To alleviate suspicions the public might have the Orphanage can increase its transparency by making periodic disclosures on matters affecting financial performance management and ownership of the Orphanage ACCA Global 2016 For example the Orphanage could disclose that includes information on its programmes activities audited financial statements and board members and executive management in its annual report The Charity Council 2017 The Orphanage can put in place and make known its internal controls especially for financial matters in key areas such as receipting payment procedures and controls delegation of authority and limits of approval since the public supports its financially The Charity Council 2017 This provides the public with a view of how their donations to the Orphanage are being utilised and assures them that there are checks and balances within the organisation to ensure the appropriate use of funds ACCA Global 2016 The Orphanage can also create an internal audit team have an audit committee or engage the services of an audit firm The internal audit team and audit committee can provide constant monitoring while the audit firm provides for periodic checks to ensure that the financial statements are in order and the internal controls are working and adhered to
The objectivity and independence needed of the auditors would allay the distrust the public might have of the Orphanage ACCA Global 2016 3 Implementation Difficulties of the Code of Corporate Governance The Orphanage may face financial difficulty when implementing the Code due to the added costs incurred in contrast with its survival on government funding and public donations For example as part of the Code the Orphanage must disclose its audited financial statements The Charity Council 2017 which would naturally require the services of an external auditing firm incurring more costs on top of its normal operations However the policies would not lead to an increase in funding and donations thus creating stress on its finances Another difficulty the Orphanage may face is the lack of appropriately trained labour to handle its operations The Code calls for internal controls to be put in place for financial matters in key areas The Charity Council 2017 the most common of which would be the segregation of duties As a small orphanage with only 20 staff there may be an insufficient number of staff with the knowledge to conduct the needed duties Therefore for the Orphanage to adhere to the Code it would have to either increase its manpower or send its current staff for the relevant training which would further contribute to its financial stress 4 Ways to Overcome Implementation Difficulties One way to overcome the Orphanage s financial difficulties is for the government to increase its funding through activity specific grants
For example the government could implement a policy which would reimburse organisations such as the Orphanage a part of the auditing costs should their financial statements be in order for a certain duration i e a 50 reimbursement in auditing fees if the organisation s financial statements are in order for at least three consecutive years This ensures that the funds are used to offset the added costs incurred due to the Code while also creating a reward system which recognises good corporate governance To overcome the Orphanage s difficulty in procuring sufficient well trained staff while minimising the impact on its finances it can work with other similar organisations to send their staff for the relevant training By pooling its resources the Orphanage can pay less for each staff it sends for training For example the organisations can cross train each other s staff in aspects their staff are more versatile in or alternatively collectively send their staff for the relevant trainings This would significantly reduce the costs needed for each organisation
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