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84 | The South African Insurance Industry Survey 2016
King IV has been revised to bring it up to date with The oversight thereof is also separated to sharpen the –– As first line of assurance: line functions that own and
international corporate governance codes, to align it focus on each as a distinct area. Cyber security being manage risk and opportunity;
to the shifts in the approach to capitalism (towards globally recognised as the biggest potential risk, also
inclusive, sustainable capitalism with integrated reporting) makes an appearance in King IV with oversight assigned to –– As second line of assurance: specialist functions
and to take account of specific corporate governance the governing body. that facilitate and oversee risk and opportunity
developments in relation to, inter alia, effective boards, arrangements, such as enterprise-wide risk and
increased compliance requirements, new governance New perspective on risk – King IV links risk and opportunity management and compliance;
structures , emerging risks and opportunities from new opportunities in a way that supports the organisation
technologies e.g. cyber-crime and social media, and new in defining its core purpose. This is an important shift –– As third line of assurance: internal assurance providers
reporting and disclosure requirements. where in the past the focus was predominantly on the that offer objective assurance such as internal audit,
negative effects of risk and the avoidance thereof. A internal forensic examiners, fraud examiners and
Key developments in King IV new lens has been provided for organisations to look at auditors, safety and process assessors, and statutory
Remuneration governance has come under the the opportunities that could arise and that need to be actuaries;
spotlight in the recent past and King IV addresses this capitalised on to set and achieve the strategic objectives.
through requiring that both the remuneration policy –– As fourth line of assurance: external assurance
and an implementation plan be tabled for a separate Auditor independence and the audit committee – The providers such as external audit, sustainability and
non-binding advisory vote of shareholders. Where the spotlight on auditor independence globally together with environmental auditors or regulatory inspectors,
policy or implementation plan is not approved by at developments in auditing standards in terms of the long external actuaries and external forensic examiners, as
least 75 percent of the shareholders, the remuneration form audit report has pre-empted King IV into introducing well as fraud examiners and auditors; and
committee must consult with shareholders and disclose two new provisions for audit committees. Firstly, the
the nature and outcome of such consultation. The social audit committee should disclose audit firm tenure as well –– As fifth line of assurance: the governing body, and audit
and ethics committee has been tasked to oversee fair as audit partner rotation and significant management or other committees.
and responsible executive remuneration practices in the changes during the course of the audit and secondly, the
context of overall employee remuneration. There is an audit committee should disclose significant matters that The model emphasises that assurance is not primarily
emphasis on the sustainable value created across the the audit committee considered and how these were about defence, rather, it is about having an adequate
economic, social and environmental context rather than addressed. and effective control environment and strengthening the
focussing on financial targets only. integrity of reports for better decision-making.
Group governance – A welcomed introduction in King IV
Separation of technology and information – The Fourth is the inclusion of recommended practices around group The above makes it evident that companies and their
Industrial Revolution is a paradigm shift in King IV. King governance which represents an important element for Boards have much to consider with the eminent release
III introduced IT governance and placed the oversight organisations operating under this structure. of King IV. The release of King IV will ensure the continued
thereof at the door of the board. King IV separates the evolution of governance in our business sector, while, at
two, information is recognised separately from technology Combined assurance – King III introduced the combined the same time, presenting a vast array of organisational
and the two are treated as such from a policy, decision- assurance model. King IV expands the traditional “three benefits.
making, management and culture perspective. lines of defence” to “five lines of assurance”
to incorporate all assurance role players:
