Corporate Governance Abdulaziz Al-Hashimi General Auditor Saudi Aramco.
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Transcript of Corporate Governance Abdulaziz Al-Hashimi General Auditor Saudi Aramco.
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Corporate Governance
Abdulaziz Al-HashimiGeneral Auditor
Saudi Aramco
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Introduction to Corporate GovernanceDefinition
Benefits
System
Cornerstones of Good Governance
The Saudi Aramco Experience Audit Committee
Internal Audit
Introduction to Corporate GovernanceDefinition
Benefits
System
Cornerstones of Good Governance
The Saudi Aramco Experience Audit Committee
Internal Audit
AgendaAgenda
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Corporate GovernanceCorporate Governance
الشركات حاكميه الرشيدة اإلدارة اإلداري االنضباط الشركات حوكمة
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Corporate Governance Defined
“Corporate governance involves a set of relationships between a company’s management, its board, its shareholders, and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined”.
… Institute of Internal Auditors
“Corporate governance involves a set of relationships between a company’s management, its board, its shareholders, and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined”.
… Institute of Internal Auditors
Corporate GovernanceCorporate Governance
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Why Corporate Governance?Why Corporate Governance?
Company Owners
Management
Majority
Minority
InsuranceSuppliersCreditors
CommunityEmployeesGovernment
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Why Corporate Governance?Why Corporate Governance?
How can you guarantee that management is increasing owner’s wealth?
Does management use the business for their personal benefit?
Is the Company controlled by a majority?
How can creditors be given assurance of financial strength?
Are employee rights and benefits protected?
Is the Company fulfilling its community obligations?
Is Company information transparent?
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Benefits of Corporate GovernanceBenefits of Corporate Governance
Social Responsibility
Fairness
Responsibility Accountability
Independence
Transparency
Discipline
Corporate Governance
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System of Corporate GovernanceSystem of Corporate Governance
COMMUNITY
INSURERS
GOVERNMENTLENDERS
EMPLOYEESBOARD
SHAREHOLDERS
REGULATORS
OFFICERS
AUDITORSPOTENTIALINVESTORS
SUPPLIERS
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Board of DirectorsBoard of Directors
General Board responsibilities should include:
Corporate Philosophy and Mission
Director Nomination
CEO and Senior Executive Selection
Management’s Strategic Plans and Business Objectives
Evaluation of Corporate Performance
Enterprise Risk Management (ERM)
Ethical Compass of the Organization
Board Self-Assessment
Corporate Philosophy and Mission
Director Nomination
CEO and Senior Executive Selection
Management’s Strategic Plans and Business Objectives
Evaluation of Corporate Performance
Enterprise Risk Management (ERM)
Ethical Compass of the Organization
Board Self-Assessment
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The Cornerstones of Corporate Governance The Cornerstones of Corporate Governance
Audit Committee Executive
Management Internal Audit External Audit
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Financial Reporting Financial Statements
Accounting Policies
FR Controls
Risk Mgmt & Controls Effectiveness of Controls
Irregular Activities
Follow-up on Audit Issues
Internal Audit Authority & Resources
Scope of Work
Risk & ControlRecommendations
External Audit Scope, Fees & Services
FS Opinion & Controls
Independence & Performance
BAC AreasOf Focus
BAC ResponsibilityBAC Responsibility
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Relationship with the General Auditor Relationship with the General Auditor
Board Audit Committee
General Auditor
Independent & Objective Provider of Assurance
Risk FocusedValue Added Improvements
Professionalism and IntegrityEffective Operations
Establishes the “Tone at the Top”
IndependentRisk KnowledgeableActively Engaged
Corporate GovernanceEnsures Resources
Can
did
Com
mun
icat
ion
Candid C
omm
unication
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Internal AuditingInternal Auditing
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““Internal Auditing is an Internal Auditing is an independent, objective assurance independent, objective assurance and consulting activityand consulting activity designed designed to to add valueadd value and and improveimprove an an organization’s operation. It helps organization’s operation. It helps an organization an organization accomplish its accomplish its objectivesobjectives by bringing a by bringing a systematic, disciplined approach systematic, disciplined approach to evaluate and improve the to evaluate and improve the effectiveness of risk effectiveness of risk management, control and management, control and governance processes.”governance processes.”
