors’ certificate of compliance to the Directors’ Report. Self-Appraisal The Board is accountable for ensuring that the organization has a robust risk assessment framework and adequate and effective internal control systems, designed to manage these risks and provide reasonable assurance that the organization’s objectives are being achieved. Although in practice this function is normally delegated to management, it in no way reduces the Board’s ultimate responsibility. Board level accountability and performance expectations from stakeholders are ever increasing, and director remunerations and reappointments are increasingly based on individual contribution to a company’s performance. It is therefore essential that boards evaluate their approach to fulfilling their roles and responsibilities so that continuous improvement is achieved and value is added to the operations of the organization. Successful boards needs to know the answers to the following key questions, which KPMG can help answer:
Board composition, board size, frequency of board meetings, directors’ qualifications and work experience, and their relevance to the organization’s business, are factors that are under increased scrutiny from stakeholder groups. This is a growing trend and the starting point to improving a client’s board performance. KPMG’s independent facilitation and management of the process also allows board members to focus on SEBI’s Corporate Governance guidelines and develop a tailored response framework.
KPMG's Internal Audit Services include:
For further details contact us |
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