presented at the 2004 LWUA-Water District Forum
POSTED HERE FOR REFERENCE
Governance in Asia-Pacific
(Applicability among Philippine Water Districts)
By Atty. Antonio P. Acyatan
Antonio P. Acyatan is the managing partner of A.P. Acyatan &
Co., Certified Public Accountants - Philippine member firm of DFK
International Group of Accounting Firms (IGAF) and Philippine correspondent
firm of several Asian and European accounting and consultancy firms
(Lai & Fau, Hong Kong).
He is a management, legal and tax consultant to more than twenty
business firms and organizations engaged in varied businesses like
banking, realty development, construction, cooperatives, department
stores and supermarkets, among others. He is also attached with
several consultancy firms doing work for the World Bank, ADB and
USAID. Atty. Acyatan is presently the managing partner of the Acyatan,
Guerrero, Acyatan and Omana Law Offices and is the charter president
of the CPA-Lawyers' Association of the Philippines.
Understanding Corporate Governance
CORPORATE GOVERNANCE has been defined as: "the processes and
structure by which the business and affairs of the company are directed
and managed, in order to enhance long term shareholder value through
enhancing corporate performance and accountability, whilst taking
into account the interests of other stakeholders".
The definition can be simplified by saying - "it is the system
by which organizations are directed and controlled, in order to
achieve its goals of serving the interests of its owners and other
CORPORATE GOALS can be classified into those that: (1) Serve the
better interest of corporate owners, including return on capital.
(2) Enhance the benefits to the workers of the company. (3) Facilitate
improvement of services for the corporate customers.(4) Ensure the
observance of terms and conditions imposed by creditors. (5) Optimizes
the benefits for the community and the general public as the national
economic order is promoted. (6) Provide due observance of sustainable
development and the protection of the environment.
In the case of water districts, it
must generate maximum revenues, which will be utilized to optimize
public services from water (district) utility operations - even
as efficient service to concessionaires is maintained. GOOD CORPORATE
GOVERNANCE for Water Districts comes about through an efficiently
and effectively working, strategic Board, and appropriate, productive
Management System of Local Utilities. Absence of such governance
can be a "deterrent to economic growth, hazard to public health,
and irritant to the spirit and well-being of the citizenry."
WHO ARE INVOLVED IN CORPORATE GOVERNANCE?
We can categorize the participants in CORPORATE GOVERNANCE as the:
(1) SHAREHOLDERS-MEMBERS - They define the expectations from the
Operations of the Entity. The Privilege of Appointing Directors/Trustees
is in their Consolidated hands.
(2) DIRECTORS/TRUSTEES - Sets the Goals, Objectives, Operating Policies
of the Corporation. Holds the Authority to Hire and Fire (Executives,
Supervisors), and Appoint and Remove Staff. - In the case of members
of the Board of Water Districts - the appointing power rests with
the (political) Administration of territory covered by the sources
of the Water Districts. Each of the Directors must be nominated
by and from the sectors identified in the law.
(3) MANAGEMENT - Implements Policies and Strategies which are approved
by the Board, as well as those that are normal to company operations
. - The WD law grants the General Manager full powers of operational
management, guided by the policies adopted by the Board. The Board
members are not allowed to engage in detailed management of the
District. On balance, the Board has the power to remove the General
Manager, for cause.
SUDDEN INTEREST IN CORPORATE GOVERNANCE
When the 1997 Asian financial crisis came to the fore like a thunderbolt
- it was found out that among the major causes of the unexpected
failures of erstwhile huge and profitable giants of the corporate
world - were discovered weaknesses in corporate governance which
rendered many companies vulnerable to losses and failures.
Five Asia-Pacific countries - previously labeled as new tiger economies
or upcoming economic "miracles" - were among those most
seriously hit by the financial crisis. These are: Indonesia, Korea,
Malaysia, Philippines and Thailand. An ADB study showed that these
countries had common weaknesses (although in varying degrees) in
the regulation and actual management of corporate affairs.
