In January 2018, IFAC released a new publication, Focusing on Performance, which is designed to raise awareness of the importance among PAOs of good corporate governance practices and principles. This new blog series features stories from professional accountancy organizations (PAOs) across the globe as they reflect upon and highlight the importance of adapting governance arrangements to drive performance while considering their current and past governance arrangements.
The saying “life begins at 40” was put to the test a few years ago when the Institute of Chartered Accountants of Barbados (ICAB) celebrated the 40th anniversary of its establishment. Since its founding, ICAB has made significant strides—the profession has steadily grown and attracted young and committed talent. And while ICAB had made significant progress since becoming an IFAC member in 1983, for me—as the newly elected President—and for others on Council, this was not enough. There was a clear sense that even as we paused to celebrate the past 40 years, the reality of the work we needed to undertake to make our PAO ready for the next 40 years was setting in. We wanted to secure our future as a PAO that can function in a constantly changing and increasingly complex global economy.
Based on my prior experiences, I knew that any changes we made, or goals we achieved, would not be sustainable if we did not first address the organization’s governance. Corporate governance was a key enabler towards achieving the ICAB vision and strategy (ensuring financial sustainability; enhanced customer service to ensure member acquisition, retention and satisfaction; greater protection of the public’s interest through enhanced; and advocacy on behalf of the profession at the local regional and international levels). With legislative and structural requirements already in place, ICAB was able to concentrate on the performance within the PAO. The second ICAB Strategic Plan 2015-2018, which was approved at the start of my term, clearly outlined that rethinking our institutional structures and the way that we conduct business would be our top priorities.
How did we start? We began by first conducting research. We turned to IFAC. As we were aware that IFAC publishes guidance for PAOs on a wide range of issues, and our research found substantial guidance on corporate governance for PAOs. Based on this research, the ICAB Corporate Governance Improvement Project was born. The project built upon the key role of the Council and focused on leadership, effective controls, engendering high performance, succession planning, delegation of authority, integrity, and transparency. The ICAB Governance Improvement project was formally approved by the Council late in 2014 and included the following elements: (i) Council composition, skills, and succession planning; (ii) Conflict of interest policy; (iii) Performance evaluation of Council, Committees, and individual directors; (iv) Orientation and ongoing education for Council members; (v) Risk management; and (vi) Efficient and effective committees.
Because of limited resources, ICAB relies on the volunteers on ICAB’s Council and committees to successfully plan and implement our projects. Beyond the access to knowledge and experience provided by the volunteers, there is the additional benefit of having the input of members in shaping the PAO’s agenda and the creation of a pipeline of potential leaders. Utilizing our volunteers’ talents was key to achieving success in developing the new strategic plan. Moving the project from concept to reality was undertaken by the volunteer members of our Ethics Committee and the Executive Director—a small team of eight. The team met regularly to share their research, ideas, and develop policy papers all while keeping the ICAB Council updated on progress. The Council provided its feedback along the way which occasionally resulted in the team making adjustments to the draft policies. Ultimately, the execution of project served as an ideal example of how volunteers and PAO staff can and must collaborate to achieve the organization’s goals. The implementation of the ICAB Corporate Governance Improvement Project has had profound positive effects on our PAO.
The first positive effect was realized by July 2015, with the restructuring of ICAB committees and a revision of their terms of reference. This ensured alignment with the plan’s action items as well as the requirements of the corporate governance reforms. For example, the Ethics Committee was given responsibility for oversight of the corporate governance project and was renamed the Ethics, Governance & Risk Committee to reflect the expanded scope of its work. Committees that were not optimally or effectively serving their purpose were discontinued. The Student & Member Services Committee, for example, was replaced by two separate committees—the Member Services Committee and an Education & Student Services Committee. This allowed for a more differentiated, tailored approach to meeting the needs of ICAB’s members and students.
The second positive effect was a formal assessment of the performance of Council members, Committee chairs, and Committee members that was introduced through year-end self-evaluation surveys. The report on the findings of the three surveys now forms part of ICAB’s Annual Report to members. The results are used to identify areas for improvement and the initial survey has served as a baseline for comparison with future years.
A third impact was that several corporate governance policies and procedures were formalized, and policy documents were produced. The documents were not developed merely for the purpose of “ticking the boxes”; they are in fact serious practical manuals to guide the actions of council, committees, and staff. For instance, the policy on Efficient & Effective Committees has fundamentally changed the way that the 15 committees of ICAB function. This policy has streamlined the appointment process and requires orientation sessions to be held at the start of each term of appointment. It also sets out performance expectations and reporting requirements while requiring that committee activities be linked to the goals of the Strategic Plan. These changes ensure that ICAB’s Council and committees clearly understand the organization’s business model, its operating environment, the associated opportunities and risks, and how sustainable stakeholder value is created and optimized.
The examples are indicative rather than exhaustive. As stated earlier, ICAB is a small PAO that depends on volunteers for the implementation of many of its programs. For us, focusing our corporate governance policies on factors that drive organizational performance has made a significantly positive difference. It has enabled us to progress on all of the initiatives set out in our Strategic Plan and deliver more relevant, in-demand services to our members and students. We know that implementing our corporate governance improvement project has been a big game changer and will continue to ensure that ICAB is future-ready.
Have more questions? Do you believe your organization could benefit from a similar approach and seeks further guidance on the practical implementation of corporate governance policies? Please comment below, contact the author, and/or explore in more detail the good governance principles and practices in IFAC’s new publication!
Does your PAO have experience driving corporate governance reforms to enhance performance? Let those at IFAC know—we would love to showcase your work in action!