Education for Bankers

Corporate Governance

This presentation was given at the IBSC Director's Workshop in Columbia, SC on September 16, 2004.
 
 

Sound Practices

  • Establish Strategic Objectives and Corporate Values
  • Set Clear Lines of Responsibility and Accountability
  • Elect Qualified Board Members
  • Senior Management Oversight
  • Effective Use of Internal and External Auditors
  • Careful Consideration of Compensation
  • Corporate Governance Needs to be Transparent
  • Environment Should Support Sound Corporate Governance

Definition

“...the framework by which a company’s board of directors and senior management establishes and pursues objectives while providing effective separation of ownership and control. It includes the establishment and maintenance of independent validation mechanisms within the organization that ensure the reliability of the system of controls used by the board of directors to monitor compliance with the adopted strategies and risk tolerance.”

Corporate Governance Framework

  • Structure Effectiveness
    • Organizational Structure
      • Communication lines
      • Reporting Lines
      • Board Policies
  • Adequacy of Board Supervision
    • Board Compensation
    • Board Meetings
    • Board Members
    • Board Charters
    • Board Committees
    • Board Minutes
    • Board MIS
    • Audit Committee
    • Board Education
    • Corporate Governance
    • Self Assessments
  • Management Effectiveness
    • Management Committees
    • Business Lines
  • Adequacy of Control Functions
    • External Audit
    • Internal Audit
    • Credit Review
    • Compliance

Subject Matters Directors Should be Adressing at a Minimum

  • Audit Reporting
    • Audit Fee Schedule
    • Audit Schedule
    • Audit Scope Documents
    • Auditor Qualifications
    • Correspondence betweeen Management and Audit Functions
    • Follow-up on Reporting Exceptions
    • Internal and External Audit Reports
    • Internal and External Engagement Letters
  • Asset Quality Reporting
    • Analysis of ALLL Methodology
    • Charge-offs and Recoveries
    • Commitments
    • Insider and Employee Loans
    • Large Borrowers
    • Large Relationships
    • Loan Approval Exceptions
    • Loan Extensions
    • Loan Funding
    • New Loans
    • Non-performing Assets
    • Overdrafts
    • Participations
    • Past Dues
    • Policy Exceptions
    • Watch List
  • Corporate Governance Reporting
    • Board Assessment Reports
    • Compliance Reports (e.g., Suspicious Activity Reports)
    • Director Qualifications
    • Employee, Officer, and Director Compensation
    • Management Succession Plan
    • Personnel Reports
    • Policies and Procedures
    • Strategic Planning
  • Financial Reporting
    • Borrowings
    • Branch Analysis Reports
    • Budget
    • Cash Flow Statement
    • Funding Requirements
    • Investment Portfolio Analysis (Purchases, Sales, and Maturities)
    • Large Depositors
    • Liquidity Reports
    • New Accounts
    • Performance Analysis
    • Policy Exceptions
    • Shareholder Reports
    • Statements of Financial Condition and Income (Comparison to Budget)
    • Tax Calculations