The "discovered" weaknesses of the business corporate
sector were: over-capacity, poor quality of investments, excessive
diversification by large business groups, excessive exposure to
bank debt, especially short-term debts denominated in foreign currencies
without benefit of exchange hedges. Other findings pointed to weak
or lax internal controls, poor audits, loose legal enforcement,
lack of adequate disclosure by management, and ineffective directors
manning the Board. These are in effect, FAILURES IN CORPORATE GOVERNANCE.
That financial crisis in East Asia in 1997 brought up the challenge
of corporate governance into the limelight. The business failures
then underscored the critical importance of structural reforms in
the governance of the business enterprises in the Asia-Pacific Region.
Yet the East Asian corporate meltdown was not the principal reason
for the clarion call for improvements in corporate governance. As
early as the beginning of the 1990s there were already some corporate
scandals in the United Kingdom. The big destructive waves that hit
the American Corporate World - bannered by the failures at Enron
and World.com, which in the process brought down Arthur Andersen,
SGV's erstwhile global affiliate and one of the BIG FIVE accounting
firms - triggered the widespread interest in corporate governance.
PROMOTION OF GOOD CORPORATE GOVERNANCE
The initial advocacy for corporate governance came about in late
1992 in the United Kingdom. It came by way of the publication of
the Report of the Committee on Financial Aspects of Corporate Governance
as established by the Financial Reporting Council, the London Stock
Exchange, and the accounting profession of the U.K.
The report was referred to as the Cadbury Report, which featured
on addressing how Boards of Directors should carry out their "fiduciary
responsibilities to better ensure the reliability of company accounts
in the face of a number of accounting scandals". The Cadbury
Report provided a Code of Best Practice as an instrument for guiding
a director's behavior.
Said vital report was soon followed
by other reports released starting in 1992:
Greenbury Report in 1995 (on Director's pay).
1 Hampel Report in 1998 (on Code
1 Turnbull Report in 1999 (on Risk
1 Higgs Report in 2003 (Role and
Effectiveness of Non-Executive Directors, And limiting the number
AROUND THE CORPORATE WORLD
Sometime in 1999, the Organization for Economic Cooperation and
Development (OECD), the Commonwealth Association for Corporate Governance,
and the International Corporate Governance Network, released their
respective principles on corporate governance. Many countries adopted
the OECD Principles and they became the template for most national
codes of corporate governance.
The OECD advanced FIVE KEY PRINCIPLES.
1. The rights of shareholders
2. The equitable treatment of shareholders
3. The role of stakeholders in corporate governance
4. Disclosure and transparency
5. The responsibilities of the Board of Directors
IN THE USA AND EUROPE
The eventual collapse of global business that Enron (and its external
auditor and consultant Arthur Andersen) caused or triggered - raised
questions and required investigations that were geared to get to
the heart of performance reality and authenticity in business operations,
more especially in the field of finance, accounting and auditing.
During the subsequent quest to restore public confidence in the
stock market, the Securities and Exchange Commission of the U.S.
asked the New York Stock Exchange (NYSE) and NASDAQ to review their
listing requirements. The Management of the top 1000 corporations
(US SEC-registered companies) were required to certify as to the
accuracy of their annual reports.
On the legal and regulatory part - the US Congress passed the Sarbanes-Oxley
Act in July 2002 setting corporate governance and oversight functions
in companies. The Act created a Public Company Accounting Oversight
Board. The law has given rise to drastic changes in the way that
accountants and corporate financial officers practice their professions.
Since early 2002, European countries likewise reviewed their corporate
governance practices. Major initiatives were undertaken by Germany,
Switzerland (July 2002), and Greece (December 2002). These initiatives
focused on corporate structure, executive and supervisory boards,
such as 2-tier boards, stock options, remuneration, and others.
