Guide aims to promote good governance

PUBLISHED : Thursday, 22 July, 2010, 12:00am
UPDATED : Thursday, 22 July, 2010, 12:00am

The government's Efficiency Unit has published a guide aimed at providing subvented organisations with a reference to evaluate their corporate governance standards.

The guide, published in May, was commissioned because of findings over the years by the director of audit of a range of inadequacies in corporate governance systems, processes and practices in subvented organisations.

For example, auditors found discrepancies in NGO management structures and inadequate accounting while assessing the Leisure and Cultural Services Department's administration of the Sports Subvention Scheme last year.

The previous year, auditors found deficiencies in the Consumer Council's corporate governance practices. Among other issues, there was a failure to require annual declarations and, of its eight committees, some held meetings with not enough members present for meaningful discussion.

'This was probably the first time that an attempt has been made to provide guidance across the whole subvented sector on corporate governance, and to bring good practices from the private sector into that area,' said Ian Salkeld, head of the Efficiency Unit.

He said it is just as important for subvented organisations to adhere to high standards of corporate governance as it is for profit-making enterprises. That is because the government allocates substantial sums to NGOs each year to deliver services to the public.

In the past financial year, the government paid HK$89 billion in subventions and the subvented sector employed around 170,000 people - roughly the same as the number of permanent civil servants.

Salkeld said the unit's guide sets out general principles, benchmarks and checklists to build a proper corporate governance framework. 'The public want to see their money being spent well. But more than that, they want to be able to trust the services. The idea behind corporate governance in the private sector - of enhancing accountability, clarity, transparency - applies to subvented organisations just as well.'

There is huge diversity in subvented organisations in Hong Kong. There are the massive statutory organisations such as the Hospital Authority and the Trade Development Council, which are bound by legislation to specific corporate governance standards. Then there are the many NGOs, which may be set up as limited companies. The sums they get vary from a few hundred thousand dollars to hundreds of millions of dollars.