Author: Florentina Șușnea, Managing Partner PKF Finconta

In recent years, the level of interest in corporate governance has increased. Shareholders and executives have shown their intention to make the disclosure of financial and non-financial information more transparent. This evolution of the business environment is also reflected in the legislation of the European Union.

In Romania, corporate governance has emerged on the public agenda with EU membership, but has never had a real impact on the business environment. The creation of dedicated institutions, according to the model of the Member States, without proper implementation mechanisms, has led to the non-assimilation of these structures.

Thus, among many large entrepreneurial companies in Romania, the main role is played either by the manager or by the majority shareholders, whether by either of them or by others. Often the general manager is also the owner or majority shareholder of the company. Hence the risk that, beyond the accounting reporting rigors imposed by the legislation, it will be worthwhile to erase the difference between ownership and control.

However, he began a professionalization of management, which, in some entrepreneurial companies, started to produce results.

The reasons for professionalising management and adopting corporate governance are diverse:
• From the entrepreneur's desire to play only a consultative-strategic role in the business, the listing on the stock exchange
• From rapid business scaling and the inability of the owner to manage the growing effort, the need to structure the company for sale
• From process efficiency and process optimization to the transition to a new business stage that coincides with relaying to a professional management

As the business environment undergoes major transformations, mainly driven by the impact of technology advancement and digitization, good governance responses are required at the level of the entrepreneurial companies at each level:

• Basic level – describing the role of each role, following procedures, implementing reporting requirements and approving transactions.
• Process level – Manage and document processes relevant to delegating authority, approving transactions, and other procedures.
• Supervision level – internal audit and operational risk management supervision, compliance with internal regulations, procedures and legislation.
• Functional level – managing risk factors that conflict with company objectives, monitoring employees' compliance with internal and external rules, regulations, policies and procedures.
• Structural level – management functions and reporting lines within the company structure governed by regulations and documents such as company status, secondary legislation, role description.
• Board of Advisors – one of the simplest tools to access the expertise of a group of experienced specialists or business people, this tool greatly helps to ensure a professional and transparent work environment in the company.

Stages in selecting relevant experts to be part of the Board of Advisors:
1. Gaining support from a businessman with a lot of general business experience and a network of connections to help strengthen the team of experts.
2. Join groups, associations, hubs relevant to the industry where the company is active in order to access the competencies of the relevant experts.
3. With such a secure basis, the next objective is to involve experts / businessmen / managers well known for their expertise and integrity in the advisory council.

Adoption of corporative governance measures in entrepreneurial companies should take into account the company's maturity level. In this respect, administering a diagnosis questionnaire and interviews with decision-makers helps to identify the maturity level of the structures, processes and functions within the company. The use of these assessment tools should take into account the purpose, to analyze the present situation, the future maturity objective of the company and the action plan needed to achieve it. Companies in Romania need corporate governance if they want to manage growth consistently. Moreover, by adopting corporate governance measures, companies will be able to penetrate the foreign markets more easily.

About PKF Finconta
For more than 22 years, PKF Finconta is one of the 10 leading professional services companies in Romania. Since 2006, we are a member of PKF International Limited. PKF International is a leading international business advisory organization. The company grew consistently over the years, forming a Group of four companies: PKF Finconta, PKF Finconta Consultanta, PKF Finconta HR and Finconta Consulting SPRL, members of national professional organizations CECCAR, CAFR, CCFR and UNPIR. We provide a wide range of business advisory and related specialist services. We have seven core areas of expertise and within these areas, we tailor our services to your business and your needs: audit, corporate finance, tax, bookkeeping and accounting advisory services, transfer pricing, payroll and personnel administration and insolvency.

Web: www.pkffinconta.ro