King III – good corporate management

October 2010

Dr Kobus Laubscher, CEO

Grain SA is currently part of a process under the leadership ofexternal auditors to audit the state of corporate management and control in the organisation.

The early analysis indicate satisfactory levels of corporate management and is a feather in the cap of those who provided leadership and still do in compliance with the principles underlying good corporate management and control. With the implementation of King III from September 2009, this aspect of accountabilities and responsibilities of leaders of an organisation like Grain SA entered a new dimension.

Compliance with the new determinations builds on the foundations of King II compliance, but point to a more process oriented approach.

Compliance is not necessarily going to come to an end and it is within this context that strategic planning, with regard to compliance as far as corporate management and control are concerned, will have to take place.

Inevitably auditors will now have to report more attentively about status, deviations and declarations of intention to comply. The corporate conscience of the corporation now becomes more comprehensive with the drawing in of more and more role players who can collectively be held responsible for deviations and misrepresentations.  Auditors’ strategies in this regard will also adapt to guarantee their reassurance.

King III builds on the pioneering work in the form of advance reports. King II for instance made suggestions about desirable corporate control and management. King III takes corporate management and control further and emphasises the importance of leadership in strategy development and implementation.

The direction defining role that business leaders play in doing business and the impact thereof on the community is one of the measurable outcomes which must be reported on in accordance with King III stipulations. It is a comprehensive and inclusive process of compliance, but is in essence quite simple. King III places greater emphasis on risk management, but with an innovative inward focus in terms of which internal abilities are awarded greater prominence.

Specific reporting requirements by audit committees have the objective to encourage more principle-driven performances. Leaders such as directors and by name elected members of the Executive Committee of Grain SA are thus faced with new challenges including continued self-evaluation.

Competitiveness is another derivative of the level of corporate control and management, with the reporting by inter alia the external auditors of an organisation/company as key support. The level of business ethics consequently is derivable from reports about corporate management and control and definitive with regard to how good a corporate citizen any company is – incidentally also a requirement Grain SA will have to meet.

Judge Mervyn King has on occasion summed up the essence of selfevaluation in ten simple questions (see info box) that technically can be made applicable to all of us. Interested readers can visit the following weblink for more information: www.pwc.com/za/king3.

Publication: October 2010

Section: Editorial