Transcript Audit Committees: Fostering investor confidence

With technical & financial assistance from:
Caribbean Association of Indigenous Banks Inc
www.caibinc.org
Audit Committees: Fostering Investor Confidence
Chris Pierce
Global Governance Services Ltd.
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CEO of Global Governance Services Ltd.
Formerly Director of Professional Standards at
the IoD in London
Author of “The Effective Director” (2001)
Director of the World Bank Global Governance
Leadership Program
Author of “The Handbook for International
Corporate Governance” (2004)
Author of “Developing Corporate Governance
Codes” (2005)
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Responsibilities of directors
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The role of the audit committee
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The role of investors
Exercising
accountability
and
responsibility
Foresight
Delegation to
Management
Strategy
and
Structure
“The Directors of a company must not
approve accounts…unless they are
satisfied that they give a true and fair
view of the assets, liabilities, financial
position and profit and loss of the
company.”
Company Law Reform Bill 2006
“The primary purpose of the financial statements
of an entity is to provide its owners – the
shareholders – with information on the state of
affairs of the entity and its performance and to
assist them in assessing the stewardship
exercised by the directors over the business that
has been entrusted to them.”
Auditing Practices Board Ethical Standard 1
Audit Committee Best Practice
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Composition
Defining the role
Meetings
Resources
Remuneration
Skills and training
Relationship with the Board
Financial reporting
Internal Control and risk management systems
Whistleblowing
Internal audit
External audit
Communicating with shareholders
The role of the investor
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Accountability
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Fairness
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Transparency
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Responsibility
McKinsey’s Global Investor Opinion
Survey (2002)
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30% in East Europe and Africa
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22% in Asia and Latin America
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14% in North America and Western
Europe
Deutsche Bank Research
(2002 – 6)
 Price
premiums are paid by investors
in emerging markets for shares in
companies with good corporate
governance.
Black, Jang and Kim Research in
Korea (2003)
 Well
governed companies in Korea
trade at a premium of 160%
compared to poorly governed firms.
A large company
that is well governed
will have
an audit committee
Research indicates that companies that
are well governed:
 Have greater access to capital
 Have a higher growth rate
 Have higher profitability
 Have a lower cost of capital
 Have a higher share valuation
Chris Pierce
Global Governance Services Ltd
Tel:
+44 1689 878399
Email: [email protected]
Website: www.ggs.uk.com