Internal Auditing
Skilled Staff
Audit Types
QA
Independence
Objectivity
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Board Audit Committee
Sr. Vice PresidentFinance
General Auditor
Functional Audits Department
Operational Audits Department
Admin & General
Int”l Businesses
Information Systems
Industrial Relations
Special AuditsDivision
Planning Support & Consulting Division
Refining & Marketing
Exploration & Producing
Engg. & Projects Mgt.
Operations Services
ASC Audits Division
Internal AuditingInternal Auditing
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Model Audit ProfessionalsModel Audit Professionals
ExperienceCertificationTraining EducationAuditors
4 Year
Degrees:
• Accounting
• Finance
• Engineering
• Economics
• Info System
40% are:
• MBAs/MS
• Engineering
• Accounting
E-learning In-house Company In-Kingdom Out-of-
Kingdom
60%
• CIA• CPA• CA• CISA• CISSP• CFA• CFE• CMA• CFM• CGA• PFSO• CCSA
Company
Fieldwork in
Engineering
Other
Companies
Internally
Developed
(via OJT)
78 Auditors
From:
• Saudi Arabia
• USA
• Canada
• UK
• Philippines
• South Africa
• Australia
• India
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Internal Auditing ServicesInternal Auditing Services
Assurance Services
Consulting Services
Regular AuditsRegular Audits
Special AuditsSpecial Audits
Control Control Self-AssessmentSelf-Assessment
Risk AssessmentsRisk Assessments
Fraud AwarenessFraud Awareness
Internal Controls &
Risk Management
Internal Controls &
Risk Management
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Governance is a Social ResponsibilityGovernance is a Social Responsibility
على ” تفرض الجميع بين المشتركة المسؤولية إنالشعب هذا شؤون من أمرا تقلد مسؤول كلنصب & واضعًا بأمًانته القيًام مسؤولية الكريممن أعظمهًا ومًا وشعبه ألهله خًادم انه عينيهوالتفًاني واإلخالص بًاألمًانة توشحت إذا خدمة
. والتواضع والعطًاءالله أمًام مسًاءل انه مسؤول كل وليعلمالشعب وأمًام أمًامي ثم وتعًالى سبحًانه
تهًاون أو مقصود خطأ أي عن “السعودي
مساءلمساءل
باألمانة
باألمانة التواضعالتواضع
العطاءالعطاءالتفانيالتفانياإلخالصاإلخالص
عبدالعزيز بن عبدالله الملك الشريفين الحرمين خادمالله حفظه
عبدالعزيز بن عبدالله الملك الشريفين الحرمين خادمالله حفظه
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Hierarchy of EthicsHierarchy of Ethics
INTEGRITYINTEGRITYINTEGRITYINTEGRITY
LOYALTYLOYALTYLOYALTYLOYALTY
TRUSTWORTHINESSTRUSTWORTHINESSTRUSTWORTHINESSTRUSTWORTHINESS
HONESTYHONESTYHONESTYHONESTY
COMPETENCYCOMPETENCYCOMPETENCYCOMPETENCY
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What is Fraud?What is Fraud?
RationalizationRationalization PressurePressure
OpportunityOpportunity
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Examples of Poor GovernanceExamples of Poor Governance
“My Personal belief is that ENRON stock is an incredible bargain at current prices.. and that we will look back a couple of years from now and see the great opportunity that we currently have.”
Kenneth Lay, September 26, 2001Kenneth Lay, September 26, 2001
Kenneth Lay, Former ENRON Chairman, August 14, 2001Kenneth Lay, Former ENRON Chairman, August 14, 2001
“I want to assure you that I have never felt better about the prospects for the Company”.
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Examples of Poor GovernanceExamples of Poor Governance
“We found a systematic and pervasive attempt by Enron’s management to misrepresent the Company financial condition”
“The true causes of Enron’s rapid slide into bankruptcy were its own improprieties”
William Powers, Chairman, Special Enron Investigations Committee
February 1, 2002
William Powers, Chairman, Special Enron Investigations Committee
February 1, 2002
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“A Quality Control Agency located in the USA withdrew the Quality Certificate it awarded to a Saudi Company because the percentage of lead in its products exceeded the allowable limit, and therefore, the Saudi Company is not authorized to use the quality certificate.”
Al-HAYAT Newspaper, January 20, 2008
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Examples of Poor GovernanceExamples of Poor Governance
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ConclusionConclusion
Corporate Governance is a Process…
It can Create a Positive Impact Throughout any Organization…
You Need to Believe in it for it to be Successful…
Corporate Governance is for Everyone…
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THANK YOU THANK YOU