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Chapter 1

1.8 Key concepts

The foundation to governance is the action of the individual. These
actions are guided by a person’s moral stance.

Characteristics which are important in the development of an
appropriate moral stance include the following:

 Fairness

– equality in dealing with internal stakeholders.

– even-handedness in dealing with external stakeholders.

 Openness/transparency

– underlying principle of corporate governance

– transparency is required in the agency relationship

– default position of information provision rather than concealment.

 Innovation

– covers innovation and experimentation in reporting to the benefit of investors
and consumers

 Scepticism

– an attitude which includes a questioning mind, being alert to conditions
which may indicate possible misstatement due to error or fraud.

 Independence

– the avoidance of being unduly influenced by a vested interest.

 Probity/honesty

– honesty in financial/positional reporting

– foundation ethical stance in both principles – and rules-based systems.

 Responsibility

– acceptance of liability for the outcome of governance decisions.

– clarity in the definition of roles and responsibilities for action.

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