SWiFT 3000
The new standard for Corporate Governance evaluation
IMCA
7 September 2011
David W Duffy – Prospectus
© Prospectus 2010
Agenda
1
What Is SWiFT 3000?
2
What are the benefits?
3
Why should an organisation apply for the SWiFT designation?
4
How to get ready for SWiFT?
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1
What is SWIFT 3000?
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What is SWiFT 3000?
•
Produced by a corporate governance working group convened by the NSAI and
supported by IoD, CGAI and IPA.
•
Provides a best practice Irish specification for the conduct of an external evaluation
•
Facilitates the external assessment of Corporate Governance performance by
providing a standard framework of assessment of compliance with relevant codes
•
The assessment is confidential and voluntary
•
The objective is to assess the corporate governance frameworks of companies and
specifically the level of compliance by companies with governance codes of best practice
relevant to them:
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OECD Principles
Combined Code on Corporate Governance
Code of Practice for the Governance of State Bodies
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Following codes are in development
• ISE (UK code of Corporate Governance) for Irish Plc.'s
• Corporate Governance Code for Credit Institutions and Insurance Undertakings
• Corporate Governance Guidance and Principles for Unlisted Companies in Europe
ecoDa
• Codes In Development for; Family, SMB, Voluntary, Funds
• Relevant sectoral Codes as approved for inclusion as they emerge
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SWiFT 3000 – Scope and Process
•
Scope of the assessment will examine the following:
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•
Board Composition
Board Processes
Execution of Board Role
Companies which meet the specifications of the Code will be awarded the SWiFT 3000
Certification by independent accredited certification bodies.
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Certification Europe
NSAI ey
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Assessment Methodology: Process Overview
Phase 1
Planning &
Preparation
Phase 2
Initial Review
Phase 3
Interview &
Follow-Up
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Phase 4
Reporting &
Follow-Up
The Main Bodies Involved in SWiFT3000 (Auditors)
Association of
Accredited
Certification Bodies
Oversight
Committee
Certification
Body (CB)
CB
CB
CB
CB
Audit Team - Technical
+ Process Auditor
Client seeking
certification to
SWiFT 3000
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CB
The Main Bodies Involved in SWiFT3000 (Auditors)
•
In SWiFT 3000 there are two types of auditor
– ‘Technical Auditor’:
• Any assessor on the list of ‘Appointed Assessors’ as maintained by the Oversight
Committee. At present determined by successful completion of exam on approved
affirmation courses.
– ‘Process Auditor’
• A practicing & experienced management system auditor working with the CB, &
approved under the ISO 17021 competence assessment. Furthermore will have
attended a designated corporate governance affirmation course.
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SWiFT 3000 – Scope and Process
People interested in becoming accredited corporate governance assessors are
required to:
– Meet the criteria specified in Annex C – “Assessor qualifications and other conditions”
as per NSAI SWiFT 3000 available on www.nsai.ie; AND
– Undertake and successfully complete a three day programme on corporate governance
being run by Prospectus - www.prospectus.ie
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2
What are the benefits?
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Benefits of SWiFT
 Provides external, independent, validation of good business standards
and a healthy Governance environment
 Is an affirmation of a proper functioning business and Board
 Certifies the right “tone from the top”
 Benchmarks the Board against its peers
 Will help in attracting higher calibre board members
 Plays a part in restoring business trust and confidence in Ireland
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3
Why should an organisation
apply for SWiFT?
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The SWiFT standard will set organisations apart for their
high standards of corporate governance
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Reassures stakeholders, staff, customers, suppliers and investors
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Recognises a Board’s commitment to real Governance
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Enhances reputation, profile, business
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Sees past rhetoric and hollow written claims
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Facilitates real openness and transparency
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4
How to get ready for SWiFT?
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Getting ready for SWIFT
Diagnostic
Improvement
plan
Key gaps
SWIFT
Ready
>>>>> following shows the elements of the SWIFT process
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Scope of the Assessment
The Corporate Governance Assessment involves examination of three core
areas:
• Board composition
• Board processes
• How the Board executes its role
These 3 areas encapsulate the main principles of the relevant codes of
Corporate Governance best practice.
