IFAC chief:

Good governance essential for long-term success

The country’s commitment to good governance will be essential to ensure Sri Lanka’s long term success, as the nation becomes a more internationally integrated economy, visiting President of the International Federation of Accountants (IFAC), Ms. Olivia Kirtley, told the CEO Forum organized by the Institute of Chartered Accountants of Sri Lanka recently.

“Sri Lanka is one of the fastest growing markets in the South Asian region and in many aspects the economic outlook for Sri Lanka is very positive.

Yet challenges remain, and there is always more that could be done,” she said. Delivering the keynote address on ‘Strong Governance, Healthy Business’, Ms. Kirtley said that taking Sri Lanka and its businesses to the next level needs a strong, decisive and embedded governance culture.

“All organizations – large and small, public and private — must care about it,” she added.

Ms. Kirtley who said that the accountancy profession has long been an active advocate of good governance, outlined several important areas for stronger and more effective governance, where executives and boards have critical roles to play in corporate governance reform. “First and foremost, Boards and their committees must conduct a challenging assessment of their adequacy and qualifications to protect and represent investors and stakeholders. Boards must be willing to honestly assess themselves - as a group and each director individually,” she said. The IFAC President said that governance within the management structure is also critical.

“As executives, we must challenge ourselves and our organizations to gain a deeper understanding of complex business models and issues.

As with effective Board governance, it begins with continually examining whether the right people with the right skills are working in the critical risk and control areas.

Within operations (first line of defence), accounting, finance, risk management (second line of defence) and internal audit (third line of defence),” she said.

Outlining her third point, she said that professional accountants are uniquely qualified and stand ready to help.

Ms. Kirtley said that she was convinced by many years of serving on boards that the accounting profession is uniquely positioned to help companies address the gaps.

“Information is our business. Industry and financial expertise are our core competencies. In many countries, audit committees and our profession initially led the way for improved corporate governance. The accountancy profession stands ready to help organizations understand the essential elements, structures and processes for strong corporate governance,” she said.

Ms. Kirtley said that effective governance leads to transparency and high quality information that enables professional accountants to do a better job. “It is essential that our profession be involved at every level of corporate governance,” she added.

 - SJ