Worldwide corporate governance advisory is a growing area of practice as companies face greater regulation and higher expectations from stakeholders. Consequently large companies are revisiting their governance structures and risk identification and mitigation practices and, enhancing corporate disclosures to boost investor and regulator confidence in response to greater scrutiny. This strengthing could also be a competitive advantage especially if the Corporate is seeking access to public capital or establish a global presence.
Regulators Globally now almost uniformly believe that improved corporate governance rules do contribute to the development of the private sector and whilst local conditions remain a factor, the approach can be universalised and can be based on knowledge sharing across borders.
An IFC project (2007) on corporate governance notes that knowledge and example sharing provides a concrete base rooted in experience of corporate governance practices and policy. The knowledge base can be derived from local or Global examples. The objective is to transform the Company’s corporate culture thereby impacting positively on internal process efficiency, the internal control environment and mitigating risk. The leadership on this has to come from the Board of Directors which is ultimately responsible for the long term sustainability of the Company. When things go wrong in a Corporate the Board of Directors take centre stage. Enron directors for example had to pay USD 168 million to investor plaintiffs, of which USD 13 million was not covered by insurance.
In Pakistan, Legal as well as Accountancy firms have not looked at corporate governance practice from a holistic perspective and the advice given is therefore limited and compartmentalised, either advising on legal interpretation on the one hand or financial control and standards on the other. In this, they lag behind their overseas counter parts. There is therefore in my view scope to offer corporate governance advisory services which bridge the gap between the technical and the conceptual. A non exhaustive list is provided below:
The optimum approach to providing corporate governance advisory services is to approach this in a comprehensive manner moving from assessment to action with periodic post action reviews. The eventual aim of all corporate governance programmes is to assure the long term sustainability of organisations and this cannot be done by following a mere box ticking approach.