Internal Control and Ethics Management

 
 

"Similar to an orchestra, [corporate governance] is a co-ordinated effort among the Chairman, the CEO, Executive Directors and also Independent Non-Executive Directors. Of course, the tree greens from the top. Therefore, to embed a healthy corporate governance culture in a company, it has to be started from the top – Chairman as well as CEO. By doing so, the company can embed its code of ethics and good governance practices. INEDs can then facilitate the process and ensure checks and balances being in place."

Mr Kelvin Wong
Deputy Chairman, The Hong Kong Institute of Directors
 
Summary of views:
 

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To strengthen the internal control of a company is not only the responsibility of the company secretary but also that of the board, company directors and senior management. Like an orchestra which needs the concerted effort of every player, directors, executives, professionals and staff members in the company should all play their respective roles in ethical governance.
 

 
   
 
  

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For example, as INEDs represent minority shareholders, they should try their best in discharging their supervisory and monitoring duties. Company secretaries should also assist directors and management in ensuring ethical governance. Should she fail as in the case study, she might consider approaching the Chairman of the audit committee to ensure he is fully aware of the lack of internal control system. In any case, company secretary can influence the control culture by initiating to write the code of ethics and the power of the pen is really surprising.
   
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As the tree greens from the top, the embedment of an ethical culture and good governance practices in the company has to be initiated by and commenced from the top. Directors and their board as well as senior management should always take the lead proactively in enhancing ethical governance.
   
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The success of ethics management in a company lied in several areas – the setting up of company code of ethics and code of conduct, the provision of ethics training to all levels of staff, the development of system control and independent checks and balances as well as the nourishing of an ethical corporate culture.