Weaknesses in corporate governance must be addressed urgently, including those concerning the quality of the board of directors and management team.

In this respect, establishing measurable key performance indicators (KPIs) was of utmost important, Auditor-General Tan Sri cpi launch 260907 ambrin buang hadenan abd jalil said today.

"We find through our audit work several of these companies wanting good corporate governance but internal control is seemingly lacking and the internal audit and audit committees are not effective if not non-existent," he said.

Ambrin said what was distressing was the companies' lacklustre performance in terms of profitability, inability to pay dividends and continuous reliance on loans and advances from the government.

Loans become liability

"Sometimes, loans had to be converted into equity to ensure their survival, proving more of a liability than an asset," he said in his keynote address at the 2009 ACIIA Conference organised by the Association of Certified International Investment Analysts.

Ambrin said both external and internal audit could and should perform a significant role in enhancing corporate governance and promoting a culture of transparency.

Good governance, he said, must exist not only in the corporate or private sector but also in the public sector and civil society, including non-government organisations (NGOs).

"For these sectors too, both external and internal audit can and must play a significant role," he added.

According to Ambrin, good governance in the public sector can be viewed from several angles, such as the exercise of power by various levels of government that is "effective, honest, equitable, transparent and accountable".

"Yet another definition relates to the process of policy formulation and implementation through consensus-building among the various concerned sectors with the aim of improving the overall quality of life of all citizens," he said.

- Bernama