1. Strengthening Good Governance in the Public Sector Antony Melck University of Pretoria

2. Principles of sound corporate governance Presentation based on King III Report and Document by PriceWaterhouseCoopers

3. Public Sector King III written primarily for the Private Sector but its principles apply equally to the Public Sector. In the Public Sector much of King III is reflected in: – Public Finance Management Act (PFMA) – Municipal Finance Management Act (MFMA) – Municipal Structures Act – Municipal Systems Act

4. Core philosophy Governance, strategy and sustainability are inseparable Good governance = effective leadership – Accountability, integrity, service delivery Sustainability – nature, society and business are interconnected Corporate citizenship – Innovation, fairness and collaboration – Social transformation Apply or explain

5. Ethical leadership and corporate citizenship Ethical effective leadership underpinned by – Responsibility – Accountability – Fairness – Transparency Responsible & ethical corporate citizen – Clear and measurable objectives – Commitment to service delivery and stakeholders – Code of conduct

6. Role of Boards / Councils Custodian of good governance Acting in best interests of the institution, taking into account – Financial – Environmental – Social consequences Determining direction and policies Setting clear delegations to committees (charters) and executives whose performance must be evaluated regularly

7. Audit Committee Independent audit committee oversees – Integrated reporting (financial and sustainability) – Combined (coordinated) assurance – Internal audit function – Risk management process – External audit process – Performance reporting – Assurance of internal financial controls

8. Governance of Risk Board/Council responsible for Governance of Risk – Delegation to Audit/Risk Committee Process for – identifying – assessing – managing or ameliorating risks Assurance with respect to risk management – Risk-based audit plans

9. Governance of Information Technology Importance of IT in modern institutions – Strategic asset – Significant risks Establishing IT governance structure – IT policies – Evaluating major expenditures – Disaster recovery planning – IT risks

10. Compliance with legal requirements Board/Council must ensure compliance with applicable legal requirements – Compliance policy – Compliance officer

11. Internal Audit Function Effective internal audit function – Informed by strategy of the organisation – Risk-based approach – Assessment of internal controls – Assessment of risk management

12. Stakeholder relationships Importance of stakeholder involvement – Integrated Development Plan (IDP) – Community participation – Adequate disclosure – Transparent communication

13. Integrated reporting Triple context – Economic, social, environmental Integrated reporting Integrity of reporting Performance reporting against objectives

14. Additional aspects Alternative dispute resolution – Avoiding protracted and costly court proceedings – Remuneration of Executives – Transparency

15. Tshwane Structures and processes in place Many processes are new and need to be ‘imbedded’ – become part of the institutional culture Importance of ‘tone at the top’ – examples set and standards required by mayoral committee

16. End