The European Union came out in November
2002 with the Winter Report (chaired by Jaap Winter) which created
a high level group of company law experts appointed by the Internal
Market Commission, and which provided among others measures to strengthen
shareholder rights and protect employees and creditors and provided
for the adoption of company law and corporate governance principles.
INITIATIVES IN ASIA-PACIFIC
Awakened by the Cadbury Report and enlightened by the OECD principles,
many Asia-Pacific countries committed to bring up and adopt their
own corporate governance principles. These included those with close
ties and under the sphere of influence of the United Kingdom and
those that adhered to the corporate structure instituted by the
United States. These countries included:
1New Zealand : 1996
1Hong Kong : 1997
1India : 1998, 1999
1Japan : 1998
1Thailand : 1998
1Korea : 1999
1Malaysia : 2001
1Philippines : 2001, 2002
The Philippines, as APEC member, backed
the call for corporate governance as a key concern for the financial
health of the region. APEC Finance Ministers called for "closer
integration in monitoring, in promoting sound practices to reinforce
macroeconomic fundamentals, in supervising the financial markets,
in developing the capital markets, in improving transparency as
well as in the phasing in of reforms to keep in step with a world
that was becoming increasingly open, free, and interdependent."
The APEC Finance Ministers required concerted efforts towards a
thorough review of, and the establishment of concrete standards
for governance issues in order to regain investor confidence in
The move labeled as the Manila Initiative, stressed that improved
governance must include:
strong prudential standards and supervisory procedures for banking
1 Greater transparency in financial
reporting standards and accounting requirements.
1 Improvements to many opaque, and
sometimes even vague, legal areas, such as more practical bankruptcy
procedures and better mediation services.
1 Stronger corporate governance standards
and requirements, clarifying the legal underpinnings of corporate
governance, especially to protect minority shareholders.
RP CORPORATE GOVERNANCE
The enactment of important legislations
paved the way for upgrading of Philippine corporate governance practices.
The General Banking Act of 2000, replaced the old GBA - and provided
for a "fit and proper rule" for bank directors. The Securities
Regulation Code, also passed in same year, similarly revised previous
laws governing the regulation of securities in the Philippines and
reorganized the Securities and Exchange Commission.
Pursuant to the GBA of 2000, the Bangko Sentral ng Pilipinas (Central
Bank of the Philippines) issued Circulars No. 283 and No. 296 in
May and September 2001 to enforce the "fit and proper rule".
Bank directors are now required to undergo training in corporate
governance practices. In the same light, the Securities and Exchange
Commission issued Memorandum Circular No. 2 on April 4, 2002, promulgating
a Code of Corporate Governance for publicly listed companies and
other identified covered companies. The Code moreover required said
companies to submit their Manuals of Corporate Governance to the
SEC (to be made available to company shareholders).
The Office of the Insurance Commissioner issued its Circular on
Corporate Governance (Circular Letter No. 13-2002) to all life insurance
companies, non-life insurance companies, professional reinsurers
and urance intermediaries requiring an annual report on Corporate
Governance. The OIC aims to enhance corporate accountability of
insurance transactors and promote the interests of their stakeholders
including policyholders, claimants and creditors.
The Circular requires insurance companies to make a general disclosure
of their corporate governance practices. It uniformly covers:
Definition of Corporate Governance.
1 Importance of Corporate Governance.
1 Definition of a Director, including
Definition of Independent Director.
1 Powers and Responsibilities of
the Board of Directors and Individual Directors.
1 Qualifications (and Disqualifications)
of a Director.
1 Qualifications (and Disqualifications)
of an Officer.
1 Distinction between the Board and
Management and delineation of their accountabilities.
1 Creation of Board Committees: Audit,
Nomination, Remuneration, Corporate Governance, and Executive
1 Internal Controls and Risk Management.
1 Disclosure and Transparency; Reportorial
1 Public Accountability.
1 Rights and Protection of Investors
(including rights of minority interests).
