Accountability and Practices ofToday’s Audit Committee in Enhancing    Good Corporate Governance                        Be...
About Speaker   Mr Pairat Srivilairit received a bachelor of engineering from Chulalongkorn    University and a MBA from ...
OutlineAccountability and Practices of Today’s Audit  Committee in Enhancing Good Corporate  Governance:    (60 min)   La...
Board’s Roles in Governance   “Governance is the system by which organizations are    directed and controlled. It include...
The Bad News   Capital markets expect more from Audit Committee    oversight role in every areas that demand transparency...
Financial Accuracy   Understand financial statements / accounting policies   Assess quality of earnings, not just reliab...
Internal Control   Assess if management provide enough tone at the top   Ensure staff have capabilities   Strong cultur...
External Auditor   Auditors should report directly to the committee   Audit Committees have a role in    – Selecting, or...
Risk Management   Understand how processes are tailored to meet    company’s specific needs   Ensure processes are ongoi...
Compliance and Ethics   Review and approve code of conduct   Ensure staff receive and understand the code   Management ...
Oversight of Management   Noses In. Fingers Out.   Communicate openly / challenge as appropriate   Balance advising wit...
Life Challenges   How the Audit Committee meets increasing    accountability and regulatory and statutory mandates    – H...
Members’ Attributes   Good understanding of the business—including    company’s products, services, and industry   Willi...
Meeting-Planning Tips   Strategies to cope with expanded workload    and ensure good steering of agenda.     – Use a sche...
Participants   Should allow frank discussion of confidential matters   Both internal audit director and external auditor...
Committee Evaluation   Evaluate committee performance regularly    by comparing activities against     •   Charter     • ...
Use of Internal Audit   Internal audit must have appropriate statue in the    company, by     – Dual reporting relationsh...
Increase IA’s Effectiveness   Open communication with management and committee   Ask stakeholders’ feedbacks   Strategy...
SummaryAccountability and Practices of Today’s Audit Committee in  Enhancing Good Corporate Governance:   New requirement...
Q&A                         PAIRAT SRIVILAIRIT              CIA, CISA, CBA, CCSA, CFSA, CISSP, CFE                       I...
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Abf pairat accountability_of_today_ac

  1. 1. Accountability and Practices ofToday’s Audit Committee in Enhancing Good Corporate Governance Best Practices for Corporate Governance & Board Effectiveness 31 August -1 September 2009 swissôtel Nai Lert Park Bangkok By Pairat Srivilairit, CIA, CISA, CBA, CCSA, CFSA, CISSP, CFE Tuesday, 1 September 2009, 13.15 –14.15 hrs Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 1
  2. 2. About Speaker Mr Pairat Srivilairit received a bachelor of engineering from Chulalongkorn University and a MBA from Thammasat University. He is a certified internal auditor (CIA), certified information systems auditor (CISA), certified bank auditor (CBA), holder of certification in control self-assessment (CCSA), certified financial service auditor (CFSA), certified information systems security professional (CISSP), and a certified fraud examiner (CFE). He is chairman of the Bank and Financial Institution Internal Auditors Club (BFIA) and past director of ISACA Bangkok chapter. He is also a member of The Institute of Internal Auditors (IIA), The Association of Certified Fraud Examiners (ACFE), The Information Systems Audit and Control Association (ISACA), The International Information Systems Security Certification Consortium (ISC)² and The Institute of Internal Auditors of Thailand (IIAT). He is a known lecturer on operational auditing and information system auditing courses at IIAT and ISACA Bangkok Chapter. He is also a special lecturer of the IIA’s Internal Auditing Education Partnership Program (IAEP) at Chulalongkorn University, and served as a member of the IIAT’s editors committee in publishing the Thai version of IIA standards, and the book on internal auditing procedure which was published with the support from the Stock Exchange of Thailand (SET). He also represented IIAT speaking to students at several universities to disseminate the internal auditing profession. Mr Pairat Srivilairit is associated with finance and banking industry for over 18 years with rich experiences in the area of management consulting, planning, research, investment, operation and audit. He is now with TISCO Bank Public Company Limited as head of internal audit and secretary to the audit committee. Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 2
  3. 3. OutlineAccountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance: (60 min) Latest development on Audit Committee mandates Critical roles & responsibilities at the present Recommended tools & mechanism for Committee to effectively discharge their roles and responsibilities Exploring how IA can excellently work with Committee Effectiveness & efficiency of Internal Audit functions Summary Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 3
  4. 4. Board’s Roles in Governance “Governance is the system by which organizations are directed and controlled. It includes the rules and procedures for making decisions on corporate affairs to ensure success while maintaining the right balance with the stakeholders’ interest.” Board’s Dual Roles in corporate governance – Advisor to management – Fiduciary to shareholders Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 4
  5. 5. The Bad News Capital markets expect more from Audit Committee oversight role in every areas that demand transparency. – Oversee process that produces reliable, transparent and objective financial information – Ensure the company has effective internal controls – Retain and compensate external auditors – Oversee risk management – Compliance with laws and regulations affecting the company – Oversight of management. Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 5
  6. 6. Financial Accuracy Understand financial statements / accounting policies Assess quality of earnings, not just reliability Healthy skepticism / ask probing questions Comfortable with treatment of unusual / complex issues Understand significant changes / auditors’ concerns Consider risk of fraud ― it is never zero  Revenue recognition  Provisions  Expense classification  Areas of judgement  Accounting for business  Suspense / Clearing combinations accounts Review adequacy and consistency of disclosures Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 6
