The following points are taken from the King IV report copyrighted to The Institute of Directors Southern Africa NPC.
Introduction to King IV
The definition of corporate governance for the purposes of King IV, is defined as the exercise of ethical and effective leadership by the governing body towards the achievement of the following governance outcomes:
Ethical Leadership is exemplified by integrity, competence, responsibility, accountability, fairness and transparency. It involves the anticipation and prevention, or otherwise amelioration, of the negative consequences of the organisation’s activities and outputs on the economy, society and the environment and the capitals that it uses and affects.
Effective leadership is results-driven. It is about achieving strategic objectives and positive outcomes. Effective leadership includes, but goes beyond, an internal focus on effective and efficient execution.
Ethical and effective leadership should complement and reinforce each other.
The underpinning philosophies of King IV relating to sustainable development are:
Sustainable development is understood as: ‘development that meets the needs of the present without compromising the ability of future generations to meet their needs’. It is a fitting response to the organisation being an integral part of society, its status as a corporate citizen and its stakeholders’ needs, interests and expectations.
The objectives of King IV are to:
Key changes in King IV
Changes worth noting in the King IV report include:
Risk Management, Compliance and Assurance in King IV
The following are the key areas where King IV addresses risk management, compliance and assurance (including combined assurance and internal audit):
Strategy, Performance and Reporting: Principle 4: The governing body should appreciate that the organisation’s core purpose, its risk and opportunities, strategy, business model, performance and sustainable development are all inseparable elements of the value creation process.
Risk Governance: Principle 11: The governing body should govern risk in a way that supports the organisation in setting and achieving its strategic objectives.
Compliance Governance: Principle 13: The governing body should govern compliance with applicable laws and adopted, non-binding rules, codes and standards in a way that supports the organisation being ethical and good corporate citizen.
Assurance: Principle 15: The governing body should ensure that the assurance services and functions enable an effective control environment, and that these support the integrity of information for internal decision-making and of the organisation’s external reports. The governing body should ensure that the assurance services and functions enable an effective control environment, and that these support the integrity of information for internal decision-making and of the organisation’s external reports.
40. The governing body should assume responsibility for assurance by setting the direction concerning the arrangements for assurance services and functions. The governing body should delegate to the audit committee, if in place, the responsibility for overseeing that those arrangements are effective in achieving the following objectives:
42. The governing body should oversee that the combined assurance model is designed and implemented to cover effectively the organisation’s significant risks and material matters through a combination of the following assurance service providers and functions as is appropriate for the organisation:
48. The governing body should assume responsibility for internal audit by setting the direction for the internal audit arrangements needed to provide objective, relevant assurance that contributes to the effectiveness of governance, risk management and control processes.
58. The governing body should monitor on an ongoing basis that internal audit:
59. The governing body should ensure that internal audit provides an overall statement annually as to the effectiveness of the organisation’s governance, risk management and control processes.
BarnOwl: an effective enabler of King IV risk, compliance and assurance
BarnOwl is one of the few software solutions on the market that provides a single, fully integrated governance, risk management, compliance and audit solution.
The BarnOwl Risk Management module facilitates:
The BarnOwl Compliance Management module facilitates:
The BarnOwl Audit Management module facilitates:
You can read more on risk-based auditing at: http://www.barnowl.co.za/insights/6-ways-risk-based-auditing-adds-value-to-your-organisation/
BarnOwl is a fully integrated governance, risk management, compliance and audit software solution used by over 200 organisations in Africa, Europe and the UK. BarnOwl supports best practice risk management, compliance and audit frameworks (e.g. COSO, ISO31000, Compliance Institute’s handbook, International Professional Practice Framework), whilst offering a highly flexible and configurable parameter-driven system allowing you to configure BarnOwl to meet your specific requirements.
BarnOwl is the preferred risk management solution for the South African public sector endorsed by the OAG (Office of the Accounting General).
Being a locally developed, owned and supported software solution, BarnOwl guarantees superior product support as well as on-going product development to meet localised requirements.
For more information see www.barnowl.co.za
Written by: Jonathan Crisp
Director: BarnOwl GRC
Acknowledgements to The Institute of Directors in Southern Africa NPC.