Venkat Raman –
Accountability and transparency are increasingly becoming the focus of corporate governance and with the promulgation of stricter laws relating to Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT), the compliance regime is expected to tighten in most countries.
In its Sector Assessment Report released on April 7, 2017, the Reserve Bank of New Zealand (RBNZ) rated the overall inherent rating as ‘High’ for Retail, Business and Commercial Banking and ‘Medium’ for Wholesale and Institutional Banking. The risk for deposit-taking companies was ‘Low,’ while Building Societies and Credit Unions carried ‘Medium’ risk.
The Bank’s Prudential Supervision Head Toby Fiennes said that New Zealand’s banking sector continues to have a relatively high potential risk because money launderers and terrorist financiers are more likely to target financial institutions in that sector rather than other sectors.
“The sector risk assessment is designed to help financial institutions to understand their own exposer to money laundering and terrorist financing risks better,” he said.
The byword in high places
Accountability has become the byword in the echelons of corporate governance as markets become volatile, exposing companies to heightened risks. The Global Financial Crisis that began in 2007-2008 taught the single most important lesson: that accounting policies of companies- both listed and private – should be strong, with a robust internal and external audit system that can send out early alarms. Since then, governments, especially those that were compelled to bail out huge corporates that were failing, to have in place stricter accounting and reporting standards.
There have been developments in the corporate sector as well, with stakeholders including shareholders becoming vociferous in their demands for better accounting and reporting systems and practices.
In the case of New Zealand, the failure of Air New Zealand in November 2001 and the resultant $885 million bailout package of the then Labour government, was seen as an important lesson in transparency.
Ten years later (in April 2011), the National government had to fork out $500 million of taxpayer money to AMI amidst revelations that the bill for the failed South Canterbury Finance had jumped from $900 million to $1.2 billion.
The past decade has seen nothing less than a revolution in the command centres of capitalism: corporate boardrooms. The ancien régime of club ties and long lunches has been swept aside, and replaced by a new order based on transparency and accountability.
“For the 2014-2015 audits, some government departments provided annual report information to my auditors that was late or, if provided on time, was incomplete or inadequate. The lateness and poor quality of information and draft reports initially provided not only created more work for my auditors but that work also needed to be completed in a tighter time frame.
“I would like to see more attention being committed to good quality financial and performance reporting to ensure that entities provide a robust and transparent account of themselves to Parliament and the public in a timely manner.”
The fact that the above observations and many others are available on the public domain speaks for the transparency of governance predominant in New Zealand.
Today, thanks to increasing public scrutiny and debate, not to overlook the vigilance of the opposition, no government can get away from the public eye. That in itself is a tribute to New Zealand’s penchant for corruption-free government.
There are of course many existing – some of them new – issues that test the government’s truthfulness – and these do not relate to finance.
Private Sector test
How truthful and reliable is the private sector? Are they fully complaint with the accounting and disclosure procedures? Does their tax compliance alone suffice to certify their good governance? How can they be encouraged to subscribe to better accountability, transparency procedures?
The Indian Newslink Sir Anand Satyanand Lecture has been structured to promote the concept of good governance in government, public sector, private undertakings and in our personal lives. With accountability, integrity, honesty and transparency as the core principles, the annual Lecture series, now in its seventh year, aim to assess our values.
Our Annual Lecture
Lyn Provost, who retired from the post of Controller & Auditor General (CAG) of New Zealand on January 31, 2017 after completing her seven-year term, is the Guest Speaker at this year’s Lecture, scheduled to be held on Monday, August 7, 2017 at Alexandra Park, Greenlane, Auckland. Medtech Global Limited Executive Chairman Vino Ramayah will be the Master of Ceremonies, with ‘Perspectives’ and ‘Reflections’ given respectively by Nirvana Group Director Ranjna Patel and former Member of Parliament Dr Rajen Prasad.
We will report more on the theme of her Lecture in our ensuing editions.
During her term as the CAG, Ms Provost reported on topics as diverse as governance, education of Maori, Auckland Council and the Canterbury earthquakes, as well as completing a number of high profile inquiries.
Over those seven years, she was also Secretary General of Pacific Association of Supreme Audit Institutions (PASAI) and a member of the International Governing Board of the Vienna based International Organisation of Supreme Audit Institutions (INTOSAI).
Immediately prior to her role as the CAG, she was Deputy Commissioner of Police for eight years, the first woman civilian to hold this position.
Ms Povost was also Acting Chief Executive of Archives New Zealand, Branch Manager, State Services Commission and held auditing roles in the Audit Office, Touche Ross, London and Pim Goldby, South Africa.
She was recently appointed as a public member on the International Auditing and Assurance Standards Board located in New York and is the Chair of the Brian Picot Ethical Leadership Advisory Board.
Lyn is a Chartered Accountant and is married with two children.
Tickets to the Seventh Annual Indian Newslink Sir Anand Satyanand Lecture are priced $150 per person. Tables seating ten persons at $1500 plus GST are also available. For bookings, please call (09) 5336377 or 021-836528. Email: firstname.lastname@example.org
Dr Rajen Prasad, Ranjna Patel and Vino Ramayah