Lesson09-Gov - GOVERNANCE Contents Page Introduction 1....

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GOVERNANCE Contents Page Introduction 2 1. Role and responsibilities of the board of directors 2 2. Committees of the Board of Directors 3 3. Canadian Securities Administrators Multilateral Instruments MI 58- 101/201 6 4. CMA Canada Management Accounting Guideline – Measuring and Improving the Performance of Corporate Boards 8 5. CMA Canada Management Accounting Guideline – Strategic Management of Information for Boards 40
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Governance Page 2 CMA Ontario – January 2008 INTRODUCTION There is not a week that goes by where the newspapers talk about a situation where mismanagement or fraud occurred in an organization. Generally, there is an expectation that large organizations that appear to have plenty of resources and expertise would be beyond failure when it comes to management and operations. In order to understand the role of governance in an organization, it is necessary to understand the role and responsibilities of the Board of Directors and its relationship with management (including CEO and CFO) and the firm’s shareholders. The Board of Directors remains responsible and accountable even for delegated functions. Organizations can no longer have a Board acting only as ‘advisors’, rubber stamping management decisions or providing fancy window dressing to the organization. Shareholders will remember the terrible impact of such cases as Enron and WorldCom in the 1990’s. Boards have a strong role to play with clear responsibilities and ultimately, are accountable to the shareholders. Although Boards’ structure can vary from one country to the other or from one organization to the others, there are some consistencies in the role and responsibilities that a Board must carry. Most of the Governance material required for this course are contained in the two CMA Canada Management Accounting Guidelines: Measuring and Improving the Performance of Corporate Boards and Strategic Management of Information for Boards that are included with this document. We would recommend that you read these first. The remainder of this document considers governance topical areas that are required by the CMA Canada Competency Map but not covered by the Management Accounting Guidelines. 1. Duties and responsibilities of the Board of Directors Overall, the responsibilities of the Board of Directors is to provide leadership, to make prudent and objective decisions, to implement effective internal controls, always with the best interests of the organization and its shareholders in mind. The board represents the interests of the shareholders – it is the link between the shareholders and the management of the organization and ultimately, is accountable to shareholders. As a group or entity, the board is responsible for the development of the corporate strategy of the organization; it must understand, review and monitor the implementation of the corporation strategic plans.
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Lesson09-Gov - GOVERNANCE Contents Page Introduction 1....

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