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Caribbean Corporate Governance Forum

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Title: Caribbean Corporate Governance Forum


1
Caribbean Corporate Governance Forum
  • "Effective Corporate Governance Perspectives for
    the Caribbean Corporations and SMEs"
  • September 3rd 5th, 2003
  • ECCB, St. Kitts
  • Vicki D. Carmichael

2
GOOD CORPORATE GOVERNANCE DEMANDS HEALTHY DOSES
OF
  • RESPONSIBILITY
  • ACCOUNTABILITY
  •  
  • TRANSPARENCY
  •  
  • NON-CONFLICT OF INTEREST

3
UNHEALTHY PRACTICES COULD HAVE ANY OR ALL OF THE
FOLLOWING IMPLICATIONS
  • FINANCIAL
  •  
  • ECONOMIC
  •  
  • LEGAL
  •  
  • MORAL
  •  
  • POLITICAL

4
PART I

5
Sound Corporate Governance involves the necessary
checks balances needed within an effective
corporate governance structure
6
Key components of good corporate governance are
  1. Effective and efficient Internal Controls Risk
    Management
  2. Conducive Organisational structure culture
  3. Sound Management philosophy and operating style
  4. Effective and proactive Board and committees
    Well-delineated roles and responsibilities of
    Board, management and employees.
  5. High standard of Integrity and ethical values
  6. Commitment to excellence.

7
SECTION A
  • EFFECTIVE EFFICIENT INTERNAL CONTROLS RISK
    MANAGEMENT

8
Internal Control Three pillars of internal
control that can determine business success are
Sound and accurate financial non-financial
reporting
Compliance with applicable law regulations
Effectiveness and efficiency in business
operations
9
Internal Control Systems
  1. Determine your GOAL.
  2. Establish a STEERING COMMITTEE.
  3. ENABLE EMPOWER the Audit Committee.
  4. Select a SUITABLE REALISTIC framework.
  5. COMMIT and ENCOURAGE endorsement of plan.

10
Internal Control Systems, contd.
  • SENSITISE employees and ENCOURAGE input and/or
    recommendations.
  • IMPLEMENT and encourage CONTINUAL MONITORING of
    the systems employed.
  • IMPLEMENT and/or MAINTAIN an effective and
    well-organised record management system of all
    policies procedures.

11
Internal Control Systems, contd.
  1. The Board must demand a written assessment from
    the following persons, on an annual basis
  • Managements view of what is deemed as
    significant risk, along with proof of analysis
    and mitigation.
  • Internal auditors independent evaluation of risk
    control systems.
  • External auditors assessment of internal
    controls.

12
Risk management
  • The major risks to identify include
  • Business continuity
  • Management of strategic operational change
  • Business reputation
  • Market competition
  • Financial Economic

13
Risk management contd
  1. Regulatory Legal
  2. Challenges to intellectual property rights
  3. The recruitment retention of competent
    personnel
  4. Evaluation integration of acquisitions and
  5. Protection of IT systems data.

14
SECTION B
  • CONDUCIVE ORGANISATIONAL STRUCTURE CULTURE

15
Corporations and SMEs need to ensure that a
vibrant organisational structure exists to
  1. Encourage best practices
  2. Provide clearly defined roles responsibilities
  3. Allow adaptation to change

16
  1. Improve communication
  2. Build team-spiritedness
  3. Provide a sense of commitment and
  4. Cultivate the appropriate culture.

17
Recommended Organisational structures

18

19

20
The appropriate culture, tone and attitude of the
workplace is also key to the effectiveness of
corporate governance.

21
Many Caribbean companies need to consider the
eradication of negative management practices in
order for sound corporate governance systems to
thrive. These Pontius Pilate management
practices include
  • Coercive tactics that lead to fear and
    intimidation.
  • Notions of bossism and authoritarianism.

22
Therefore, what kind of management/leadership
style structure does your organisation have?
Again it is recommended to cultivate either a
functional/participatory or matrix structure.
23
SECTION C
  • SOUND MANAGEMENT PHILOSOPHY OPERATING STYLE

24
The Company's management philosophy is reflected
in the systems, policies protocols by which its
business is conducted. It should echo
  • Transparency
  • Accountability
  • Responsibility
  • Non-conflict of interest and
  • Value for Employees

25
SECTION D
  • EFFECTIVE AND PROACTIVE BOARD COMMITTEES
    WELL-DELINEATED ROLES AND RESPONSIBILITIES OF
    BOARDS, MANAGEMENT
  • EMPLOYEES

26
The Board of Directors
27
  • Companies should ensure that
  • The Board is aware of its mandate.
  • The Board understands the companys strategy and
    are aware of the risks associated therein.
  • Directors are aware of their fiduciary duty
    duty of care.
  • The Board monitors managements performance.

28
  1. The Boards composition is a healthy mix of
    expertise and does not present a conflict of
    interest.
  2. Directors receive the requisite orientation.
  3. The Board meets frequently and have required
    access to information and personnel.
  4. The protocol and conduct of all meetings be
    honoured.

29
Management Employees
30
Companies should ensure that
  1. The delegation of authority and responsibility be
    clearly defined and inforced and

31
  1. Management is competently skilled. These skills
    should include

32
  1. Employees should also have the requisite skills
    for their required job functions.
  2. Both management and employees performance must
    be devoid of conflicting interests.
  3. Employees must be given clearly defined job
    charters.
  4. Requests made to staff must be clear and
    unambiguous.

33
SECTION E
  • HIGH STANDARD OF INTEGRITY
  • AND ETHICAL VALUES

34
It is imperative that the following groups
operate with high levels of integrity and ethical
values in any Corporation or SME
  1. Board of directors
  2. Senior management
  3. Employees
  4. Internal auditors
  5. External auditors

The success or failure is determined by these
values and reputation risks are also at stake.
35
SECTION F
  • EFFICIENCY COMMITMENT
  • TO EXCELLENCE

36
  • A businessman once said, A business succeeds
    not because it is long established or because it
    is big, but because there are men and women in it
    who live it, sleep it, dream it, and build great
    future plans for it.

37
PART II

38
EMBRACING CORPORATE GOVERNANCE STANDARDS AT THE
CORPORATION SME LEVEL
  • What confronts us?

39
  • The opening of the CSME would see trans-regional
    traffic of all resources.
  • With FTAA to take effect January 2005 there is no
    place to hide.

40
  • Companies are forced to be more vigilant of
    their financial practices with the recent
    pressure from FATF, CFATF, IAIS and FIU, for
    anti-money laundering legislation in Caribbean
    companies and the honouring of KYC rules.
  • In order to continue to access finance from
    international agencies, the need for disclosure,
    transparency, competitiveness and good management
    practices would come under great scrutiny.

41
SUMMARY

42
  • YOUR ORGANISATION SHOULD CAREFULLY CONSIDER THE
    FOLLOWING

43
  • What is the cost of non-compliance vs.
    compliance?
  • How essential is your staff to your business
    success?
  • What would be your financial and economic
    losses?
  • What are your reputation risks?

44

Corporations and SMEs must
  • Admit that the business environment has
    profoundly changed.
  • Accept that Corporate Governance is no longer a
    nicety.
  • Effectively and efficiently employ the key
    components of sound corporate governance.

45
  • The ball is in our court.
  • Thank you for allowing me to participate in this
    forum.
  • V. Carmichael.
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