Sound corporate governance is the bedrock of a progressive corporate ecosystem: Dr. Ajay Bhushan Pandey

The Indian Institute of Corporate Affairs (IICA), the apex think tank of the Ministry of Corporate Affairs, Government of India, inaugurated its industry-leading Directors' Certification Master Class in Ooty, Tamil Nadu, on 10^th July 2024. The Master Class, held from 10 to 12 July 2024, brings together over 50 participants representing the boards of leading organizations across India to enhance their corporate governance acumen.

The inaugural session was attended by Dr. Ajay Bhushan Pandey, Chairman of the National Financial Reporting Authority (NFRA) and the Director General & CEO of IICA; Ms. Neera Saggi, Independent Director on the boards of multiple companies including Tata Steel and GE Power; Mr. Shailesh Haribhakti, Board Chairman, Audit Committee Chair, and Independent Director in several leading organisations.

During the inaugural session, Dr. Pandey also highlighted a new collaborative initiative between IICA and NFRA to launch specialized training modules aimed at enhancing the skills and knowledge of accounting professionals, auditors, and independent directors. “Sound corporate governance is the bedrock of a robust corporate sector,” he stated, stressing its crucial contribution to sustainable growth.

In his keynote address, Dr. Ajay Bhushan Pandey highlighted the essential role of corporate governance in today's economy and society and emphasised the importance of audit committees and independent auditors in maintaining corporate integrity and sustainability. He referred to  historical cases like Kreuger & Toll and McKesson & Robbins to illustrate the evolution of regulatory frameworks.

Dr. Pandey outlined five key defences in corporate governance: management, audit committees and independent directors, financial reporting frameworks and auditors, investors/shareholders and lenders, and independent regulators like NFRA. He urged audit committees to engage deeply with key audit standards and review NFRA disciplinary orders regularly.

Additionally, he emphasised the importance of Key Audit Matters (KAM) and Emphasis of Matters (EOMs), advocating for active engagement with auditors to ensure transparent reporting.

Dr. Pandey concluded by underscoring the primary responsibility of corporate boards to protect shareholders’ interests and ensure good governance. He recommended directors to familiarise themselves with NFRA's review reports and disciplinary orders. Quoting Healy and Palepu from Harvard Business School, he suggested evolving audit committees into ‘transparency committees’ to give investors a clearer understanding of a company's economic reality.

These courses, which will count towards the continuing professional learning requirements for chartered accountants, are designed to prepare auditors and independent directors to manage large companies with diverse shareholder bases and meet global standards. The training modules will include nine-month courses for auditors and accountants, with online classes held two to three days a week, and shorter courses for independent directors lasting three to six months. Developed with input from top industry experts, these courses aim to provide practical and valuable learning experiences.

The Directors' Certification Master Class continues over the next two days, featuring sessions led by distinguished speakers and industry experts. Notable speakers include Mr. Nawshir Mirza, Independent Director at Thermax Ltd; Mr. Vivek Talwar, Former Chief Sustainability Officer at Tata Group; Mr. Puneet Gupta, Managing Director at Protiviti India; Dr. Anil Kumar, Independent Director at LIC of India; CA Mohan R. Lavi, Board Advisor; and Dr. Mahendra Chouhan, Former Chairman of Fino Payments Bank; Mr. Nagendra Rao, Past President of ICSI and Mr. PS Jayakumar, Former MD & CEO of Bank of Baroda.

Fostering an environment of learning and collaboration, equipping participants with the knowledge and skills necessary to excel in their roles as directors and governance professionals - this three-day program is led by Dr. Niraj Gupta, Head of the School of Corporate Governance & Public Policy (SoCGPP) at IICA, and supported by Mr. Manoj Singh and Mr. Mathew John, Chief Program Executives at IICA.

Corporate governance strengthened by director training and regulator collaboration to enhance audit oversight and reporting transparency. The Master Class advances sound corporate governance by strengthening audit oversight, encouraging active engagement on Key Audit Matters and Emphasis of Matters, and promoting regular review of regulatory disciplinary orders; it outlines five layered governance defences and urges audit committees to master key audit standards.