Home' Trinidad and Tobago Guardian : October 15th 2015 Contents OCTOBER 15 • 2015 www.guardian.co.tt BUSINESS GUARDIAN
CORPORATE GOVERNANCE | BG9
One of the most important elements of effective
corporate governance---in both the public and
private sectors---involves the content and quality
of the annual report. The T&T Corporate Gov-
ernance Code (2013) recommends that boards
of directors should present an "accurate, timely,
balanced and understandable assessment of the company s per-
formance, position and prospects." But, in reality, how effective
are our companies in meeting this reporting recommendation?
Public sector: plenty of room for improvement
Many of our readers may be surprised to learn that the reporting
of company performance in T&T is at a very disappointing and
low level. In August of this year when we sought to find the
annual reports of 80 companies in which the State has an interest
in, we were able to find annual reports for
2014 on Web sites of seven companies. The
general public has a fundamental right to
know the actual performance, position and
prospects of state enterprises in this country.
In order to improve management of public organisations one
must start with a clear published statement of the current situation.
All of the newly formed boards in the state-owned sector should
currently be identifying whether their organisation is one of the
seven that has published its annual report, whether it is being
transparent and then address this as a matter of priority.
Private sector: also plenty of room for improvement
Our readers may be surprised to learn that the situation is not
a lot better in the private sector.
A survey in 2011 found that the average disclosure by companies
listed on the T&T Stock Exchange was less than 50 per cent of
what boards of directors, on average, disclose in other emerging
and frontier markets.
The starting point: reporting on the governance
The starting point for improved disclosure by organisations
normally begins with the publication of a clear outline of the
board s roles and responsibilities.
In particular the board should state that it is explicitly taking
into account the legitimate interests and expectations of all stake-
holders. There should also be in the annual report evidence that
there is active co-operation between corporations and stakeholders
in creating wealth, employment, and the sustainability of a finan-
cially sound enterprise.
Reporting on the composition and performance of
board and committees
All boards should appoint sufficient numbers of independent
directors that are unbiased in their judgment, particularly for sit-
uations where there is a potential for conflicts of interest. The
assessment of the board s independence should take place annually
and each non-executive director that is considered to be inde-
pendent should be disclosed in the annual report.
The selection and appointment processes of all directors should
be reported in the annual report. These processes should rigorous
and formal and designed to give the board a balance of inde-
pendence and diversity of skills, knowledge, experience, perspectives
and gender among directors so that the board works effectively.
A committee with a majority of inde-
pendent non-executive directors, should
lead the board s nomination process and
make recommendations to the board.
All directors should receive induction training upon joining the
board and should regularly update and refresh their skills and
knowledge. The induction and updating activities relating to the
directors should be published in the annual report.
Another activity that should be published in all Annual Report
concerns board evaluation. All boards should undertake a rigorous,
transparent and formal annual evaluation of its own performance
and that of its committees and of the individual directors.
In addition, the board should ensure that the remuneration of
directors and senior management is transparent, fair and reasonable
and include a section on this in the annual report.
Reporting on accountability
All boards should publish accurate, timely and balanced disclosure
of all material matters concerning their company.
In particular, directors should state in the annual report their
responsibility towards the integrity of the financial reports.
This includes a statement from directors that these reports
comply with applicable financial reporting standards and present
a true and fair view of the financial affairs of the company.
All boards should, on an annual basis, report to shareholders
and stakeholders on the external auditor s involvement in non-
audit work and fees paid to auditors. This disclosure should dif-
ferentiate between fees for audit work and fees for non-audit
All boards should, on an annual basis, verify in the annual
report that the company has appropriate processes that identify
and manage potential and relevant risks.
All boards should report annually to shareholders on how the
company is implementing the corporate governance principles
contained within the T&T Corporate Governance Code (2013)
and explain any significant departure from recommendations
supporting each principle.
The CCGI is a regional, independent, non-profit, professional membership
organisation registered with the Accreditation Council of T&T. CCGI is
the award body that provides the Certificate and Diploma in Corporate
Governance and the Chartered Director qualification throughout the
Caribbean. The next course to be run in Trinidad will be on Corporate
Reporting and will be run on October 22 to 23. CCGI welcomes membership
applications and participation in its courses and events throughout the
region. +1 (868) 221-8707 www.caribbeangovernance.org
How good are our
producing annual reports?
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