Monthly Archives: September 2015
Understanding the risks in these emerging markets is critical to being able to capitalise on these developing opportunities. In particular, emerging markets are often associated with corruption and nepotism; where the business practices considered as ethical and compliant in developed countries may not yet apply. Tackling fraud, bribery and corruption is therefore a crucial step in successfully entering or expanding in emerging markets in regards to regulatory pressure but also in a broader strategic vision of establishing sustainable business and operations in those countries.
The concept of good governance is that boards can contribute in powerful ways as they advise, support and challenge management teams tasked with delivering results. Governing well is not easy. There can be tension between the board and management, between leadership and various stakeholders and even around the boardroom itself. Whether or not this tension is harnessed into constructive professional discourse depends on who is gathered around the table and, importantly, how they work together. When boards work well together, are cohesive with the management teams of their organisations and honour the visions of multiple, diverse stakeholders, governance can become a competitive advantage. When they don’t, corporate governance can be incredibly destructive.
Norway’s adoption of a 40 per cent gender quota for corporate boards in 2003 was a watershed moment, with global governance ramifications that we are only just beginning to understand. More than a dozen countries have since followed Norway’s lead, while many others have chosen voluntary ‘comply or explain’ gender targets. Consistent with its free-market values, the United States maintained the status quo and did not follow the global trend.
Let’s coin another phrase: governance activism. If we all accept for the moment that governance refers to ‘conduct of life or business; mode of living, behaviour and demeanour’ and even the less-used ‘discreet or virtuous behaviour; wise self-command’ from the full Oxford English Dictionary 2004 (meanings 4a and 4b), then my focus is truly about getting the governance of modern businesses to be sound. Sound in the sense that they really consider the interests of all stakeholders and that they play fair. In my opinion, sound governance drives environmental and social issues.
At the turn of this century, a new era began for public company auditors and audit committees. Marked by emerging pressures and ongoing change, this new era continues to take shape. As never before, policymakers are focused intently on the financial statement audit with implications for stakeholders across the financial reporting supply chain. Investors also show increasing interest in how the audit works and how it is overseen. Auditors and audit committees have responded to these developments in numerous ways, but two important themes stand out: collaboration and communication.