Professional Documents
Culture Documents
16/397035/EK/20991
- Establish and run specialized committees as needed (e.g. audit, compensation, nomination) to
provide additional support and expertise.
Executive Management
The role of executive management in promoting strong internal governance, good leadership, and
undoubted behavior is critical. To prevent the pursuit of “self-interest” – which might lead ultimately
to abusive practices – executive management must remain under the general supervision of directors
and be constrained by certain structural parameters. In order to be effective in working toward the best
interests of the company, a proper compensation package must be established that allows executives
to benefit as they create shareholder value. Essential duties of executive management include:
- Manage the firm’s operating, financing, and corporate activities on a daily basis, remaining
accountable to the board of directors for progress and performance.
- Create tactical business plans and operating strategy in conjunction with the board of
directors. Manage the results and adjust them as necessary.
- Define and monitor financial and operating risk exposures in conjunction with the board.
Internal Control Groups
Firms often feature a variety of groups, but it usually have the following two characteristics:
independent and possess technical process. To be effective, it has to promote cross-group
communication and cooperation. It also has to undergo regular review, to adapt with rapid changes of
technology and globalization. Five departments and/ experts that are mostly essential to enhance the
responsibility of internal control groups are:
1. Financial control/accounting 4. Internal audit
2. Risk management 5. Operations and technology
3. Legal compliance
Code of Conduct
Code of ethics generally aim to ensure a clear understanding of basic ethical principles, including
proper treatment of stakeholders. In addition to specifically declaring such ethical parameters. It is
drafted by board of directors, and promulgated by executive management. This is not to say that code
of ethics merely a written statement, it needs to construct culture and belief system of the company for
it to sustain.
Implementation of Internal Governance Measures
These may be implemented in two forms:
- Under the prescriptive approach a company adheres to certain standard governance
practices and formally discloses to shareholders that it is in compliance.
- Under a non-prescriptive approach a company can select the practices it chooses, but must
disclose exactly what standards it has selected