1 Monitoring and Assessment.
CORPORATE GOVERNANCE AT THE LOCAL
Corporate Governance is about protecting
stakeholders' rights by way of continuously optimizing public service.
This squarely applied to the operations of our Water Districts.
At the Board of Directors' level, the individual directors - although
they are appointed by a political personality of the Administration,
are accountable not only to the appointing authority but more so,
to the general stakeholders - the concessionaires and the public
in general. Once a director is appointed to a directorial seat,
he takes on fiduciary responsibilities for the public. Even if he
came from a particular sector, the director is not in that WD Board
to represent specific interests.
PROMOTION OF GOOD CORPORATE GOVERNANCE
A good number of Good Corporate Governance
proponents including Chair Celso Vivas of PICPA's Corporate Governance
Committee opine that Corporate Governance can be promoted within
the organization - in our case in the Board of Directors of our
Water District - through the observance of:
We can say there is FAIRNESS when
- among others -
directors willingly submit themselves to continuing education
to ensure their effective participation in board activities.
A director sincerely considers resigning or at least taking a
leave of absence, whenever he is unable to do his part for whatever
reasons or whenever his contributions became marginal, or whenever
he has continuing conflict of interest of material nature.
The directors see to it that the Board does not serve as a mere
rubber stamp to formalize decisions made by the appointing authority
(or owners) and top management.
individual directors abstain from voting on matters involving
conflict of interest of which he or his related interest is a
The Board, its individual directors and top management, submit
themselves to a fit and proper test regularly.
Individual directors observe confidentiality, i.e., not disclosing
confidential information to any particular shareholders or stakeholders,
to whom they owe any private allegiance, without authority from
The directors avoid individualism and promote the spirit of unity
within the Board.
Board and individual directors respect and protect the rights
of all stakeholders.
In fine - there is fairness when the Board and individual directors
keep good governance culture alive and make sure that it is rooted
throughout the organization - top to bottom.
Delegation is one of the wonders of
our corporate world - more so coming from the Board in terms of
the affairs and operations of the company. But the ACCOUNTABILITY
of the Board of Directors and of the individual directors cannot
be passed on to others. They will always be held accountable for
each and every decision and action they make in and for the company
ACCOUNTABILITY is achieved by creating a strategic, working Board
of Directors - with proper mix of directors with related board experience.
This is the spirit observed in the filling up of directors' seats
in our Water Districts.
There must be a measure of the effective and efficient performance
of the Board, the individual directors, and the Management of the
entity. The assessment should be continuing and proper evaluations
conducted at appropriate times.
Corporate governance should ensure the installation of fair system
of checks and balances not only in business operations but also
in the safeguarding of company assets and the limitation of liabilities
to the truly correct and appropriate. The management of usual and
unusual risks faced by the entity must be ever on alert and upgraded.
Ethics also dictate that management of the company - starting from
the establishment of policies must be in accordance with law and
the very source of its creation - its charter or Articles of Incorporation
TRANSPARENCY is about openness, willingness
to share important corporate details and information to all governance
players including the owners, appointing power, government, customers,
and the public it serves. The Code of Corporate Governance and Code
of Conduct for directors are set-up and strictly adhered to and
when public disclosure of corporate governance performance evaluation
results are allowed when asked.
The most critical test of TRANSPARENCY refers to the preparation
and release of financial statements. The norm is for financial statements
to be prepared in accordance with the Generally Accepted Accounting
Principles, and audited based on Generally Accepted Auditing Standards
and Practices. Both accounting and auditing standards in the Philippines
are required now to be adhered to international standards.
With regard to the stakeholders and the public it serves, Corporate
Governance requires that policies insuring open and honest channels
of communication be installed. There must be two-way system of communication
so that comments, and even adverse views can be reported or relayed
to the Board and Management.
For Local Water Districts - it can
be said that GOOD CORPORATE GOVERNANCE is akin to a WORKING, STRATEGIC
BOARD COMPOSED OF HONEST AND OBJECTIVE MEMBERS - EQUIPPED WITH RELEVANT
EXPERTISE, TRAINING AND EXPERIENCE.
