Muscat: Crowe Horwath Oman, an auditing and accounting firm, has called for creating effective corporate governance practices, especially in view of the economic slowdown and reductions in budget expenditures.
Addressing the Corporate Governance and Fraud Deterrence event organised by Crowe Horwath Oman at the Al Bustan Palace Hotel last Wednesday, the firm’s managing partner, Davis Kallukaran, said, “Under the current tight situation, expenditure on effective internal controls is the first to be curtailed. However, it is the duty of the people in charge to ensure that effective corporate governance practices are established across the company. Effective corporate governance is the need of the day to prevent fraud.”
Also speaking at the event, Mubeen Khan, advisor at the Capital Market Authority, , explained, “World over, about 5 per cent of global GDP is lost to fraud every year. The Capital Market Authority is keen to empower the directors by creating awareness on the effectiveness of best practices in corporate governance.”
Oman lacks a vigilant authority to monitor corporate governance. However, regulators have made it obligatory for listed companies to have the performance of their board of directors assessed annually by a firm, which is neither its statutory auditor nor internal auditor. “We feel that it is the duty and responsibility of firms like us, as the conscience keepers of the economy, to spread awareness among the public of these requirements,” added Kallukaran.
Earlier, Sheikh Nasser Al Rawahy, the deputy chairman of the State Audit Institution of Oman, opened the event, which brought together directors from the corporate sector and government officials from 81 countries. Bernard Delomenie, regional director of Crowe Horwath, responsible for Europe, Middle-East, and Africa, also was present .
Addressing the conference, Bernard said, “Crowe Horwath international, with its 35,000-plus partners and staff spread over 750 offices in 129 countries, is committed to utmost quality in what it does.”
In the current economic scenario, downsizing of an organisation, fear of layoffs, unstable stock prices, the tight credit environment, and decreased internal controls could lead to fraud. It thus becomes imperative for corporate boards to ensure the implementation of efficient governance practices and adequate controls.
Good corporate governance could have prevented the more than $1 billion cash fraud in India-based Satyam Computer Services, the Euro 1 billion fraud at Siemens, as well as Parmalat’s default of a $1 billion bond and their overstating of earnings by 530 per cent, while understating their liabilities by Euro 1.8 billion.