Effective corporate governance key to fraud deterrence

The importance of effective corporate governance practices, especially amid today’s challenging economic environment, was highlighted at a key forum hosted by Crowe Horwath Oman at Al Bustan Palace — A Ritz Carlton Hotel on Wednesday.

Davis Kallukaran Managing Partner, Crowe Horwath Oman, noted that investments in effective internal controls are typically reduced in tough economic situations. But he warned that management officials tasked with corporate governance are ultimately responsible for their effective enforcement across the company.

Had there been good governance practiced by company boards, instances of mammoth fraud as uncovered in a number of well-known international companies in recent years, would not have occurred, he said, noting that effective corporate governance is a vital safeguard against fraud.

Kallukaran made the comments at the opening of a forum on Effective Corporate Governance and Fraud Deterrence. “In Oman, we do have very vigilant authority in monitoring the effectiveness Governance.

In fact the regulators have made it obligatory for listed companies to carry out an annual assessment of the effectiveness of the performance of their Board of Directors and that also by a firm which is neither its Statutory Auditor nor its Internal Auditor. We feel that it is the duty and responsibility of Corporate of firms like us, as the conscience keepers of the economy, to spread awareness among the public of these requirements,” he stated.

Earlier, Shaikh Nasser al Rawahy, Deputy Chairman of the State Audit Institution of Oman, inaugurated the event.

Kallukaran warned that companies are typically vulnerable to fraud in challenging economic circumstances. This is especially the case when businesses are, for example, subject to downsizing, layoffs, volatile stock prices, tight credit, and decreased international controls.

“It is the duty of the Board of Directors as a whole to ensure that governance practiced by them is effective and adequate controls are established to oversee this,” he stressed.

The event was held in conjunction with the visit of Bernard Delomenie, Regional Director of Crowe Horwath, who is responsible for the group’s activities across Europe, Middle East and Africa, covering 81 countries in all. Addressing the conference, Delomenie said Crowe Horwath International with its 35,000 plus partners and staff spread over 129 countries, are committed to utmost quality in what they do. This is the reason why the firm was named the Best Advisory Firm of the Year in 2015 by the International Accounting Bulletin.

Later, delivering the keynote address on ‘Effective Corporate Governance and Fraud Deterrence’, Mubeen Khan, Adviser at Oman’s Capital Market Authority, said around five per cent of global GDP is lost to fraud every year. The Capital Market Authority is keen to empower company directors by creating awareness on the effectiveness of best practices in Corporate Governance, he said.

The event was attended by corporate directors, government officials and business executives.