Corporate Governance

Corporate governance is one key element in improving organization efficiency and growth as well as enhancing investor confidence. It also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.

Corporate governance is crucial for any organization’s success. Policies and internal controls help mitigate risks and ensure a safe working environment. Policies create awareness and provide employee training, while controls detect, mitigate, reduce, or prevent risks. Together, they minimize risks and ensure secure operations.

Importance of reviewing and implementing policies and internal controls;

  • Risk Management and Compliance: Internal controls serve as the first line of defence against risks. Regular reviews ensure that these controls are robust and aligned with the organization’s risk appetite. Example: A financial institution reviews its anti-money laundering policies and internal controls to prevent illicit transactions and comply with regulations.
  • Financial Integrity and Accuracy:  Policies guide financial transactions, while internal controls ensure their accuracy. Regular reviews validate their effectiveness. Example: A publicly traded company reviews its financial reporting policies and internal controls to prevent fraud and misstatements.
  • Operational Efficiency:  Well-defined policies and effective controls streamline operations. Regular reviews identify bottlenecks and areas for improvement. Example: An e-commerce company reviews its inventory management policies and internal controls to optimize stock levels and reduce costs.
  • Transparency and Accountability: Corporate governance demands transparency. Regular reviews ensure policies and controls are documented, accessible, and adhered to. Example: A nonprofit organization reviews its conflict of interest policies and internal controls to maintain ethical standards.
  • Stakeholder Confidence: Investors, regulators, and customers rely on corporate governance. Regular reviews demonstrate commitment to sound practices. Example: A tech startup reviews its data privacy policies and internal controls to protect user information and build trust.

In summary, reviewing policies and internal controls is not just a compliance exercise; it’s a strategic imperative for organizations aiming to thrive in a dynamic business landscape

For corporate governance to take part organizations are expected to comply with various governance laws and observe transparency, accountability, ethical code of conduct and sustainability.

A legal compliance audit checklist should probe areas of the organization’s corporate governance practices; the examination may look into the appointments of directors, staff employment, procurement, annual general meetings, tax remittances (Corporate Tax, Withholding Tax, VAT, Stamp Duty, Capital Gains Tax) and company returns at the respective registry. For example, under the Companies Act, Cap 212 the post-compliance requisites after registration include:

  • To keep a register of your company’s members (shareholders);
  • To file the company’s Annual Returns in every year;
  • To annex to the annual returns certified copies of Accounts and Auditor’s Reports related to the said returns;
  • A company must hold an Annual General Meeting every year and keep all its minutes;
  • A company is required to keep proper Books of Accounts;
  • To state your company’s incorporation number on any document you deliver to the Registrar for registration;
  • To notify the Registrar of any changes to the company’s registered particulars kept by the Registrar;
  • To register any charges created by your company.

In the same sequel corporate governance examination should probe into conducting regulatory review depending on the sector that the company the audit is conducted is falling, For example;

  • Banking sector the regulations imposed by the Bank of Tanzania (BoT) should be checked to ensure compliance,
  • For telecommunications companies under Tanzania Communications and Regulatory Authority (TCRA),
  • For Insurance Firms,
  • For Brokerage and Agencies under Tanzania Insurance Regulatory Authority (TIRA),  
  • For contractors under the Contractors Registration Board (CRB), for aviation under the Tanzania Civil Aviation Authority (TCAA),
  • For energy sector under the Energy and Water Regulatory Authority (EWURA),
  • For transportation, both surface and marine under the Surface and Marine Transport Regulatory Authority (SUMATRA),  
  • For the Forest Industry (natural and plantations), bee reserves and bee resources are under the semi-autonomous government agency of Tanzania Forest Services Agency (TFS).
  • Etc.

The examination should go further to audit the review of contracts including management of contracts to meet the set goals, existing litigation and or, arbitration proceedings as well as employment disputes pending before the court of laws and their consequences or advise on the best alternative dispute resolution to avoid incurring costs and resources.

NOTE: It is very important to understand and pay attention to the above-mentioned obligations by consulting an attorney to help with compliance. This is because there might be an oversight which may result in penal sanctions like fines or even jail time.

“Don’t hesitate to consult us for any your compliance assistance”

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