INCURSIONS INTO CORPORATE GOVERNANCE AND ANALYSIS OF REALITY FACED BY TOP 5 ROMANIAN BANKS

Abstract

Worldwide, financial institutions keep on being challenged with navigating the constantly evolving and vast universe of risks arising both from external factors which cannot be controlled within the internal control environment but also from internal factors. Not only the larger companies, but also the medium ones, need to dedicate enough resources, time, commitment in order to fully assess the risks that tend to affect a company at any moment in time. In order to make sure that the objectives are met and the risks are monitored and controlled, companies should develop open and formal communications mechanisms in order to establish a strong control environment, a good corporate governance model and an efficient internal audit function. The preliminary steps consist in: foundation of an efficient internal control system, formalization of governance structures, implementation of policies and procedures compliant with the statutory requirements and adapted to the industry, develop well defined roles and responsibilities of persons in charge with governance including a code of conduct, establish control functions within the company that oversee any breaches of regulations, supervise anti-money laundering, corruption, anti-bribery etc. Both in case of unitary and two-tiers models of corporate governance, out of all the subcommittees, it is really important to focus on the Audit Committee. This has became more and more important when the number of whistleblower tips and also complaints increased, leading to internal investigations over which the Audit Committee plays a critical role, overseeing the processes.

Keywords

• corporate governance
• financial institutions
• risk management
• code of conduct
• agency theory
• Board of Directors
• Supervisory Board.