Pretoria - Boards and auditors have an important role to play in ensuring that codes of conduct are followed so as to avoid the failure of governance, Finance Deputy Minister Nhlanhla Nene says.
Nene, who was speaking at the Annual Audit Committee Conference on Wednesday, said that although South Africa weathered the global economic crisis relatively well, questions still remained around what extent the failures or weaknesses in corporate governance contributed to the meltdown.
"What has been evident, post the crisis, is that there have been significant failures of internal risk management in some multinational financial institutions," said the deputy minister, adding that the financial crisis has revealed severe shortcomings in internal risk management and the role of boards overseeing risk management systems.
"The best practice in terms of rules and codes seem to be there, but either we do not understand them well or we simply take them for granted. Audit committees can also play a more holistic role so that financial statements are accurate and reliable," explained Nene.
For South Africa and other countries, the crisis has presented an opportunity to see how best to enhance its financial design and regulatory framework.
"The failure in market conduct and its supervision played an important role in the global financial crisis. No system of regulation can be successful unless it is transparent, independent and accountable; not only as far as Government is concerned but also the regulated industries and the public at large," said Nene.