  7. 7. Internal Control Assess if management provide enough tone at the top Ensure staff have capabilities Strong culture of integrity “do the right thing” Understand if audit plans address high-risk areas • Management override  Poor culture • Outside service providers  Recurring control weaknesses • Information technology  Payment systems • Mergers and acquisitions  Segregation of duties Understand control weaknesses, correction plan, and their impacts on financial reporting Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 7
  8. 8. External Auditor Auditors should report directly to the committee Audit Committees have a role in – Selecting, or reappointing, external auditors – Evaluating auditors’ performance – Ensuring auditors’ independence Candid and ongoing communications are vital Timely and robust dialogue on complex issues is essential Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 8
  9. 9. Risk Management Understand how processes are tailored to meet company’s specific needs Ensure processes are ongoing, with appropriate staffing Meet periodically with Chief Risk Officer Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 9
  10. 10. Compliance and Ethics Review and approve code of conduct Ensure staff receive and understand the code Management exhibits ethical behavior Understand program for monitoring code compliance Review reported violations and follow-up actions Whistleblower / complaint hotlines Review reported complaints / ensure actions taken are timely, consistent, and appropriate Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 10
  11. 11. Oversight of Management Noses In. Fingers Out. Communicate openly / challenge as appropriate Balance advising with fiduciary duty role Strong, open two-way communications Management should seek committee’s input in advance of key decisions Evaluate management’s performance and assess bench strength Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 11
  12. 12. Life Challenges How the Audit Committee meets increasing accountability and regulatory and statutory mandates – Have clear vision of what should be doing – Have the right directors on the Committee – Have effective structure to let them do work – Have a committee mandate - not a one time activity – Receive pertinent information and timely briefings – Have access to right people at the right time – Ensure time is well spent and activities are focused – Ensure the Committee’s voice to be heard Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 12
  13. 13. Members’ Attributes Good understanding of the business—including company’s products, services, and industry Willingness to dedicate substantial time and energy Other relevant attributes – Extremely high level of integrity – Healthy skepticism and courage to challenge – Inquisitiveness and independent judgment Good financial knowledge Regular training / orientation Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 13
  14. 14. Meeting-Planning Tips Strategies to cope with expanded workload and ensure good steering of agenda. – Use a schedule planner over the year – Balance workload across meetings – Meet in person at least 4 times a year, 2-4 hrs each – Detailed, written agenda and briefing materials submitted at least 10 days in advance – Expect chairperson to facilitate discussion, encourage meaningful participation, hold pre-meetings to explore issues, and ensure the right people attend – Ensure accurate minutes are kept to summarize meeting discussions and capture follow-up actions for accountability Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 14
  15. 15. Participants Should allow frank discussion of confidential matters Both internal audit director and external auditors typically attend every meeting Management’s participation is important Ask CEO / CFO to be on call during the meeting Avoid schedule multiple board committee meetings concurrently Meet privately with IA director, external auditors, finance management, and others, as warranted Guard against too many observers May engage outside specialist as necessary Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 15
  16. 16. Committee Evaluation Evaluate committee performance regularly by comparing activities against • Charter • Board approved mandate • Regulatory requirements • Leading practices Assess committee dynamics, not only on what the committee does, but also on how effectively it functions Should be robust— no “check the box” Obtain feedback from board, management, internal audit, general counsel, and external auditors Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 16
  17. 17. Use of Internal Audit Internal audit must have appropriate statue in the company, by – Dual reporting relationship to AC and CEO – Ensuring IA’s continual access to committee – Committee play key role in selection, evaluation, compensation, succession of IA director – Review and approve IA charter and plans – Monitor plans / approve major changes – Understand audit results / focus on findings and follow-up action – Ensure IA has budget and resources needed Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 17
  18. 18. Increase IA’s Effectiveness Open communication with management and committee Ask stakeholders’ feedbacks Strategy linked to objectives / stakeholder’s value Focus more on risk / governance Systematically-prioritized and adaptable plan Reduce routine and low value-added activities Automate fraud detection / shorten reporting cycle Attract and retain top talents Third party expert / IT audit Adherence to auditing standards and ethics Strengthen business knowledge and computer skills Play risk and governance educator role Quality assurance review Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 18
  19. 19. SummaryAccountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance: New requirements for accountability present a unique opportunity for audit committee and internal auditors to add value to organization. Audit committees must understand internal audit’s role if they are to work effectively and share a healthy interdependence. The internal auditors provide objective assessment on the state of the organization’s risk, control, governance, and monitoring activities to the audit committee. Audit committees provide validation and oversight to the internal auditing activities. Accountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 19
  20. 20. Q&A PAIRAT SRIVILAIRIT CIA, CISA, CBA, CCSA, CFSA, CISSP, CFE Internal Audit Department TISCO Bank Public Company Limited Mobile : +668 1903 1457 Office : +66 2633 7821 Email : pairat@tisco.co.thAccountability and Practices of Today’s Audit Committee in Enhancing Good Corporate Governance Pairat Srivilairit pairat@tisco.co.th 20
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