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The Assessment Methodology
The assessment methodology is crucially evidence based and
principally relies on the following:
• Board documents & records relevant to the scope of the
Assessment
• Questionnaires
• Interviews
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Key headings for the evaluation
Core competency
Assessment Assessment
rating
average
Main principles
(0 to 4)
A. The Company
1
A1 The Board
4
2
A2 The Chairman and CEO
4
3
A3 Board balance and independence
4
4
A4 Appointments to the Board
2
5
A5 Information and Professional
Development
2
6
A6 Performance Evaluation
2
7
A 7 Re-election
2
B. Remuneration
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B.1 Level and Make-up of Remuneration
3
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B.2 Remuneration Procedure
3
C. Accountability and Audit
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C.1 Financial Reporting
4
11 C.2 Internal Control
12
4
C.3 Audit Committee and Auditors
Rating
4
3.17
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A sample of Board Documents that could be reviewed
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Board procedures, board documents, records
Board terms of reference
List of matters reserved for board's decision
Schedule of board and committee meetings for the prior and current year
An appropriate sample of board meeting agenda and supporting
documentation
Board Minutes
Internal audit work plan
Audit committee papers
Committee terms of reference
latest set of annual report and accounts
Strategic plan
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A sample of pre-assessment Questionnaire
(to Board members)
The Board
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•
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By what means does the board direct and control the company?
Does the board have processes in place for succession planning?
Has the board ensured that systems of risk Management and other systems of internal
control are established and operate in practice?
Board balance regarding appointments and independence
•
Are the range of skills, knowledge and experience on the board appropriate?
Information flows
•
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Is the form and quality of the information supplied to the board appropriate to enable it to
discharge its duties?
How does the company secretary ensure good information flows between senior
Management and non-executive directors?
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A sample pre-assessment Questionnaire
(to the Company Secretary or Designated Representative)
Board
•
•
•
•
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What committees are established and who are the members?
Are the mandates for the board and committees clear and effectively defined?
Are there independent directors and do they meet the independence criteria in the
Combined
Code?
Has the board appointed an independent non-executive director to be the senior
independent
director?
Do all directors receive induction on joining the board?
Board evaluation
•
•
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Does the board undertake a formal and rigorous annual evaluation of its own
performance?
Does a similar evaluation of the performance of committees take place?
Is the performance of individual directors also evaluated?
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A sample pre-assessment Questionnaire
(to the Company Secretary or Designated Representative)
Remuneration
• Is there a board remuneration committee operating in accordance with the
provisions of the Combined Code?
• Are there procedures in place to avoid conflicts of interest in setting levels of
remuneration?
Accountability and Audit
• Has the board adopted policies governing corporate conduct, including
compliance with applicable laws and regulations?
• Does at least one member of the audit committee have recent and relevant
financial experience?
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Detailed review of Board Composition
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Responsibilities of the board
Composition and structure of the board
Balance and Diversity
Skills expertise and experience
Chairman/CEO separation
Election of directors
Time commitment
Board Independence
Composition of board committees
Role of the chair
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Lead independent director
Company secretary
Knowledge of company
Appointment of directors
Information on board nominees
Board induction, and development
Related Party Transactions
Director Declarations
Conflicts of Interest
Board processes
Processes relate to the underlying mechanisms used by the board.
The following are assessed:
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Collective responsibility of the board,
Terms of reference (Board and Committee(s),
Matters/decisions reserved for the board/Management,
Board meeting process,
Committee meetings,
Decision making process,
Information flows (between Management and the board and between the board and
stakeholders).
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Finally, some thought's and observations….
• Moving beyond ticks in boxes, “hassle” to embedded CG
environments
• Reputational risk damage, is a strong driver and desire to
avoid the mistakes of the past
• Genuine desire to improve business culture is more evident
• This is unique in Europe!
