The Principles of Good Governance

By Ahmad Shahrul Hj. Mohamed

1. Knowledgeable and wise board

A board of directors consisting of highly qualified members with broad range of expertise and experience is an invaluable source to the entity. This would enable them to analyse each situation objectively and impartially before making wise decisions on behalf of the entity. With such knowledge in their possession, they will also be able to discharge their roles effectively by deciding on the best policies in the best interest of the entity.

2. Effective and efficient management team

A team of effective and efficient management will be able to execute and perform the tasks assigned to them within the required timeframe and budget and will be responsible for the daily running of the entity according to the policies set out by the Board. This should include the best people for the jobs not only in the entity’s operations but also in the support team including finance, legal and human resources.

3. Adequately staffed and well-trained internal audit team

The roles of the internal integrity team and internal auditor should not be underestimated as their roles are integral to this to ensure a check and balance culture is maintained throughout the entity at all times. Clear reporting lines and structures at all levels will enable timely reporting of frauds or irregularities to be made by any members of the team as and when the incident is encountered.

4. Impartial external auditors

The role of the independent external auditor is to express an opinion on the financial statements of the entity taken as a whole as part of the entity’s reporting including to its members. However, the skills and procedures performed by the external auditors can prove to be invaluable to the entity as it may lead to the discovery of material misstatements that may involve frauds or material errors and misjudgements.