Three specific tools resulting from the Sound Management concept are suggested by the ISM to the managers of public and private institutions

Written by Bernard Brault on 13/05/2010

Punishing corruption acts is only a short-term solution and, most of the time, it is the managers’ only reflex, who react without hesitation when faced to unexpected disclosures: get in contact with Sûreté du Québec! Finding the persons responsible for the criminal act is not within the managers’ area of competence; however, using a safety net to prevent possible future slip-ups may assign to the Governance responsibilities.

The management of an organization is a complex activity. It seems very difficult to keep constant control, especially if the existent management framework was created empirically and in disorder, or if it was reviewed to overcome the obstacles met over the years.

Since everybody sees things their own way, professional managers are still confident in their management skills until, thanks to some media revelations, they realize that the world is coming to an end. Our public financial institutions capitalized by the government are certainly exposed to the highest risk: Fonds de Solidarité FTQ, Caisse de depot et de placement, Société générale de financement (SGF), Investissement Québec, etc.

The everyday reality introduces us to real situations of fraud, embezzlement, extortion, bribery attempt, allusions, and doubt, which destroys our confidence in professional managers. Nevertheless, not all professional managers are deliberate accomplices to these fraudulent acts. Most of the times being faced to the accomplished fact, they can’t completely iron out the doubt concerning their implication.

To all the managers who consider themselves persons of integrity, the ISM suggests a serious and systematic approach in order to supervise the acts and management processes related to their mission. There are three tools used by the Sound Management concept which are aimed at reaching this objective of prevention. Here is a brief presentation:

Risk assessment: application of the Sound Management Model

The Sound Management model offers a systematic matrix approach ensuring that all administrative acts called ‘managerial functions’ can be combined to the OAAQ’s six fundamental principles of Sound Management. This approach, characterized as a finite element type, allows a full diagnosis of a company’s management. It is important not to forget that the Sound Management model allows a classification of the policies and processes present in an organization. The cells that will be less or not at all filled in stand for a potential risk. According to the materiality of these “absences” and keeping in mind the mission and the stakes at risk, the manager will make an assessment of the necessity to remedy the situation. The purpose is not to fill in 70% or 80% of the cells. The risk will always be related to what is not filled in or non-compliant. As the saying goes: “A chain is only as strong as its weakest link.”


Remedial actions to prevent the risks: the Sound Management framework

It would be impossible to proceed with an audit in a company or an organization that doesn’t dispose of a reporting system thoroughly structured. By analogy with the accountability field, the management framework is for managers what the reporting system is for accountants. In fact, the Sound Management Framework (SMF) is a big file of rules, processes, methods, means, and tools, and the filing method used corresponds to the Sound Management model as a 41-cell matrix. For each cell of the model, the objective is to answer the following question: What does it need to be done in order to be compliant with the Sound Management concept? Therefore, the manager gets a systematic guide in order to avoid forgetting an important aspect during the business process management. 

The main advantage of the Sound Management model and framework is related to the fact that the values used are based on coded administrative jurisdiction rules collated and revised regularly and published by an independent organism – the OAAQ.


Risk assessment: the Sound Management Audit

The Governance shouldn’t be naïve. It isn’t because a direction has been issued that it is necessarily correctly implemented. This is why the Control function should be taken into consideration.

Regarding the control function in management, the theoretical model and the Sound Management framework constitute a finite element system (matrix) allowing a real systematic audit based on a compliance analysis of the management within the organization. In order to comply with the GASMP (Generally Accepted Sound Management Principles), the existence of a thoroughly structured Sound Management framework facilitates the audit because each cell has already been object to analyzing the necessary actions to be taken to ensure compliance with the Sound Management concept.

What distinguishes the Sound Management Audit from the accounting audits resides precisely in the object of the audit, more precisely in the administrative act, the managerial functions combined with the fundamental principles. They are collated in a repository of Generally Accepted Sound Management Principles (GASMP). This approach allows a compliance analysis of the administrative acts.

The similarities between this approach and the accounting audits are related to the systematic aspect, the method used to detect the probative evidence, and the compliance systematic analysis based on the Sound Management model.

Therefore, all the administrative acts taken as part of each function within the organization are scanned while taking into consideration the statutory and ethical obligations implied by the Sound Management fundamental principles.



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