CGF ARTICLES, OPINIONS & EDITORIALS
Unleashing IT-value in business (2013-04-22)
February 20,
2015 3660 3660 
Since the collapse of giant corporations such as Enron, Parmalat and Worldcom in the last ten years or so, including the subsequent Sarbanes-Oxley legislation in the USA (designed specifically to improve financial reporting), a legacy of Corporate Governance has been left where many companies have created a ‘tick-box’ approach to Corporate Governance, more especially toward legal compliance.
A whole new industry has grown on the back of traditional auditing, including the manner in which Governance, Risk and Compliance (GRC) has been dealt with as a result of this ‘tick-box’ approach, and which has become entrenched within many companies. Regrettably, this approach has created an entirely inappropriate culture and understanding of governance. [In our view, good governance has experienced a set-back that will take many years to overcome.]
Admittedly, whilst the climate of many companies desperately needed improvement (and self-regulation had clearly failed in these cases), the ‘cost-imposition’ imposed by the legislation left many companies with a distorted view of Corporate Governance and a determination to minimise governance costs to only those required to stay within the law.
South Africa has taken its lead from the rest of the Western world, and despite the advantages created by the ‘apply or explain’ philosophy embedded in the King III principles and practices, many South African companies have adopted the ‘Sarbanes-Oxley mentality’ of ‘comply or else’ which does not inspire, nor enthuse most companies.
However, maybe all is not lost. A number of leading companies in Europe and the USA are now beginning to adopt a very different attitude. They are recognising that Boards of Directors are accountable for maximising the value their companies deliver to all stakeholders and that governance processes (evaluation, direction and monitoring) are the mechanisms through which value is identified and grown. They are also aware that with Integrated Reporting and the ‘Triple Bottom Line’, the definition of value goes way beyond traditional financials.
