how governance reviews can improve your charity
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7/27/2019 How Governance Reviews Can Improve Your Charity
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How Governanceev ews can
Improve your
24 February 2011
Irving Low, Partner v sory
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What is Governance?
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What is Governance?
The systems and processes concerned withensurng t e overall direction, effectiveness,
supervision and accountabili ty
of an or anisation.
©2011 KPMG Advisory LLP (Registration No. T10LL1646J), a limited liability partnership registered in Singapore underthe Limited Liability Partnership Act (Chapter 163A) and a member firm of the KP MG network of independent memberfirms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Al l rights reserved. Printed inSingapore.
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KPMG’s Four Pillars of Governance
The aim is to achieve… Performance
Effective Risk Management
Performance
Monitoring
& Evaluation
Leadership
& Strategy
on ormance
• Laws• Regulations• Publishedstandards and S
t ak eh o
l d er
D
/ M an
a g em
The Board
• expectations of the stakeholdersfor accountability and transparency.
w ou comproms ng… en t
Ethics & Culture
Accountabil ity
& Audit
Communication
with
StakeholdersPerformance
Conformance
Enhancement to its overallperformance in the delivery of services to target community.
©2011 KPMG Advisory LLP (Registration No. T10LL1646J), a limited liability partnership registered in Singapore underthe Limited Liability Partnership Act (Chapter 163A) and a member firm of the KP MG network of independent memberfirms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Al l rights reserved. Printed inSingapore.
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Piecing together the big picture
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Mapping of Charities/IPCs’ “ As-is” state of Governance vis-à-vis Code of
Governance for Charit ies and IPCs
Performance
1. Board Governance
r nc p es o e o e
Effective Risk Management
Performance Leadership.
3. Strategic Planning
4. Programme Management
5. Human Resource
S t a
k eh ol
E D
/
M an
& Evaluation
The Boardanagemen
6. Financial Management and
Controls
7. Fundraising Practices
d er s
g em en t
Accountabil ity
Communication
with
8. Disclosure andTransparency
9. Publ ic Image
Ethics & Culture
©2011 KPMG Advisory LLP (Registration No. T10LL1646J), a limited liability partnership registered in Singapore underthe Limited Liability Partnership Act (Chapter 163A) and a member firm of the KP MG network of independent memberfirms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Al l rights reserved. Printed inSingapore.
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What we saw in past Governance reviews…
Composition of the averagescores by pil lar
Leadership & Strategy ~ What is
the Board’s role in the strategy
process; Vision and Mission of the
24%
ea ers p
Strategy
PerformanceMonitoring &
Charities/IPC?
Performance Monitoring &
Evaluation ~ Structured system
45%
10%
Evaluation
Accountability &Audit
evaluating Charities/IPC’s
performance against defined
goals?
21%
withStakeholders
Audit and Accountabi lity ~ Is there
a system of good record-keeping
and documentation of decisions and
actions?
Communication with
Stakeholders ~ How are values and
objectives communicated clearly66% of scores are derived fromgovernance practices under “Performance”
©2011 KPMG Advisory LLP (Registration No. T10LL1646J), a limited liability partnership registered in Singapore underthe Limited Liability Partnership Act (Chapter 163A) and a member firm of the KP MG network of independent memberfirms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Al l rights reserved. Printed inSingapore.
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only 34% are derived from “Conformance”
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Where is the weakest link?
High Governance Score = Good Governance if the organisation
Accountability & Audit Accountability & Audit
• Lack of sound internal control systems• No documented policies and procedures, “Head” syndrome
• Inadequate checks and balance, eg single signatory•• Breakdown in book-keeping functions, eg financial statements are not
available on regular basis
• eope ssues• Lack of skilled resources• High turnover
©2011 KPMG Advisory LLP (Registration No. T10LL1646J), a limited liability partnership registered in Singapore underthe Limited Liability Partnership Act (Chapter 163A) and a member firm of the KP MG network of independent memberfirms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Al l rights reserved. Printed inSingapore.