ACCOUNTANCY PROFESSION INITIATIVES
The Philippine Institute of Certified
Public Accountants (PICPA), as the national organization of CPAs,
undertook a number of initiatives promoting good governance. PICPA
- working with the Board of Accountancy and the Professional Regulation
Commission - established a Quality Assurance Board, geared to ensure
the quality of Philippine CPAs. Among its tasks is to monitor and
advocate pending legislation regarding the accountancy profession.
The new Accountancy Law (imposing preliminary work experience for
would-be external auditors, and continuing professional education
for CPAs) was recently approved - but the other bill also intended
to strengthen the Philippine Accountancy profession is still pending.
This latter bill proposes the establishment of a Corporate Oversight
Board. Meanwhile, the Board of Accountancy has passed a resolution
that provided for the creation of a Quality Review Committee.
PROMOTING GOOD CORPORATE GOVERNANCE
The promotion and upgrading of corporate governance covers several
The strengthening of regulations for
the domestic financial system was a proper response to the Asian
financial crisis. Bank regulators saw the need to improve banks
supervision and regulations to enable banks to perform their role
as external monitoring and control agents of their corporate debtors.
While the Asian financial crisis principally referred to corporate
governance malpractices in banks and the financial institutions,
those that happened in the Western Hemisphere relate to huge corporate
scandals involving public companies, which eroded investor confidence.
In the Asia-Pacific, the goal was to beef up the financial system,.
the West went for the upgrading of capital markets restructuring
and the covering regulations. Both areas called attention to the
need to likewise upgrade and safeguard the sanctity of financial
statements - and to further professionalize accountants and auditors.
The Sarbanes-Oxley Act of the USA called for Corporate Governance,
which require "further strengthening of independence, integrity,
proper oversight, deterrence, accountability and certification,
transparency and disclosure and strong internal controls."
There is a pending bill in our Philippine Congress adopting some
aspects of the Sarbanes-Oxley Act:
1 Creation of an independent Public
Accounting Oversight Board to enforce professional standards,
ethics, and competence for the accounting profession.
Requirement that CEOs and CFOs personally vouch for the veracity
of their financial statements and provision of much stiffer penalties
of disclosure requirements for public companies, notably in areas
of off-balance sheet transactions and insider trading.
Protection of the independence and objectivity of securities analysts
by directing the SEC to review rules ensuring their independence.
the SEC to undertake a comprehensive review of corporate governance,
the separation of audit and non-audit work, and the role of credit
The Sarbanes-Oxley Act reaffirms that
the CEO and CFO carry primary responsibilities, requires that at
least one member of the Audit Committee is a financial expert, establishes
a financial standard that is broader than Generally Accepted Accounting
Principles (GAAP), and necessitates the independence of external
auditors in fact and in perception.
Board of Directors Level
With the new laws and regulations - responsibility for a company's
corporate governance belongs to the Board Directors. Its members
must realize that their collective basic functions are:
(1) Strategic direction and formulation;
(2) Policy setting;
(3) Monitoring and supervision; and
We say for emphasis that the Board
is responsible for setting the direction for the company. This is
not Management's responsibility, so the Board should not relegate
this duty to Management. Likewise, the Board of Directors must set
the ethical culture of the company.
The company's success or failure is the Board's responsibility.
The Management simply implements the directions and policies approved
and ratified at the Board level. In line with this precept, the
directors or trustees must see to the fulfillment of their adopted
strategies by way of good monitoring. But first, the Board must
be satisfied that the goals and objectives it has set for the Company
and its Management are achievable.
As created, the Board of Directors of LOCAL WATER DISTRICTS are
to be composed basically of five (5) members representing:
1 Professional Associations
1 Business, Commercial or Financial
1 Educational Institutions
1 Women's Groups
The composition mix is intended to
provide the necessary conglomeration of knowledge and variety of
culture within the Board of the Water Districts.
