Corporate Governance Chapter 5 2001 and other international standards of corporate governance that place the legal responsibility for protecting minority shareholders on boards of directors. 801. The CRM also observed that boards of directors in the public sector and in private enterprises in Mauritius comprise mostly males. Women are virtually not represented, at least not on the boards of the largest 100 companies in Mauritius. Chapter 5 804. The auditing services industry is highly concentrated. A few large firms control the market and can therefore charge higher than average fees. In addition, these firms consult for the same clients as they audit for. This could result in conflicts of interest. 805. With regard to auditing in banks, the BoM is responsible for overseeing banks, leasing companies and other deposit-based financial institutions. Auditors working on its behalf must first have licences and then pass an additional test (a kind of background check conducted using a standardised questionnaire) designed and administered by BoM officials. The CRM has realised how seriously the central bank takes its responsibility of choosing auditors. Reporting guidelines for corporations 802. 803. 282 The CSAR has addressed important issues about the accounting and auditing professions in the public and private sectors of Mauritius, especially the lack of regulation, independence, and the quantity and quality of accountants and auditors. It is, however, necessary to reinforce the following points: • • • With regard to audits in the public sector, the National Audit Office (NAO) has a mandate to examine the accounts of ministries and departments, local authorities, several statutory bodies and public-interest entities. However, it is itself a government entity. The prime minister nominates the director, the MOFEE sanctions its budget and the Public Service Commission (PSC) appoints its personnel. This raises doubts about its independence. Parliament has rarely discussed and examined its annual report seriously. This indicates little political interest in the relevance of this important document. Some very important public-interest entities, including 40 statutory bodies, did not want to comply with the requirements of the FRA of 2004. They therefore solicited the support of the FRC. The latter supported them and amended the FRA to exclude most statutory bodies from the list in the schedule of the act.47 This behaviour suggests that they will not adopt good standards of auditing. Accounting and auditing in the public sector use the same standards as in the private sector. In addition, parastatals and other SOEs have had to comply with the regulations of the FRA. However, the Finance Act of 2008/2009 has only just introduced this mandatory compliance. With regard to the private sector, the CRM observed that private auditing firms regulate themselves. Accountants and auditors are members of the MIPA and normally comply with its standards and rules. 47 - NAO Annual Report, 2007 to 2008. Corporate Governance Disclosure and transparency 806. The Code of Corporate Governance sets the framework for disclosure and communication of annual reports, corporate governance reports and funding (political and charity). The Mauritius branch of Ernst and Young conducted a desktop survey to determine whether the private sector complies with the requirements of the Code of Corporate Governance. This survey revealed that there was a relatively high level of nondisclosure in annual reports, a contravention of most provisions of the code. 807. The Ernst and Young study showed that noncompliance, or nondisclosure, occurred in the areas that follow. 808. Composition of boards. The composition of boards showed only some compliance with the recommendations of the code. It recommends that there should be at least two executive directors, two independent directors and nonexecutive directors. However, the survey showed that there was full compliance with section 2.55 of the code, which states that the chairpersons of boards may not be the chief executive officers (CEOs) of the companies. 809. Remuneration of directors. Fifteen of the 25 companies surveyed disclosed the remuneration of individual directors, as is recommended by section 2.8.2 of the code. The remaining companies either disclosed the directors’ total remuneration, which is also a requirement of the Companies Act of 2001, or did not make any disclosure at all in their corporate governance reports. 283