De La Salle Lipa SY 2022-2023

Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Corporate Governance
Module 1 for GOVRISK – Corporate Governance, Business Ethics,
Risk Management and Internal Control

Module Objectives
ü Describe the principles of effective corporate
governance
ü Specify the roles and responsibilities of the different
stakeholders within corporate governance
ü Understand corporate governance policies in terms of
the 16 governance responsibilities

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Corporate Governance
Corporate
§ organization created by a group of shareholders who have ownership of the
corporation

Governance
§ process whereby elements in the society wield power, authority and
influence and enact policies and decisions concerning public life and social
upliftment
§ process of decision-making and the process by which decisions are
implemented (or not implemented) through the exercise of power or
authority by leaders of the country and/or the organization

Corporate Governance
“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.”
- Organization for Economic Co-operation and Development (OECD)

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Corporate Governance
§ refers to the way a corporation is governed
§ is the technique by which companies are directed and
managed
§ means carrying the business as per the stakeholders’ desires
§ is actually conducted by the board of Directors and the
concerned committees for the company’s stakeholder’s
benefit
§ is all about balancing individual and societal goals, as well as,
economic and social goals

Characteristics of Good Governance

1. Participation
§ mobilizing people to
participate in the decision-
making process
§ Freedom of association and
expression on one hand,
and an organized civil
society on the other hand

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Characteristics of Good Governance

2. Rule of Law
§ fair legal framework that are
enforced impartially for full
protection of human rights,
particularly those of the
minorities or marginalized
§ requires an independent
judiciary and incorruptible
force

Characteristics of Good Governance

3. Transparency
§ Balance between policy-
making and its enforcement
following proper rules and
regulations
§ Information is freely
available, directly
accessible, sufficient, and
understandable

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Characteristics of Good Governance

4. Responsiveness
§ sufficient services
addressing the needs of all
stakeholders within a
reasonable timeframe

Characteristics of Good Governance

5. Consensus Oriented
§ mediation of different
interests to achieve the long-
term perspective interest of
the whole community
§ can result or originate from
understanding the historical,
cultural, social context, and
behavior of the community

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Characteristics of Good Governance

6. Equity and Inclusiveness
§ ensures that all members
feel that they have a stake in
it and they are not excluded
from the mainstream of the
community
§ all groups have
opportunities to improve or
maintain their well-being

Characteristics of Good Governance

7. Effectiveness and Efficiency
§ ensure the outcomes meet the
needs of the society
§ proper utilization of resources for
the establishment of sustainable
development
§ sustainable use of natural
resources and the protection of
the environment

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Characteristics of Good Governance

8. Accountability
§ the most important
characteristic
§ organizations much be
accountable to the public
and to their institutional
stakeholders
§ cannot be endorsed without
transparency and rule of law

Pillars of Corporate Governance

§ Accountability – management is
accountable to the board, the
board is accountable to
shareholders
§ Fairness – shareholders rights;
treat all shareholders including
minorities, equitably; provide
effective redress for violations

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Pillars of Corporate Governance

§ Transparency – timely, accurate
disclosure on all material matters,
including the financial situation,
performance, ownership and
corporate governance
§ Responsibility and Independence
– free from the influence of
others; completely avoid conflicts
of interest

Concepts of Governance
key components of governance oversight

Source: Internal Auditing Assurance Advisory Services by Anderson, U. L. et. Al (2017)

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Concepts of Governance
key components of governance oversight

§ The board serves as the “umbrella” of governance oversight

for the entire organization.
§ The board provides direction to management. Empowers
them with the authority to take the necessary actions to
achieve that direction, and oversees the overall results of
operations.
§ The board must understand and focus on the needs of key
stakeholders.

Concepts of Governance
key components of governance oversight
§ Day-to-day governance is executed by the management of
the organization.
§ Senior management and line managers have important,
although somewhat different, roles in governance.
§ These roles are carried out through risk management
activities

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Concepts of Governance
key components of governance oversight

§ Internal and external assurance activities provide

management and the board with assurances regarding the
effectiveness of governance activities.
§ These parties include, but not limited to, internal auditors
and the independent outside auditors.

Concepts of Governance
key components of governance oversight

The Board and Its Committees

§ Identify the key stakeholders of an organization
§ Understand the needs and expectations of the key
stakeholders
§ Identify the potential outcomes that would be unacceptable
to the key stakeholders.

