The workload of the audit committee has experienced a steady rise over the years – particularly for listed companies or those in the regulated sector.
This comes amid a growing realisation by firms that accountability is one of the keys to success.
Among publicly listed companies, the discussion about good governance began with the publication of the Cadbury Report in the UK in 1992, the first governance code internationally. In many countries, specific codes and regulations for governance followed. Today, nearly all countries have a governance code, but these are mainly for publicly listed companies.
Regulatory agencies worldwide and in the Middle East acknowledge that risk management and compliance are integral features of a successful business model and have turned their full attentions toward raising the standards across the financial services industry for corporate governance and risk management systems.
The value of bringing seasoned perspectives and new insights into the corporate governance dialogue cannot be overstated, particularly today, with the pace of technological change, globalisation and regulatory pressures shaping the way businesses think about risk, strategy, talent and long-term performance. A key insight can change the course of a discussion – if not a major business decision – entirely.
The workload of the audit committee has risen steadily over the years, particularly for listed companies or those in the regulated sector, and prioritising issues is a battle given the constantly changing developments in global risk, regulation and political environments.
Through KPMG’s own regular thought leadership, global and regional surveys, issues-based round tables and panel discussions bringing together audit committee chairs and directors, we have tried to highlight the key challenges facing audit committees, matters relating to audit committee effectiveness and other priorities.
Previously conducted surveys are helpful for benchmarking current practices, identifying gaps and emerging risks and sparking fresh conversations about how audit committees and boards are strengthening their oversight. The primary aim is to raise the standards of governance in the UAE.
There is much to be done. About a year ago, KPMG conducted a survey covering 35 countries and more than 1,000 audit committee members. One of the questions was: “What areas would you favour additional reporting/communication from the audit committee to investors to provide more insight into the work of the audit committee?”
A series of suggestions were offered, including the role in risk governance, oversight of the external auditor and audit committee effectiveness.
An alarming 40 per cent of the respondents chose “none of the above”.
What this tells us is that a significant number of audit committee members have yet to grasp the messages of the investor community who are generally pushing for greater transparency and communication from those charged with stewardship.
In an overwhelming majority of cases, however, the reports are less forthcoming. These reports are missed opportunities to demonstrate to shareholders the significant and stewardship role which the job entails. One cannot generalise, but it would be a fair assumption that this passive style indicates a less than proactive audit committee.
This will change as companies constantly compare their reporting to that of their peers and as pressures from regulators and standard- setters increase.
There are matters beyond reporting, including broader governance matters and those connected with the quality of controls, processes and people, the alignment of the company’s ethical and compliance programmes with new vulnerabilities to fraud and misconduct keeping on top of technology advances.
The industry needs to understand that good governance helps to create economic value and in the case of family-run businesses, assists the emotional well-being of the family and others with a stake in the company. It demonstrates that the owners are taking responsibility for their employees and other stakeholders, and helps to ensure the long-term survival of the family enterprise.
Effective governance calls for a board of directors and a management team where each member understands their role.
A clear vision and related business policies, along with formalised interactions between governance bodies and key stakeholders, is also key. Ultimately, it offers the opportunity for open dialogue among key stakeholders, including employees to discuss and tackle organisational concerns.
Ian Gomes is the head of advisory at KPMG Lower Gulf
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
Profile
Company: Libra Project
Based: Masdar City, ADGM, London and Delaware
Launch year: 2017
Size: A team of 12 with six employed full-time
Sector: Renewable energy
Funding: $500,000 in Series A funding from family and friends in 2018. A Series B round looking to raise $1.5m is now live.
Guide to intelligent investing
Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
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MATCH INFO
Juventus 1 (Dybala 45')
Lazio 3 (Alberto 16', Lulic 73', Cataldi 90 4')
Red card: Rodrigo Bentancur (Juventus)
England v West Indies
England squad for the first Test Cook, Stoneman, Westley, Root (captain), Malan, Stokes, Bairstow, Moeen, Roland-Jones, Broad, Anderson, Woakes, Crane
Fixtures
1st Test Aug 17-21, Edgbaston
2nd Test Aug 25-29, Headingley
3rd Test Sep 7-11, Lord's
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now
Top 10 most polluted cities
- Bhiwadi, India
- Ghaziabad, India
- Hotan, China
- Delhi, India
- Jaunpur, India
- Faisalabad, Pakistan
- Noida, India
- Bahawalpur, Pakistan
- Peshawar, Pakistan
- Bagpat, India
Director: Jon Favreau
Starring: Donald Glover, Seth Rogen, John Oliver
Rating: 2 out of 5 stars
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Federer's 11 Wimbledon finals
2003 Beat Mark Philippoussis
2004 Beat Andy Roddick
2005 Beat Andy Roddick
2006 Beat Rafael Nadal
2007 Beat Rafael Nadal
2008 Lost to Rafael Nadal
2009 Beat Andy Roddick
2012 Beat Andy Murray
2014 Lost to Novak Djokovic
2015 Lost to Novak Djokovic
2017 Beat Marin Cilic
Scoreline
Al Wasl 1 (Caio Canedo 90 1')
Al Ain 2 (Ismail Ahmed 3', Marcus Berg 50')
Red cards: Ismail Ahmed (Al Ain) 77'
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
UAE currency: the story behind the money in your pockets
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.