‘Companies need separate audit, risk management panels’
March 8th, 2010 - 10:34 pm ICT by IANSKolkata, March 8 (IANS) Any company should have separate committees for audit and risk management and the latter should be accordingly represented on the company board, according to a British business school head.
“The company board should play a strong role in adopting a realistic risk management system and risk management system should be carefully separated from its audit committee,” University of Warwick’s Warwick Business School director Derek Condon said at a seminar on “Risk Management and Corporate Governance” here Monday.
He said rotational audit is fine and practised by many companies. “However, I would not recommend over-rotation. Because it may take away knowledge and experience from the company and may put an established system into jeopardy,” he said when asked if auditors should be rotated to ensure fairness.
On the multi-crore Satyam fraud, he said financial fraud was nothing new or peculiar to India and it is more important to know how to handle such crises. “The best way to pre-empt such a fraud is to admit everything transparently.”
“Shareholders should not be kept in the dark. Communication is the other keyword. Everything should be communicated to all stakeholders and that in turn increases shareholders’ value,” Condon said.
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