The governance diagnostic gives an overview of a company’s governance at a given date. We can draw a parallel with the production of financial statements, which give a financial picture at a given date.
Financial results do not happen by accident: they reflect the decisions taken by the directors and executives. When it comes to the directors and executives, we are at the heart of the governance of an entity. Therefore, there is a direct correlation between financial performance and governance. We sincerely believe that a governance diagnostic is just as important and closely related to the financial outcomes contained in the financial statements. Improving the quality of governance of an organization will have a direct impact on its financial results.
Usually, the governance diagnostic covers the following 10 analysis and review elements:
1 the Board of directors
2) the directors and executives
3) the entity’s culture
4) risks assessment
6) the reports and audit
7) general meetings
8) the shareholder’s rights
9) social responsability
10) environmental responsibility
Because there is no regulatory framework requiring SMEs and NPOS to disclose information on their governance for public companies, this situation brings an extra challenge for SMEs and NPOS. There is little or no expertise in the governance of SMEs and NPOS. The assessment and control of risks associated with governance become more difficult.
This is when an expert in governance is needed to assist you in this field of expertise. To be an expert in this field of expertise, you need a thorough knowledge of global best practices in corporate governance. In summary, the governance diagnostic is little known by the small and medium-sized entities (SMEs and NPOS), directors, executives and even less by citizens. Governance services are therefore a field of expertise such as taxation, the business law and other expertise needed by companies.
A governance diagnostic is not more expensive than the annual fee that SMEs and NPOS pay to their auditor firm for their financial statements. In most cases, its cost is even lower.