Integrity-Driven Performance. New Strategy for ... - GRC Resource

Governance Reforms: A Snapshot of Recent DevelopmentsCorporate Governance: In November 2003, the U.S. Securities and Exchange Commission(SEC) approved the final versions of corporate governance listing standards proposed by theNew York Stock Exchange and the NASDAQ Stock Market. Both standards expand upon theSarbanes-Oxley Act of 2002 and the SEC rules to impose significant new requirements onlisted companies. These sweeping reforms mandate independence, increased transparencyand new standards for corporate accountability. These and other governance standardsemphasise the importance of enhancing governance, ethics, risk and compliance oversightcapabilities.Enterprise Risk Management: In October 2003, the Committee of Sponsoring Organizationsof the Treadway Commission (COSO) issued for public comment its new Enterprise RiskManagement framework. The final COSO framework, along with Application Guidance,both authored by PricewaterhouseCoopers, will be published in June 2004. The new COSOframework identifies key elements of an effective enterprise risk management approach forachieving financial, operational, compliance and reporting objectives. Both the new COSOframework and Application Guidance emphasise the critical role played by governance,ethics, risk and compliance in enterprise risk management.Compliance and Business Conduct: On 30 December 2003, the United States SentencingCommission proposed far-reaching changes to the United States Federal Sentencing Guidelines,which set forth the U.S. Government’s standard on what constitutes an effective complianceprogramme. The Guidelines are also reflected in industry regulatory compliance guidancestandards. The new recommendations emphasise the importance of expanding the compliancestandard to better address a corporation’s ethical culture; establish the governance andoversight responsibilities of the board and senior management; frame the need for appropriateresources and authority; and recommend that companies conduct ongoing risk assessmentsto form the basis for continuous improvement of their compliance programmes. Once again,recommendations focus on the relationship between governance, ethics, risk managementand compliance.Although these developments are examples of emerging standards in the United States,similar reforms and standards have emerged globally, and organisations the world over aredealing with their implications.4