The Importance of Internal Audit and the Role of Governance for Family Businesses in Transformational Stage. George Stoyanov, Grant Thornton

Transcription

1 The Importance of Internal Audit and the Role of Governance for Family Businesses in Transformational Stage George Stoyanov, Grant Thornton

2 Transformational Stages Role of Governance Role of Internal Audit

3 What is business transformation? Transformational change is Fundamentally changing what we do, how we do it, with and for whom we do it Making new assumptions Accepting a period of discontinuity Working through a period when there are no easy answers Transformational change is not Making small changes Fixing problems Adding a new process as a bolt-on Tweaking a process to improve it slightly

4 What are some of the reasons for transformation in family businesses? Change in Family Handover of the family business bringing new generation with new thoughts and ideas Performance Gaps Unmet organizational goals and objectives or other unsatisfied organizational needs New Technology Identification of new technology and more efficient and economical methods of work Identification of Opportunities New customers or other opportunities are identified in the market place that the organization needs to pursue in order to increase its competitiveness Crisis Financial crisis creates many changes as organizations attempt to survive

5 What are the key stages in transformation? Are we still aligned to our strategy? Do we still know who we are? Re-assess Strategic Alignment Business Model Innovation Assess What are new business models we need to adapt to keep up with technological changes? Implement Can we do it fast even if we fail? Fast Execution Operational Strategy Development Design Are able to convert this in operational plans?

6 What transformation criteria to apply? People Engage with Key Stakeholders critical to transformation identified Define clear roles and responsibilities Technology Standardize reporting, planning, data management and analytics Standardize and simplify system platforms / architecture Integrate between subsystems Embed application controls Business Core Define clear view of future state / drive growth Assess business and organizational capabilities Determine technical capabilities pre and post implementation Measure performance directly tied to company strategy Change Management Define change management approach Commit to manage the change in the workplace Motivate for the change management Measure the effectiveness of change initiatives

7 Development and Transformation of Family Business Over Time and Better Governance Initial Phase Growth / Transformation Maturity Family Family Family Ownership Business Ownership Business Ownership Business What works at one stage of the ownership cycle usually does not work well at other stages Controlling families should take a careful look at the governance models applicable for their particular stage of development The governance solution should depend on the ownership stage the company is in Mature Governance Structure: Separate functions of ownership, control and management Family offices normally created to clarify the boundaries between the family s and company s accounts Skills and knowledge of family members enhanced for new type of roles as owners, directors or employees

8 Articulate the Strategic Objectives of the business Implement Strategies Communication strategy Change management strategy Risk Management strategy Place Mechanisms to gain Assurance Robust assurance framework Assessment of risk & impact Roles of Internal Audit & Compliance Implement Sound Internal Control Effectiveness & efficiency in operations Reliability of information Compliance with laws & regulations The Role of Governance in Transformational Stages Establish the Boundaries of Conduct Policies and related procedures Understand and analyse the organisation's structure Confirm program scope & alignment to organisation structure Implement transitional Delegation of Authority

9 The role of Internal Audit in Transformational Stages Understand Assess Deliver Gain an understanding of: Transformation objectives Timelines and interdependencies Stages for the transformation and current status Skill set gaps in people Tech capabilities gaps Review key documentation Interview key stakeholders Review specific risk registers Perform independent risk assessment and gauge impact on internal controls Identify gaps with other assumptions Update internal audit plan Design new internal audit approaches Conduct design audits Attend transformation committees Conduct post implementation reviews

10 Thank you Any questions?