How Governance Reviews Can Improve Your Charity

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How Governanceev ews can

Improve your

24 February 2011

Irving Low, Partner v sory



What is Governance?



What is Governance?

The systems and processes concerned withensurng t e overall direction, effectiveness,

supervision and accountabili ty

of an or anisation.

©2011 KPMG Advisory LLP (Registration No. T10LL1646J), a limited liability partnership registered in Singapore underthe Limited Liability Partnership Act (Chapter 163A) and a member firm of the KP MG network of independent memberfirms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Al l rights reserved. Printed inSingapore.

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KPMG’s Four Pillars of Governance

The aim is to achieve… Performance

Effective Risk Management

Performance

Monitoring

& Evaluation

Leadership

& Strategy

on ormance

• Laws• Regulations• Publishedstandards and S

t ak eh o

l d er

D

/ M an

a g em

The Board

• expectations of the stakeholdersfor accountability and transparency.

w ou comproms ng… en t

Ethics & Culture

Accountabil ity

& Audit

Communication

with

StakeholdersPerformance

Conformance

Enhancement to its overallperformance in the delivery of services to target community.


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Piecing together the big picture



Mapping of Charities/IPCs’ “ As-is” state of Governance vis-à-vis Code of

Governance for Charit ies and IPCs

Performance

1. Board Governance

r nc p es o e o e

Effective Risk Management

Performance Leadership.

3. Strategic Planning

4. Programme Management

5. Human Resource

S t a

k eh ol

E D

/

M an

& Evaluation

The Boardanagemen

6. Financial Management and

Controls

7. Fundraising Practices

d er s

g em en t

Accountabil ity

Communication

with

8. Disclosure andTransparency

9. Publ ic Image

Ethics & Culture


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What we saw in past Governance reviews…

Composition of the averagescores by pil lar

Leadership & Strategy ~ What is

the Board’s role in the strategy

process; Vision and Mission of the

24%

ea ers p

Strategy

PerformanceMonitoring &

Charities/IPC?

Performance Monitoring &

Evaluation ~ Structured system

45%

10%

Evaluation

Accountability &Audit

evaluating Charities/IPC’s

performance against defined

goals?

21%

withStakeholders

Audit and Accountabi lity ~ Is there

a system of good record-keeping

and documentation of decisions and

actions?

Communication with

Stakeholders ~ How are values and

objectives communicated clearly66% of scores are derived fromgovernance practices under “Performance”


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only 34% are derived from “Conformance”



Where is the weakest link?

High Governance Score = Good Governance if the organisation

Accountability & Audit Accountability & Audit

• Lack of sound internal control systems• No documented policies and procedures, “Head” syndrome

• Inadequate checks and balance, eg single signatory•• Breakdown in book-keeping functions, eg financial statements are not

available on regular basis

• eope ssues• Lack of skilled resources• High turnover


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• Issues on Conflict of interest



Suggestions for improvement …..Your “ To-Be”

• -

Leadership & StrategyLeadership & Strategy

• Clarify and document the roles and responsibilities, eg Board Kit

• anage t e con ct o nterest nc u ng t e process o trac ng.

er ormance mon or ng an eva ua oner ormance mon or ng an eva ua on

• Establish key performance indicators, eg budgets for programs, outcome

management reports, etc.

• Review and monitor KPIs and to determine its relevance to mission and visionof the charit .


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Suggestions for improvement …..Your “ To-Be”

•

Communication with stakeholdersCommunication with stakeholders

.

• Disclose all remuneration of Board and three highest paid staff, in bands of $100,000.

• Establisha sound internal control s stems includin documentation of olicies

Accountability & Audit Accountability & Audit

and procedures in the following key areas:

• Procurement procedures and controls;

• Receipting, payment procedures and controls; and

• S stem for the dele ation of authorit and limits of a roval..”


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Effective internal control?

The KPMG Governance and

Internal Controls Framework

Internal control framework:

People Processes Systems

Most difficult to fix.


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The KPMG Governance and Internal Controls Framework – Your Four Lines of Defense

Source: KPMG , Internal Audit, Risk and Compliance Services in Singapore



Benefits of Goodv



Benefits of Good Governance?

Internal External

• Boost public confidence.

• More transparent and accountable to

• Provides clarity and oversight on the

direction of the organisation.

• Better control environment.stakeholders.

• Improve efficiency and effectiveness in

management of limited resources.

Sustainability of Organisation

The Straits Times, 10 January 2011, “Rating plan benefits both charities and donors”

“The NVPC has released scant details of how it will carry out its analysis (of charity rating)…


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, ,

charity, and its relevance to the community.”



Key Takeaway



Message

• Has your organisations performed a review? What is your “As-Is” state of

• Fix the lapses, work towards the “To-Be”. Tap on available governmentgrants.

• Governance review is an on-going process and involves continuous

monitoring.

• No system can guarantee to prevent fraud: Min Law

'

discharging their responsibilities properly.Source: Straits Time 22 November 2010


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Thank you

rvng owPartner , KPMG Advisory LLP

Tel: +65 6411 8888Email: [email protected]

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©2011 KPMG Advisory LLP (Registration No. T10LL1646J ), a limited liability partnership registeredin Singapore under the Limited Liability Partnership Act (Chapter 163A) and a member firm of the

(“KPMG International”), a Swiss entity. All rights reserved. Printed in Singapore.

The information contained herein is of a general nature and is not intended to addressthe circumstances of any particular individual or entity. Although we endeavour to provideaccurate and timel information, there can be no uarantee that such information is accurateas of the date it is received or that it will continue to be accurate in the future. No one shouldact on such information without appropriate professional advice after a thorough examination

of the particular situation.

How Governance Reviews Can Improve Your Charity

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