Updates on governance matters 25/11/17

Progress report: On Governance from the General director in the State Representative Meeting 25/11/17

1. Internal audit – Indah Group of Companies was hired to do internal audit of SGM accounts. Indah GoC has audited the accounts of each state, the Asia Centre for Education and Culture [ACEC] accounts, Tadika Seri Soka [TSS] accounts, Publications accounts and others (The list is long and we couldn’t get all the detail). The Audit Report was submitted in November, 2017. Overall, the auditors find the up keeping and maintenance of accounts record satisfactory, accurate and fair. They met the standards of accounting practice. No inappropriate or mishandling of funds were found. (GD added that this internal audit was not required by the R.O.S.)

2. External audit – Crowe Horwath also submitted report in May 2017 on the consolidated accounts of SGM for 2016. It was a clean report. Crowe Horwath was also appointed as independent consultant. (GD added that there should be no more questions about the mishandling of funds or baseless accusations of people in SGM pocketing money. )

3. Chief administrator appointed – Mr Lok Chee Kong. The Chief Administrator will be responsible to manage and oversee;

• Human Resource
• Publication
• Finance committee
• Construction and Building committee
• management department

4. Tax committee formed

5. Audit committee formed

We have discussed these progress with some professionals and these are their thoughts.

1. There have been questioned raised about the professional experiences of the auditors in Indah GoC. Are they relevant and sufficient in auditing a huge NGO like SGM? You can see them here and here. You may check the rest of the auditors background in the website.
2. Could GD let us know the process of selection of the Internal Audit service provider. The selection process is vital to ensure that it is being carried out in a transparent manner.
   1. Was there an open tender issued out?
   2. If yes, how many firms bid for the job?
   3. If no, why?
   4. How did SGM assess the IA firms, e.g. their competency, capability, experience with non-profit org.
3. On engaging Crowe Horwath as independent consultant – GD, should also specify what were the scope of Crowe Horwath as an independent consultant, as tax consultant or other matters? As far as an external auditor is concern, they should not be appointed for consultancy jobs that is in conflict with their role as external auditor.
4. Appointment of Chief Admin – We laud that SGM has taken steps to alleviate GD’s burden of administrative tasks and that the Chief Admin will be able to relieve these non-faith related duties. However, we also know that Mr Lok is an elected General Council member. In a good governance set-up, the General Council is supposed to do the role of oversight over the management, which is led by the Chief Admin. Now, how would SGM overcome the perception that the Chief Admin is also part of the group (General Council) that formulates policies, and also the person responsible to execute those policies? There would be inherently conflict of interest, wouldn’t it? How would the Chief Admin carry out his duties conscientiously without the overbearing pressure to “conform” by the GC? Not only he is elected into the General Council, Mr Lok also carries the portfolio of Secretary General. An important function that Mr Lok has both executive & policy making responsibilities. (Let us be clear here. We are not in any way questioning or insinuating that Mr Lok is a person of questionable character or have trust issues. We knew that he has been a sincere and hardworking senior leader in SGM who has given the larger part of his life contributing to SGM.) The Chief Admin cannot also be in the Council or hold important role of General Secretary.

By providing more information and being more transparent, SGM will be able to gain the trust and confidence of the members. As the education level and quality of our members are rising, SGM must rise to this challenge to protect the organization and the members. We are in the internet age and given the size of SGM, having a ”trust me” attitude and ”don’t ask any question” approach won’t work.

The General Director should not be making statements like ‘You should be happy now and stop all the baseless rumours aiming to destroy the reputation of SGM since we have done this internal audit thing.’ Rather, as the central leader of this precious organisation, the General Director should instead say…

‘We have carry out these steps in our aim to improve the governance and accountability. Please continue to let us know what you think and share with us your suggestions. Together, we can make SGM into a strong and united organisations. We practice itai doshin (many in body, one in mind), respecting and transcending differences, and sharing the same mind as Nichiren in our aim for kosen-rufu.’