Annual Report 2010 - Ministry of Finance and Planning

3 | REFORM INITIATIVESPublication of GuidesA Guide for Treasury Representatives (July 2010)A Guide for Chairmen and Board of Directors of Public Enterprises (October 2010)These two guides were published toprovide an overview of the uniquecatalytic role played by the Chairmenand Directors of Boards of PublicEnterprises, including TreasuryRepresentatives - who are the driversof the Public Enterprises.The contents inter alia emphasize thefollowing;• The intention of the publications isto empower and guide Chairmen,Board Members and Treasuryrepresentatives serving in Boardsof Public Enterprise, inter aliain relation to their duties andresponsibilities.• The guides set out in brief, thelegal and regulatory frameworkgoverning Public Enterprises andthe legal provisions governingthe appointment of Secretaries toMinistries and Boards of Directorsof such Enterprises.• Public enterprises are establishedwith specific objectives. Someare established to satisfy widercommercial, economic and socialgoals, some to achieve commercialor social goals, while others arerequired to achieve both commercialand social goals. These enterprisesare expected to combine businessautonomy with public accountability.The Government has recognizedthat, as much as private enterprises,the public enterprises are alsoimportant for the socio economicdevelopment of the country and inmany instances Public Enterpriseslead development in a competitiveenvironment by adding marketcompetition when it is distorted bymarket imperfections.• The overall FinancialManagement in the public sectorincluding Public Enterprisesfalls within the purview of theMinistry of Finance and Planning.• The Treasury official has a specialresponsibility to guide the Boardof Directors and ensure thatthere is sufficient interfacingamong all stakeholders.• Chairmen and the Boards ofPublic Enterprises should ensurethat they work in consultationwith the Secretary to therelevant line ministry, who isentrusted with supervisorypowers.• Public Enterprises essentiallycontribute towards infrastructuredevelopment and in the provisionof services. Some of the PublicEnterprises are dominant playersin the banking and financialservice industry who are alsotrend setters in that sector. Someare in other important areassuch as education, health andsocial security while others arepredominant service providers inagriculture industry, engineering,construction, trade etc. Theexpenditure of such enterprisesmust therefore be justifiable,and be spent within the overallGovernment vision and thePublic investment strategy.• Several state Enterprises areestablished under statutes andas such their performance shouldbe carried out in compliancewith such statutory requirementssubject to the provisions of otherlaws as applicable.• There is an urgent need toensure best practices relating toCorporate Governance. Henceit should be noted that whileCorporate Governance practicesintroduced by the Central Bank ofSri Lanka require state banks toadopt and follow such practices,Public enterprises are required tofollow guidelines published by theDepartment of Public Enterprises.• Attention is drawn to theprovisions In relation to the roleof the Auditor General, and theCommittee on Public Enterprise(COPE) that carries out oversightfunctions, as more fully explainedin the publications.• Attention is also drawn to theprovisions of the Companies ActNo.7 of 2007 on the Rights ofthe Government, Solvency Test,Serious Loss of Capital, Duties ofDirectors, Interests of Directorsin Transactions, AccountingRecords, Group FinancialStatements, Annual Report and itscontents, and provisions relatingto Subsidiaries of a Company,as more fully explained in thePublications.• Attention is also drawn to thekey provisions of the FinanceAct No.38 of 1971 such asFinancial Obligations of a PublicCorporation, Preparation ofBudgets of Public Corporations,Appropriation of Net SurplusRevenue, Investment of Moneysof a Public Corporation andRendering of Accounts and Auditin relation to Financial Control ofPublic Corporations, as also morefully explained in the publications.196