Conducting business nowadays is rather challenging in the environment full of uncertainties beyond expectations. Therefore, businesses that can stay sustainable in the new era must have solid fundamentals with flexibility to adjust strategies in accordance with changes in relevant rules, regulations, and standards.  They must also have knowledgeable and competent “Board” that can respond comprehensively to expectations of various stakeholders.

In addition to being good organization leader, the Board has oversight roles to ensure achievement of pre-determined strategies and business plans.  The Board should establish efficient, prudent, and independent audit process to ensure the organization has adequate and appropriate “internal control”.  It should also put in place disclosure process to build trust of stakeholders and prepare “financial report” in accurate, complete, trustworthy, and timely manners.

This guideline comprises two sections including 1. Key Principles and 2. Practice Guidelines.

Key Principles:

1. The Board has a duty to ensure the company complies with good corporate governance principles by stipulating that the management and staffs are responsible for business planning and operation under effective risk management and “internal control” while taking into account impacts on stakeholders, society, and environment.

2. The Board should ensure the company has effective and prudent “audit” mechanism to evaluate the adequacy and appropriateness of internal control including:

2.1 Mechanism to examine accuracy and completeness to maintain credibility of financial report and corporate disclosure.

2.2 Mechanism to evaluate adequacy of internal control and internal audit systems.

2.3 Compliance with relevant rules, laws or regulations.

2.4 Effective risk management framework and process.

2.5 Appropriate process to select, propose, appoint, and offer compensation to auditor.

2.6 Appropriate process to review connected transactions or transactions with potential conflict of interest.

3. The Board is tasked to appoint “Audit Committee” as another committee that comprises only of “independent directors” to support the Board in overseeing audit mechanism.

4. The Board should nominate knowledgeable and competent Audit Committee in accordance with the company’s context and requirements of regulator.  The Audit Committee should be able to perform independently from the management or any interest groups to prevent potential damage to stakeholders.  The Board should regularly enhance relevant knowledge and skills of Audit Committee.

5. The Board should ensure the Audit Committee can appropriately and adequately contribute time to complete assigned duties.  The Board should provide Audit Committee with sufficient budget and man power, including advisor or expert on specific matter as necessary, to ensure the committee’s effective performance.

6. The Board may assign certain tasks to the Audit Committee upon the latter’s consent.  However, the assigned tasks must not contradict the committee’s independent performance.

7. The board should stipulate that Audit Committee meet at least every three month and report outcome to the Board on a quarterly basis, which may contain key issues detected.  The Audit Committee may seek discussion with the Board on matters that need to be resolved in timely manner.

8. The Board should receive annual performance report of the Audit Committee and disclose the committee’s performance in the Annual Report.

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