AGIA MID YEAR CONVENTION (2004)
By Gary B. Teves
LANDBANK President and CEO
Association of Government Internal Auditors
Mid-year Convention cum Seminar
Diosdado Macapagal Hall, LANDBANK Plaza
July 2, 2004; 9:30 - 10:00 am
To the Board of Directors, officers and members of the Association of Government Internal Auditors led by VP Boy Roxas, other distinguished guests, ladies and gentlemen, good morning, and welcome to LANDBANK.
I am pleased to join you once again in this AGIA convention, my third time to speak before you.
In 2000, I spoke about the importance of good corporate governance in building a strong and empowered organization. Last June 2003, I challenged you to raise the bar of professionalism and excellence among practitioners by adhering to the international standards set for internal auditors.
This year, I am glad to note that you've taken the challenge a step further, as reflected by this year's theme - "Professional Competency: A Key to Institutionalizing the Internal Audit Service for Good Governance."
I am not an auditor by profession, but as LANDBANK President and Vice Chairman of the Board of Directors, I am fully aware of the importance of an effective internal audit system and staff in an organization.
As in many other organizations around the world, our Board of Directors and management have been working to continuously improve internal controls and governance, of which internal audit plays an integral part.
In the context of your theme, I will cite some reforms and requirements necessary for strengthening corporate governance in the country. Then, I will try to identify the areas in your organizations that I feel you should prioritize. Lastly, I will once again pose some challenges that you can adopt to improve your respective institutions.
I came across this comic strip featuring a group of men in a boardroom. One of them is griping:
"OK.bottom-lining it.the auditors are no longer team players."
Humor and complaining aside, directors and top managers today recognize, not only the importance of auditing, but also its very nature--that it must be, first and foremost, an independent and objective activity.
In the Philippines, the government emphasizes good corporate governance as key if we are to attain higher investor confidence and a developed capital market, as well as a stronger corporate sector and economy.
In line with this, the Securities and Exchange Commission (SEC) approved in April 2002 the implementation of the Code of Corporate Governance. Covered in this Code are the various areas of compliance that the Board of Directors and management of corporations should scrutinize.
In addition to the principles outlined in this Code, LANDBANK also adheres to other good governance practices based on our charter and related Bangko Sentral ng Pilipinas (BSP) Circulars. According to the BSP, improved corporate governance in banks and other financial institutions is essential if we want to insulate our economy against future crises.
To that end, we developed, finalized and released the LANDBANK Corporate Governance Manual, which contains detailed descriptions of the duties and responsibilities of our Board of Directors. It also incorporates an annual performance scorecard for our Board of Directors.
Early this year, the Institute of Internal Auditors or IIA revised the International Standards for the Professional Practice of Internal Auditing to more directly address your profession's responsibilities with regard to corporate governance.
According to PricewaterhouseCoopers, these revised Standards require internal auditors to assess governance processes and make recommendations to improve them in pursuit of the following objectives:
To promote appropriate ethics and values within the organization;
To ensure effective organizational performance management and accountability;
To effectively communicate risk and control information to appropriate areas of the organization;
To effectively coordinate the activities of and communicating information among the Board, external and internal auditors, and management.
In addition, these revised Standards call for internal auditors to evaluate the design, implementation and effectiveness of their organization's ethics-related objectives, programs and activities.
Competency is the key
Rather than be daunted by the greater pressures brought by these added responsibilities, practitioners like you must view this as an opportunity to further hone your proficiency, especially now that most organizations have recognized the importance of enhancing their internal auditors' capabilities.
We must add value to our work, going beyond our roles as the so-called "cops on the block." Internal audit work involves more than assessing risks and examining evidence to ensure compliance. We must also provide advisories on designing, implementing and enhancing related client service activities.
More importantly, we must constantly strive to perform our work with the utmost integrity. Former US Supreme Court Chief Justice Earl Warren once said: "In civilized life, law floats in a sea of ethics."
Knowledge and application of audit standards and related laws are not the only yardsticks of competency. Ethical conduct is the true hallmark of a competent internal audit professional and a person of integrity.
Let us therefore continuously challenge ourselves to achieve the highest ideals of ethics, honesty and honor in the day-to-day practice of our profession.
I hope that we will continue to work together to help our government improve corporate governance practices and consequently, the service we render to our fellow Filipinos. By doing so, we are helping build a strong foundation for a truly developed nation.
Thank you very much, and good morning.