Publication date: Jan 11, 2011 | author/source: Archie Garden
At Oriens we are great believers that focus from the very beginning of an entity’s corporate governance is one of the critical drivers for future success. So, what is corporate governance? Certainly the huge major corporate catastrophies of the last few years such as Enron and Lehman Brothers has highlighted the importance of corporate governance; but it is surprising how few smaller companies think that this is an area of importance, or one worth spending scarce cash resources on.
Good corporate governance begins with the board, and we believe the guidance provided by the Institute of Directors and the Financial Services Authority to be useful. The board’s role is to provide entrepreneurial leadership of the company within a framework of prudent and effective controls which enables risk to be assessed and managed. The board should set the company’s strategic aims, ensure that the necessary financial and human resources are in place for the company to meet its objectives and review management performance. In addition, they state that all directors must take decisions objectively in the interests of the company. The importance of having effective non-executive directors is also underlined, in that they should constructively challenge and help develop proposals on strategy. Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance. They should satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and defensible.
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