LOCAL GOVERNANCE

WHAT IS GOVERNANCE
A SYSTEM DESIGNED TO CONTROL AND
DISTRIBUTE POWER WITHIN THE
ORGANIZATION

IDEALS TO BE DONE TO REALIZE GOALS

AND DESIRES
Set of relationships
among the officers,
management, and owners Officers
of a business entity
through which the
objectives are decided and
the means for achieving
Management Owners
them and monitoring
performance are
determined.
 • Lack of formal strategic
planning and management
processes
• Lack of clear understanding of
the actual duties,
responsibilities, accountabilities,
and liabilities of the board of
directors as a body and as
individual directors

GOVERNANCE ISSUES AND

PROBLEMS
 • Diverse backgrounds of directors –
knowledge, experience, and training
not related to the organization
• Lack of sufficient knowledge in
finance
• Incomplete or insufficient reports and
data for making decisions

GOVERNANCE ISSUES AND

PROBLEMS
 • Reports and other required data not
given in advance of scheduled
meetings
• Insufficient discussion of complex
issues
• Lack of free exchange of ideas and
opinions

GOVERNANCE ISSUES AND

PROBLEMS
 • Lack clear definition of the roles and
responsibilities of the board on one
hand and management on the other
• Lack of knowledge of the business,
statutory requirements, current and
best business practices

GOVERNANCE ISSUES AND

PROBLEMS
 • Lack of time devoted to board work
• Insufficient oversight in audit and risk
management

GOVERNANCE ISSUES AND

PROBLEMS
GOOD GOVERNANCE
GUIDING PRINCIPLES
1ST PRINCIPLE
It is the paramount duty of
the board of directors to select
and oversee the chief operating
officer.
 It is the responsibility of
2 ND
PRINCIPLE
management to operate the
business in an effective,
efficient, and ethical manner in
order to produce value for
stakeholders.
3RD PRINCIPLE
It is the responsibility of
management, under the
oversight of the board and
audit committee, to produce
timely and factual financial
statements.
 It is the responsibility of the
4 TH
PRINCIPLE
board and the audit committee
to engage an independent
accountant to audit the
financial statements prepared
by management.
5TH PRINCIPLE
It is the responsibility of the
independent accountant to
ensure that he is in fact
independent and has no
conflict of interest.
6TH PRINCIPLE

Employees shall be dealt with

in a fair and equitable manner
GOVERNANCE
QUOTES
“You cannot legislate good behavior.” -
Mervyn King