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• Issues on Conflict of interest
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Suggestions for improvement …..Your “ To-Be”
• -
Leadership & StrategyLeadership & Strategy
• Clarify and document the roles and responsibilities, eg Board Kit
• anage t e con ct o nterest nc u ng t e process o trac ng.
er ormance mon or ng an eva ua oner ormance mon or ng an eva ua on
• Establish key performance indicators, eg budgets for programs, outcome
management reports, etc.
• Review and monitor KPIs and to determine its relevance to mission and visionof the charit .
©2011 KPMG Advisory LLP (Registration No. T10LL1646J), a limited liability partnership registered in Singapore underthe Limited Liability Partnership Act (Chapter 163A) and a member firm of the KP MG network of independent memberfirms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Al l rights reserved. Printed inSingapore.
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Suggestions for improvement …..Your “ To-Be”
•
Communication with stakeholdersCommunication with stakeholders
.
• Disclose all remuneration of Board and three highest paid staff, in bands of $100,000.
• Establisha sound internal control s stems includin documentation of olicies
Accountability & Audit Accountability & Audit
and procedures in the following key areas:
• Procurement procedures and controls;
• Receipting, payment procedures and controls; and
• S stem for the dele ation of authorit and limits of a roval..”
©2011 KPMG Advisory LLP (Registration No. T10LL1646J), a limited liability partnership registered in Singapore underthe Limited Liability Partnership Act (Chapter 163A) and a member firm of the KP MG network of independent memberfirms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Al l rights reserved. Printed inSingapore.
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Effective internal control?
The KPMG Governance and
Internal Controls Framework
Internal control framework:
People Processes Systems
Most difficult to fix.
©2011 KPMG Advisory LLP (Registration No. T10LL1646J), a limited liability partnership registered in Singapore underthe Limited Liability Partnership Act (Chapter 163A) and a member firm of the KP MG network of independent memberfirms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Al l rights reserved. Printed inSingapore.
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The KPMG Governance and Internal Controls Framework – Your Four Lines of Defense
Source: KPMG , Internal Audit, Risk and Compliance Services in Singapore
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Benefits of Goodv
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Benefits of Good Governance?
Internal External
• Boost public confidence.
• More transparent and accountable to
• Provides clarity and oversight on the
direction of the organisation.
• Better control environment.stakeholders.
• Improve efficiency and effectiveness in
management of limited resources.
Sustainability of Organisation
The Straits Times, 10 January 2011, “Rating plan benefits both charities and donors”
“The NVPC has released scant details of how it will carry out its analysis (of charity rating)…
©2011 KPMG Advisory LLP (Registration No. T10LL1646J), a limited liability partnership registered in Singapore underthe Limited Liability Partnership Act (Chapter 163A) and a member firm of the KP MG network of independent memberfirms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Al l rights reserved. Printed inSingapore.
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, ,
charity, and its relevance to the community.”
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Key Takeaway
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Message
• Has your organisations performed a review? What is your “As-Is” state of
• Fix the lapses, work towards the “To-Be”. Tap on available governmentgrants.
• Governance review is an on-going process and involves continuous
monitoring.
• No system can guarantee to prevent fraud: Min Law
'
discharging their responsibilities properly.Source: Straits Time 22 November 2010
©2011 KPMG Advisory LLP (Registration No. T10LL1646J), a limited liability partnership registered in Singapore underthe Limited Liability Partnership Act (Chapter 163A) and a member firm of the KP MG network of independent memberfirms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Al l rights reserved. Printed inSingapore.
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Thank you
rvng owPartner , KPMG Advisory LLP
Tel: +65 6411 8888Email: [email protected]
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©2011 KPMG Advisory LLP (Registration No. T10LL1646J ), a limited liability partnership registeredin Singapore under the Limited Liability Partnership Act (Chapter 163A) and a member firm of the
(“KPMG International”), a Swiss entity. All rights reserved. Printed in Singapore.
The information contained herein is of a general nature and is not intended to addressthe circumstances of any particular individual or entity. Although we endeavour to provideaccurate and timel information, there can be no uarantee that such information is accurateas of the date it is received or that it will continue to be accurate in the future. No one shouldact on such information without appropriate professional advice after a thorough examination
of the particular situation.