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SWiFT Programme Leaders
Title:
Title:
Email:
Phone:
Fax:
Director, Prospectus
Email: dduffy@prospectus.ie
Phone: +353 1 218 0304
Fax:
+353 1 260 3130
David is the founder and a director of Prospectus. He graduated
from Trinity College Dublin with a Bachelor of Business Studies
Degree and is a Chartered Accountant. He also holds an MBA
from IMD in Lausanne, Switzerland
He has extensive experience in planning and implementing significant
strategic, management and organisational change, and advising on
corporate governance in the public, private and not for profit sectors
He is a member of the Institute of Directors and was President of the
Institute of Management Consultants in 1992 and 2007
He is also the author of a book published by Prospectus in May 2004,
titled “The Management of Management – A practical guide to
Corporate Governance”. Prospectus is bringing out a new book on
corporate governance in the 2011 to build on the success of the last
publication
David has led the governance reviews of a number of organisations
including: Institute of Taxation in Ireland, HEA, Royal Hospital
Donnybrook, National University of Ireland at Maynooth; St Vincent’s
Healthcare Group; EBS, Health Research Board; Revenue
Commissioners. Radiological Protection Institute of Ireland; Public
Appointments Commission
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Head of HR Practice, Prospectus
pangulo@prospectus.ie
+353 1 218 0319
+353 1 260 3130
Pedro is responsible for the ongoing development of the Prospectus HR
Consultancy Practice, including business development and the delivery of
innovative HRM and organisational development initiatives and projects
He has over 10 years HR consulting and executive development
experience. Prior to joining Prospectus Mr. Angulo has worked in senior
management roles in Penna, Deloitte, IBM Business Consulting Services
and PricewaterhouseCoopers in Dublin
Pedro has led the design and implementation of large-scale human
resources with both national and international clients, in the public and
private sectors. Some of his clients include: DIT, Integration Centre,
British American Tobacco, Holcim, UCD, ESB, National Concert Hall,
Combat Poverty Ireland, Bord Gais Eireann, INTO, Port of Cork,
European Rugby Cup, St. James’s Hospital, National University of
Ireland, DSFA, Musgrave, ICON, O2, Permanent TSB, Teagasc,
Enterprise Ireland, Glanbia, Tesco, AIB, Revenue Commissioners,
Diageo, and Kimberly Clarke
For a number of years, Pedro has been a part-time senior lecturer and
examiner in the Michael Smurfit Graduate Business School
Pedro holds an MBS in Management from UCD, is a member of the
IMCA, and a Board member of the EMCC
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Getting Ready for SWIFT
- The Three Day Training Programme
Objectives and Agenda
• At the end of this programme participants will have:
– A clear understanding of SWIFT 3000
– Improved their knowledge of the Codes
– Further develop their corporate governance assessment skills
DAY 1
9.00-10.00 Programme Introduction

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Welcome and Introductions
Programme Context, Aim and Objectives
Agenda and Assessment
10.00-11.30 Introduction to Corporate Governance
11.45- 13.00 SWIFT 3,000
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Scope, Assessment Requirements and Methodology
13.00-14.00 Lunch
14.00-17.00 Codes of Best Practices
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The Combined Code on Corporate Governance
Code of Practice for the Governance of State Bodies
OECD Principles of Corporate Governance
DAY 2
DAY 3
9.00-9.30 Recap from Day 1
8.45-9.00 Recap from Day 2
9.30-12.30 Technical and Process Assessors
9.00-13.00 Case Study - Part 3:
Interviews & Follow Up
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Relationship between the bodies involved
Certification Body standards & accreditation
The relationship between the technical and the
process assessor – Team mechanics
12.30-13.00 Introduction to the Case Study
13.00-14.00 Lunch
13.00-14.00 Lunch
14.00-16.30 Case Study - Part 4:
Reporting & Follow Up
16.30-17.0 Exam Discussion
14.00-15.30 Case Study - Part 1:
Planning & Preparation for the Assessment
15.45-17.00 Case Study - Part 2:
Initial Review of Board documentation
17.00-17.30 Review and Close
17.00-17.30 Review and Close
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17.00-17.30 Close & Participant Feedback