So, you have been a director for how long now?

Usually newly appointed directors face the challenges they expect, with a combination of trepidation and excitement. And who can blame them? Having worked hard at developing the expertise and experience that others may want to make use of, it is a compliment to be asked to represent the best interest of the owners/shareholders of the business, on a board. But often, due to a lack of training or sharing of knowledge, new directors do not know what they let themselves in for when it comes to their personal liability and due care.

Often, when directors are for example asked to sign the statement of responsibility on a set of audited financial statements, they rely extensively on the representations made by management, and commit themselves to a statement that reads something along the lines of : “The directors take responsibility for ensuing that these financial statements accurately and fairly represent the state of affairs of the company…” and “…satisfied that no material breakdown in the operations of the systems of internal control and procedures occurred…”

Furthermore, ever since a number of large corporate failures in the early part of this decade, increasing attention have been given to the duties and responsibilities of directors for the effective governance of their companies.Questions were being raised about the number of boards directors were on, and how effective they could be if they did not attend board meetings regularly.

The duties of a director, both in common law and under the provisions of the Companies Act, are onerous. The Companies Act in particular provides for sanctions in many cases where a director is party to, or fails to take all reasonable steps to prevent, a breach of its provisions.

The King Code is generally accepted as best practise for a code of corporate practises and conduct. This code was a revision from the 1994 King Report, which as developed at the instance of the Institute of Directors in Southern Africa, by a committee chaired by former Supreme Court judge Mervyn King (the “King Committee”) formed in 1993 to review and make recommendations relating to standards of corporate governance in South Africa. The King Committee was composed of leading representatives of the South African corporate, legal, academic and political communities. The King Report advocated an integrated approach to good governance, addressing the interest of a wide range of stakeholders and supporting fundamental principles of good financial, social and ethical and environment practice.

As auditors we pride ourselves on the part we can play in the continuous development of the proficiency and experience of the directors of boards of companies, whether or not they are clients of ours. We draw on the best practises and research our global firm has done, and during our training courses, the skills and experience of our presenters comes to the fore. Our training is tailor-made to suit the needs of each company and director (including senior management) and can range from a one day course where we cover many aspects including elements of company law, to a shortened version for the director who is looking to advance the combined effect of the board of directors. We believe that informed directors will be in a better position to execute their duties to the greater good of the business, and will be able to put into operation their experience by expanding their potential across the entities they may serve in a non-executive capacity. Not only director benefit from this training, as sharing best working practises and practical experience will eliminate the expectation gap that may exist between management and the Board of Directors.

The duties and responsibilities of directors, both as individuals and collectively as a board, are significant and directors must be properly prepared to fulfil them.