Copyright Review Commission Report - ICT Law and Regulation ...
Copyright Review Commission Report - ICT Law and Regulation ...
Copyright Review Commission Report - ICT Law and Regulation ...
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Corporate Governance GapsKing II RequirementsPotential Implications of Non-Adherencec.All Board members wererepresentatives of composers /authors <strong>and</strong> publishers <strong>and</strong>,accordingly, there were noindependent Board members.The majority of non-executivedirectors should be independent asthis reduces the possibility ofconflicts of interest <strong>and</strong> promotesobjectivity.Every Board should considerwhether diversity <strong>and</strong> demographicsmake it effective. Diversity applies toacademic qualifications, technicalexpertise, relevant industryknowledge, relevant experience <strong>and</strong>other items.The fact that the membership was apre-requirement for becoming adirector reduced the pool ofc<strong>and</strong>idates who were capable ofbeing directors for SARRAL. As aresult, the Board had an inadequatenumber of qualified accountants withauditing <strong>and</strong> financial managementexperience.Objectivity <strong>and</strong> impartiality expectedfrom the independent Boardmembers was not possible.d.The Chairperson of the Board wasalso the Managing Director ofSARRAL.(Section 2.3.1) There should be aclearly accepted division ofresponsibilities at the head of thecompany, to ensure the balance ofpower <strong>and</strong> authority, such that noone individual has unfettered powersof decision-making.There is no evidence that the Boardtook appropriate actions against theChairperson of the Board for failingto implement the relevant controlswithin the organisation as themanaging director.The external auditors issued aqualified audit report for threeconsecutive years (2003, 2004 <strong>and</strong>2005) due to the fact that they couldnot verify the receipts <strong>and</strong>distributions.The failure to verify the transactionscould only arise as a result ofmissing supporting documentation.e.Effective internal audit function wasnot in place.(Section 3): Internal audit isresponsible to both the Board <strong>and</strong>executive management, providingthem with reasonable assuranceregarding the effectiveness of thecompany’s corporate governance,risk management processes <strong>and</strong>systems of internal control.The external auditors could not verifythe receipts from the SABC <strong>and</strong> themembers’ distributions (an indicationof systems break-downs).The internal audit would haveassisted with the investigations <strong>and</strong>designing appropriate controls toprevent the systems’ collapse.f.Effective risk management <strong>and</strong>internal control systems not in place.(Section 3.2.1) A comprehensivesystem of internal control should beestablished by the Board to ensurethat the risks are mitigated <strong>and</strong> thatthe company’s objectives areattained. The control environmentshould also set the tone of thecompany <strong>and</strong> cover ethical values.The external auditors issued aqualified audit report for threeconsecutive years (2003, 2004 <strong>and</strong>2005) for failing to verify the receipts<strong>and</strong> distributions. A good internalcontrol would have created goodaudit trails, which would haveallowed the auditors to audit.7.2 COLLECTING SOCIETIES (SAMRO, SAMPRA AND NORM) VERSUS KING III7.2.1. To minimise the risks of another collapse, it is important to analyse the state of corporate governance for theremaining collecting societies.- 48 -