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Concepts of Governance
key components of governance oversight

Stakeholders’ characteristics
§ Some stakeholders are directly involved in the operation of the
organization's business.
§ Other stakeholders are not directly involved, but are interested in the
organization's business; that is, they are affected by the success or other
outcomes of the business.
§ Some stakeholders are neither directly involved nor interested in the
success of an organization's business, but these stakeholders may
nonetheless influence aspects of the organization's business and, as a
result, the organization's success.

Board’s Governance Responsibilities

The Code has 16 principles that are distributed among
five (5) main sections, namely:
1. Board’s Governance Responsibilities – Principles 1 to 7
2. Disclosure and Transparency – Principles 8 to 11
3. Internal Control System and Risk Management Framework – Principle 12
4. Cultivating a Synergic Relationship with Shareholders – Principle 13
5. Duties of Stakeholders – Principles 14 to 16

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Principle 1
§ The company should be headed by a
competent, working board to foster the long-
term success of the corporation, and to sustain
its competitiveness and profitability in a
manner consistent with its corporate objectives
and the long-term best interest of its
shareholder and other stakeholders.

Principle 2
§ The fiduciary roles, responsibilities and
accountabilities of the Board as provided under
the law, the company’s articles and by-laws, and
other legal pronouncements and guidelines
should be clearly made known to all directors as
well as to stockholders and other stakeholders

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Principle 3
§ Board committees should be set up to the
extent possible to support the effective
performance of the Board’s functions,
particularly with respect to audit, risk
management, related party transactions, and
other key corporate governance concerns, such
as nomination and remuneration.

Principle 4
§ To show full commitment to the company, the
directors should devote the time and attention
necessary to properly and effectively perform
their duties and responsibilities, including
sufficient time to be familiar with the
corporation’s business.

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Principle 5
§ The Board should endeavor to exercise objective
and independent judgment on all corporate
affairs.

Principle 6
§ The best measure of the Board’s effectiveness is
through an assessment process. The Board
should regularly carry out evaluations to
appraise its performance as a body, and assess
whether it possesses the right mix of
backgrounds and competencies.

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Principle 7
§ Members of the Board are duty-bound to apply
high ethical standards, taking into account the
interest of all stakeholders.

Principle 8
§ The company should establish corporate
disclosure policies and procedures that are
practical and in accordance with best practices
and regulatory expectations.

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Principle 9
§ The company should establish standards for the
appropriate selection of an external auditor,
and exercise effective oversight of the same to
strengthen the external auditor/s independence
and enhance audit quality.

Principle 10
§ The company should ensure that material and
reportable non-financial and sustainability
issues are disclosed.

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Principle 11
§ The company should maintain a comprehensive
and cost-efficient communication channel for
disseminating relevant information. This
channel is crucial for informed decision-making
by investors, stakeholders and other interest
users.

Principle 12
§ To ensure the integrity, transparency and proper
governance in the conduct of its affairs, the
company should have a strong and effective
internal control system and enterprise risk
management framework.

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Principle 13
§ The company should treat all shareholders fairly
and equitably, and also recognize, protect and
facilitate the exercise of their rights.

Principle 14
§ The rights of stakeholders established by law, by
contractual relations and through voluntary
commitments, must be respected. Where.
stakeholder’s rights and/or interest are at stake,
stakeholders should have the opportunity to
obtain prompt effective redress for the violation
of their rights.

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Principle 15
§ A mechanism for employee participation should
be developed to create a symbolic environment,
realized the company’s goals and participate in
its corporate governance processes.

Principle 16
§ The company should be socially responsible in
all its dealing with the comminates where it
operates. It should ensure that its interactions
serve its environment and stakeholders in a
positive and progressive manner that is fully
supportive of its comprehensive and balance
development

Prepared by: Maria Jamillah Patron

De La Salle Lipa SY 2022-2023
Borderfree Education Corporate Governance, Business Ethics, Risk Management and Internal Control

Module Objectives
ü Describe the principles of effective corporate
governance
ü Specify the roles and responsibilities of the different
stakeholders within corporate governance
ü Understand corporate governance policies in terms of
the 16 governance responsibilities

Prepared by: Maria Jamillah Patron