State-Owned Enterprises and Corruption by OECD

Author:OECD
Language: eng
Format: epub
Tags: Governance
Publisher: OECD Publishing
Published: 2018-08-26T16:00:00+00:00

Effective monitoring by the board

The board is responsible for monitoring management. Performance monitoring should integrate board expectations for responsible business conduct – an important component of which is anti-corruption and integrity (OECD, 2015b: VI). Section 2.2.3 showed that boards are more informed than executive management on most audit findings and integrity-related assessments.

Boards must be well informed in order to adequately monitor the performance of management, including with respect to integrity and anti-corruption. Boards, to a certain degree rely on the determination of management as to what is materially significant and thus should be shared with the board.

The presence of specific audit, risk or compliance committees may facilitate more regular discussion on the topics. The presence of specialised board committees is associated with fewer reported instances of corrupt or other irregular practices in a company.

The findings in this report may also motivate the board to integrate anti-corruption and integrity performance into board assessments of management. With regards to anti-corruption mechanisms or programmes, boards should have appropriate assurance of the performance of integrity mechanisms and related controls. In 86% of companies, the department assigned significant responsibility for integrity is also responsible for overseeing implementation of internal guidelines or codes.

Key findings that may be useful for monitoring are not always shared with boards (see Table 2.9). A broader range of integrity related outputs are shared with them than with executive management, except in two areas: recommendations from integrity functions and evaluations of internal controls (that may be separate from internal audits). It is possible that boards are missing the complete picture. Indeed, the findings in Chapter 1 demonstrated that board members and executive management have different perspectives on corruption risk in the company, and that these are not aligned with the real incidence of corruption.

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