Corporate Governance means processes and structures designed to help the organization achieve its objectives. In India, it is a set on internal controls, policy, and procedures that form the framework of a company’s operations and its dealings with various stakeholders such as customers, management, employees, government and industry bodies.
These processes and structures are influenced by risks that act as a barrier in an organization’s ability to achieve objectives. The organization has to make efforts to mitigate known risks as well as some unknown risks with the help of internal auditing.
Risks involved in Corporate Governance
- Strategies not aligning with the structure of the organization.
- Operational risk associated with internal processes.
- Emerging risk in the future and their effect on governance processes.
- A mistake in decision-making process due to continuous pressure from stakeholders to improve organization performance.
- Lacking behind in adapting to the fast-changing business environment.
How Internal audit can help:
Internal audit can provide management and board an informed unbiased critique of governance processes. Based on the finding of the assessed risk, the internal audit recommends changes to improve the processes and also helps in its implementation.
- Internal audit acts as a catalyst to provide insights to management and board for having a deeper understanding of governance processes and structures.
- Helps in giving foresight to the organization regarding future trends and bringing attention to emerging challenges before they become crises.
- Internal audit can add value by providing advisory and consulting services, intended to improve governance, risk management, and control processes, so long as internal audit assumes no management responsibility.
- Doing Risk-based audits so that higher risk areas are given more priority and lower attention is given to low risk areas.
Changes in COVID 19
As there are current and incoming Challenges due to the pandemic are also required to make changes to its existing corporate governance process and controls for mitigating risk. Focusing on additional risks and probabilities of their occurrence, increasing the meetings with the management for enhancing communication, and reviewing the board’s Future plans are some of the ways by which they can make changes in governance process.
A committee should be set up to prepare the plan addressing the COVID situation and finding solutions on how to reduce the impact of it on business processes and other management processes. Enhancing the company’s reporting system and oversight duties to detect problems that may cause risk in the future and consider the company’s liquidity and capital considerations and ensure any issues in this regard are being addressed. This is a crucial time and needs to be addressed carefully for the future of the organizations.
-Shivam Vashishtha, ShineWing India