However, there are certain issues and concerns that have to be checked
and verified if we are to fully promote Good Corporate Governance
within the Board of LWDs. This may be true or not in certain Water
of financial & risk management literacy
1 Lack of relevant experience
1 Insufficient knowledge of LWD's
operations, business or industry
1 Inadequate knowledge of duties,
responsibilities, rights & liabilities as directors
1 Lack of necessary training on corporate
1 Absence of Code of Conduct for
directors and the Board itself
1 Lack of commitment on the part
of the directors
1 Insufficient discussion/consultation
among members and with Management
1 Lack of credit and financial management
1 Lack of transparency and financial
1 Political Interference from without
and from within.
The Audit Committee
The most vital committee in the pursuit of good corporate governance
is the Audit Committee. The new legal and regulatory framework for
Philippine corporations emphasize the need for an Audit Committee
of the Board composed of at least one independent Director (who
must chair the Committee) and two others who must be financial experts
or have had experience in auditing.
The Audit Committee is responsible for choosing the company's external
auditor as well as the internal auditor. This Committee must ensure
that the company's internal control and risk management are able
to sufficiently safeguard the value of the company, prevent fraud
and avoid conflicts of interest. The Philippine Code of Corporate
Governance emphasizes that every company must come up with "an
independent audit function, through which the company's Board, senior
management and stockholders may be provided with reasonable assurance
that its key organizational and procedural controls are effective,
appropriate, and complied with."
The Board sets the direction - but the actual implementation and
ensuring that the strategic directions and policies of the company
are fulfilled belongs to Management. It is very vital and important
that a top Management Team is selected. Among the Board Nomination
Committee's functions is the selection of qualified, energetic and
committed men at the helm of the company.
Learning from the lessons of the most devastating corporate scandals,
men of principle must be chosen, and held accountable for their
actions. This is the purpose of the requirement that CEOs and CFOs
need to sign on and affirm the veracity of company financial statements
The promotion of good corporate governance is very much hinged on
a Board's ability to choose the right Management Team, and the commitment
of such a Team to "actively manage and operate the company
in a sound and prudent manner, ensure that there are organizational
and procedural controls supported by an effective information and
risk management system, safeguard the company's assets and ensure
the growth of the company, and be compliant with laws, rules, and
The law creating our WATER DISTRICTS emphatically provides for the
delineation of functions between the Board of Directors and the
Chapter V, Sec. 17 provides: Performance
of the District Powers. - All powers, privileges and duties of
the district shall be exercised and performed by and through the
Board: Provided however, That any executive, administrative or
ministerial power shall be delegated by the Board to officers
and agents designated for such purpose by the Board.
Sec. 18 in turn provides: Functions
Limited to Policy-Making. - The function of the Board shall be
to establish policy. The Board shall not engage in the detailed
management of the district. (underscoring ours)
The limitation on the "powers"
of the Board to engage in the detailed management of the district
gives "too much" leeway to the Management - even as
the Board, in the perception of the general public - is the body
responsible for the operations of the Water District.
At the Investor Level
The development and growth of the Asian capital markets calls for
corporate governance to the maximum. In an ADB study, it was noted
that "missing middle" investors characterize our Asian
capital markets. These big investors are usually the institutional
shareholders in developed capital markets like insurance companies,
pension funds and mutual funds.
Due to the nature and size of their fund sources, they are able
to invest in shares of companies for the long term. They are not
the buy-and-sell type of investors. Their presence provides stability
to capital markets. To get their investment business, companies
must prove to them that their operations are transparent and their
regular reports afford institutional investors adequate reading
via disclosures. Here is where good corporate governance practices
come in pretty handy.
At the Shareholder Level
When the big players cough, the small investors get the influenza.
