Mauritius releases best practice guidance notes for audit committee members
Mauritius President Kailash Purryag (second from right) noted that the government decided last year to revise the method of functioning of audit committees for minimizing queries during audit inspections and avoiding wastage of precious public resources. (Image: Cecilia Samoisi)
The MIoD (Mauritius Institute of Directors) collaborated with KPMG to launch best practice guidance notes for members of audit committees and boards of directors at the Hennessy Park Hotel on July 2, 2014 with Mauritius President Kailash Purryag present.
“I am convinced that audit committees will go a long way to strengthen governance by increasing citizens and shareholder’s ability to hold organisations fully accountable for their actions,” the President stated.
He noted that the government decided last year to revise the method of functioning of audit committees for minimizing the number of queries arising from audit inspections and avoiding wastage of precious public resources.
The mission of an audit committee is to assure organizational integrity through internal procedures and financial statements, serving as interface between internal auditors and external auditors while ensuring an independent eye on a company’s finances.
Consequently, by exercising tight control and diligent surveillance over the operations of the company, they highlight any corporate breaches by notifying directors on corrective measures to be taken to maintain good governance.
The selection of the members of an audit committee must be rigorous to allow it to be an independent entity within the company and avoid any dishonest compromise.
However, audit committees have often had to fight a long battle to mitigate constant changes in information disclosure norms relative to good corporate governance, risk management, audit issues, accounting, financial statements and international developments.
Nowadays, committees have more responsibilities and the complexity of their task is increasing. This has culminated in the Audit Committee Forum (ACF) to help audit committees in Mauritius.
“Audit committees need guidance. Most of them did not previously receive this much-needed support to understand and implement administrative changes concerning good corporate governance, accounting and risks,” Jane Valls, CEO of MIoD, said.
She added that their influence for the promotion of good governance is now fully recognised and it is essential that these committees learn new methods and adopt best practices.
“Audit committees can become the pillars of good governance and we have a duty to strengthen them,” she explained.
This forum is an information and sharing centre for audit committees and their members.
MIoD and KPMG ensured that the members of this forum are multidisciplinary and have the competence and experience required to achieve this noble initiative.
The ACF consists of Georges Leung Shing as Chairman and Jane Valls, Catherine Mcllraith, Madhavi Ramdin, Sheila Ujoodha, Pierre Dinan, Alastair Bryce, Damendranath Bhunjun, John Chung, Jérôme de Chasteauneuf, Maurice Enouf, Jean-Michel Felix, Khoymil Goburdhun, Anil Gujadhur, Paul Halpin, Fabrice Koenig and Sanjay Molaye as members.
“It is the objective of the ACF to provide guidance for Audit Committees based on the latest legislative and regulatory requirements; as well as highlight best practice guidance to enable Audit Committee members to carry out their responsibilities effectively,” said Pierre Dinan, external member of the Monetary Policy Committee, Bank of Mauritius.
According to him, the ACF aims to be a valuable source of information to audit committee members and act as a resource to which they can turn for information or share knowledge; and, in so doing, enhance the effectiveness of audit committees in Mauritius.
This guide of best practice of audit committees contains the requirements, which every audit committee has to conform to, in agreement with the National Code of Good Governance.
In addition, the guide provides the best practices which complement these requirements.
Companies and audit committees trying to strengthen good governance are often called on to the best practices of their audit committee.
However, the forum recommends that a certain flexibility is granted to committees so that they can adopt the best solutions according to the size of companies and their economic importance.
According to KPMG, a unique committee cannot suit to all types of companies thus it is advisable to establish a committee designed for every company.
However, basic principles exist and must be respected during the phases of development and evaluation.
The best practices guide for audit committees proposes methodologies to help better define the reference terms, duties and responsibilities of the committee, the necessity of organising regular meeting, and communication with the persons receiving benefits of insurance.
Finally, the guide recommends that independent directors mainly constitute the board of a company, to avoid conflict of interest.
- By Marie-Lorry Coret and Cecilia Samoisi