The Role of the Commissioner in Organizations
The figure of the Commissioner is provided for in the General Law of Commercial Companies (LGSM) in the section on the Joint-Stock Company. However, there are no obstacles to appointing a Commissioner in other companies to exercise the supervisory function.
In general, his main task is to oversee the administration, leadership, and execution of the company’s business (Art. 166 LGSM). Below are some of the activities expected of him while acting in his professional capacity:
- Review of accounting policies and internal control of the financial information process, as well as verification of compliance with presentation and disclosure standards in the company’s financial reports.
- Examination of business transactions, documentation, records, and other necessary verifications of the company’s business operations.
- Monitoring and auditing the effectiveness of the audit function (internal and external), checking its independence and objectivity.
- Participation with a voice but without voting rights in all meetings of the Board of Directors and Shareholders’ Assemblies, and even the ability to convene them when deemed necessary.
- Contribution to the evaluation by the Board of Directors of the scope and effectiveness of established methods and processes to identify, assess, manage, and monitor non-financial risks.
- Promotion of operational excellence through the application of reliable and efficient technologies.
- Assistance in maintaining IT risks at an acceptable level and optimizing the costs of services and technologies.
- Verification of compliance with laws, regulations, contractual agreements, and applicable policies.
An important point is that while the audit committee is responsible for reporting to the Board of Directors, the Commissioner has the obligation to report to the Shareholders’ Assembly, hence his main commitment lies with the latter.
As a result of his work, the Commissioner must annually submit a report (opinion) to the Shareholders’ Assembly regarding the accuracy, sufficiency, and reasonableness of the information presented by the Board of Directors. For this purpose, various tests must have been conducted in accordance with International Auditing Standards (NIA-800). Due to this, it is very common for the accounting firm that audits the company’s financial reports to also be designated to perform the functions of the Commissioner. Although the Code of Principles and Best Practices of Corporate Governance states that there is a conflict of interest in assigning the external audit to the Commissioner, in practice, this is very common in small and medium-sized enterprises, mainly due to the costs that would be incurred by separate execution. The general recommendation in cases where the same accounting firm conducts the audit and serves as the Commissioner is that the latter be a different person from the one auditing the company’s financial reports.
Finally, it is important to mention that, although the LGSM does not provide sanctions for non-compliance with the Commissioner’s duties and Article 26 of the Federal Fiscal Code does not designate him as a “solidary responsible” in tax matters, the civil obligation to perform his functions correctly and be accountable to the Shareholders’ Assembly still persists.
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