Whenever losses are suffered in the stock market, it is usually
the small players that get dumped and trampled upon. Indeed, there
is this apparent lack of empowerment of minority interests. Minority
shareholders, are almost always deprived of their "say"
in the decisions of the companies they invest in. It is imperative
that the protection of minority shareholders be a preferential and
vital cog of good corporate governance.
For their own collective interest, minority shareholders are encouraged
to embark on shareholder activism - that is, in actively monitoring
the affairs of the company management. The disclosure and transparency
rules that are now part of good corporate governance will enhance
their ability to keep tabs on their company's Board of Directors
and top, senior management.
CORPORATE GOVERNANCE CHALLENGES
From all levels of governance, the performers must - on their own,
or in cooperation and coordination with fellow performers, and under
the aegis of the company they serve undertake in good faith the
attendant requirements and responsibilities.
They are expected to-
Be aware of their roles, duties and responsibilities - and how
these relate to others.
Understand the business and industry of the organization.
Hone and continually improve financial and risk management literacy.
Know their potential legal exposures and required protection.
Always maintain good faith - and faith in God.
their honesty and integrity at all times.
Submit themselves to continuing education and developments.
Understand and welcome the risk performance evaluations as a key
to an effective board.
AT THE WATER DISTRICTS
Corporate governance seems to be a novel buzzword among water districts.
It may sound interesting - yet even the industry leaders of the
Water Service Industry have but scanty knowledge of the subject.
Worse, the ignorance is not being admitted openly.
To enable our industry leaders to be on track of management developments
- even as we harvest the benefits of universal approaches, we propose
the following strategies/suggestions:
Establish the Water Districts corporate VISION and MISSION.
Set the Water District's short-term, medium-term and long-term
goals and strategies - preferably along the pattern of Management
Formalize guidelines for performance evaluation of the board as
a whole, and the individual directors as well as the key managers
of the Water District. The evaluation can be done say, every semester
- simultaneous with the Budget Review.
1 Adoption of a Uniform Code of Corporate
Governance among LWDs.
Strengthening the capability of Internal Auditors - to serve as
the monitoring arm (eyes and ears) of the Board of Directors.
Continuing training of finance, accounting and auditing personnel
so they can update themselves with the latest global developments.
a clear oversight structure at the Board level - availing of the
individual lines of expertise of the individual directors.
of Audit Committees of the Board of Directors - chaired preferably
by one who has no direct participation in the operation of the
Water District and with corporate governance and financial management
the possibility of hiring outside-party management auditors to
afford the Water Districts third party analytical evaluation of
its organizations and operations. Said auditors can also double
as attestors of the financial statements for purposes of the required
submissions with the Bureau of Internal Revenue.
Continuing attendance by WD directors and key executives in seminars
and workshop on corporate governance, financial literacy and risk
1 Formally adopt a Uniform Code of
Conduct for Water District directors and for senior management.
The above measures are being brought
forward - on the presumption that corporate plans and budgeting
system are in place - coupled with periodic, regular review of the
results in comparison with the pre-set goals and targets. It is
also assumed that the financial statements and related (LWUA) reports
are being prepared and submitted on time by the WD.
On the corporate front - there is
no debate that good CORPORATE GOVERNANCE is the formula that will
entice investors to return to the Stock Exchanges. Once the moneyed
sector of our society become confident in the capital system, parking
of resources in corporate stocks will come about. Whenever there
is good corporate governance, efficient and effective performance
will come about as a matter of course. These factors are intertwined
The ultimate responsibility for ensuring
good corporate governance rests with the Board of Directors. Yet
- the Board of Directors is only as good as the members comprising
it. The challenge of being and becoming a better and more effective,
efficient director is a personal decision that everyone has to confront
This challenge applies to all corporate
keypeople - and it squarely applies to the men and women in the
Board of our Water Districts. As the years go by - and as more and
more water service concessionaires enlist for service - problems
of Local Water Districts multiply in the same proportion - if not
more. One of the best paths to tread in these turbulent times -
is the way of good corporate governance, guided by the vision and
mission that should characterize all entities belonging to the Water