The governance structure of the Arab Monetary Fund (AMF) reflects the attention paid by the Fund to defining roles and responsibilities across its supervisory, oversight and executive bodies, their integration, interaction, horizontal communication, opinion sharing, broadening the scope of knowledge, and insight, prior to taking a decision. The governance structure consists of the Board of Governors and the Board of Executive Directors under which there are the Audit and Risk Committee, the system of executive management, including executive departments and committees.
The Board of Governors represents all Arab countries through a governor and an alternate governor for each member-state. It convenes annually under the rules and procedures that govern the meetings and voting. The Board of Governors annually elects one governor as chairman on rotation. The Articles of Agreement entrusts all management powers to the Board of Governors, including the delegation of powers to the Board of Executive Directors to exercise any non exclusive powers. The non-exclusive powers include the appointment of the Director General, Chairman of the Board of Executive Directors, members of the Board of Executive Directors, remunerations of its members, admission of new members, suspension of membership, increase of capital, distribution of income, appointment of external auditors, approval of final accounts and the interpretation and amendment of AMF Agreement. The Board is the highest authority of the Fund in charge of the strategic orientation, accountability and performance evaluation.
The Board of Executive Directors is composed of the Director General as Chairman and eight members elected by the Board of Governors from the citizens of member states with proven experience and expertise for a three-year tenure. The Board of Executive Directors holds quarterly meetings as well as special meetings as and when needed. AMF rules and procedures specify invitations, agenda, voting and decision making procedure.
The Audit and Risk Committee is established under, and reports to, the Board of Executive Directors. The mandate of this committee is to assist the Board in its supervisory function. It is composed of three members who are independent of the executive management of the Fund and who are elected by the Board of Executive Directors at the beginning of each session. The Audit and Risk Committee follows a charter that governs it work. It is entrusted mainly with ensuring financial statement integrity, follow-up on the implementation of risk management and internal control policies, the evaluation of the efficiency and effectiveness of the Internal Audit Office as well as the discussion of this office’s reports, monitoring the independence of external auditors and the discussion of their reports, and review of, and recommendation on, whistle blowing reports.
The Board of Executive Directors is collectively entrusted with oversight over the development of core policies and strategic work plans and programs, performance and accountability of the management, and reporting to the Board of Governors.
The AMF Office of Internal Audit (OIA) is a major component of internal control system. AMF senior management ensures that OIA fulfills its mandate independently. Its function includes the evaluation of the effectiveness of internal control systems, risk management activities and governance under the approved methodology, It directly communicates with the Audit and Risk Committee that reports to the Board of Executive Directors.
The system of organizational units of the Management consists of the Director General, Chairman of the Board of Executive Directors and six specialized executive management departments, namely, the Economic and Technical Department, the Economic Policy Institute (EPI), the Investment Department, the Finance and Computer Department, the Administration Department and the Legal Department. Additionally, the executive management committees, namely, Loan Committee, Investment Committee, Administration Committee and Risk Management Committee, in their respective advisory capacities, advise on core matters. Their membership consists of senior competent AMF staff.
Meetings of Administration staff , comprising all heads of department and office, with the Director General, Chairman of the Board of Executive Directors, serve as an important link in activating relationships among officials in charge of Management units. These regular fortnightly meetings facilitate exchange of information, debate on AMF activity developments and follow-up on the implementation of AMF plans and decisions.
AMF organizational units operate within a coherent and integrated system of internal control that consists of regulations, policies and rules organizing AMF activities and operations. This serves as a safeguard against unilateral decisions on core matters, mainly, procedural rules of the Board of Executive Directors, lending policy and procedure, investment policy, financial regulations, employee regulations, administrative circulars, financial reports, information systems, strategic planning including work continuity plans, annual work plans for management departments and job turnover policy.
Risk management policy is one of the main pillars of the AMF governance framework. Risk management responsibilities are distributed across all levels, including the Board of Executive Directors, assisted by its Audit and Risk Committee, that is entrusted with oversight of risk management, adoption of core risk appetite policy and matrix; the Director General, Chairman of the Board who is in charge of oversight and control of AMF-wide implementation of risk management; and the Risk Management Committee, composed of senior executive officials, that is entrusted with the monitoring and control of risk management implementation, follow-up on, and maintenance of, risk appetite matrix, updating of risk management reports, guidance of risk management officers, committee coordinator and periodical reporting, to the Director General, Chairman of the Board.
External audit, in turn, is another important link in the AMF governance system. The Board of Governors is invested with exclusive powers to appoint external auditors. Under the AMF Agreement, these powers cannot be delegated. External auditors are appointed based on a recommendation by the Board of Executive Directors. The Audit and Risk Committee under the Board of Executive Directors is entrusted with the monitoring of External Auditors’ independence and the discussion of their reports.
For the implementation of governance principles, the Fund has adopted a detailed list of those principles. They are as follows:
Protection of membership rights and equal treatment: the AMF governance framework ensures that shareholder rights are protected and easy to exercise; that members are equally treated; that they have the right for compensation in case their rights are infringed upon. This principle is fully upheld by the Fund. On the disclosure of private interests of members of the Board of Executive Directors and senior executive staff, the system of governance is a framework that does not provide for unilateral decisions on core matters, be it at the level of the Board of Executive Directors or that of executive management departments. Members of the Board of Executive Directors’ nominations are endorsed by the highest level of authority in the Fund, namely, the Board of Governors. They are elected from the citizens of member-States with proven experience and expertise. The Board of Executive Directors operates under procedural rules that govern decision making. At the level of executive management departments, work policies and procedures govern responsibilities and powers. Specialized committees consider, and recommend on, core matters.
Recognition of stakeholder rights: The AMF fully adheres to this principle, including the protection of stakeholder rights to claim compensation in case their rights are infringed upon. Stakeholders are defined as member-States, AMF staff and contractors.
Disclosure and transparency: The AMF fully adheres to this principle, considering that the Board of Governors that elects and decides the remuneration of the Directors collectively ensures the disclosure of salaries and benefits of the Directors, and their neutrality.
Accountability: AMF fully adheres to this principle at all levels. At the level of executive management, accountability is observed through general disciplinary rules, regulations on non-compliance with work hours, disciplinary procedures, oath-taking by staff, annual performance evaluation for staff, annual departmental plans and progress reports and fortnightly management staff meetings. At the level of the Board of Executive Directors, accountability for performance is observed through reports compiled by the Audit and Risk Department under the Board of Executive Directors. These reports cover follow-up work and regular meetings convened by that committee with a view to ensuring that the process of compiling financial statements, the quality and effectiveness of controls and risk management are sound; that conditions are conducive for neutral internal audit; that external auditors have adequate qualifications and independence. Accountability is additionally observed through quarterly financial and administrative reports, recommendations and reports developed by executive management committees (namely, Loan Committee, Investment Committee, Administration Committee and Risk Management Committee) as well as internal and external audit reports, annual plans, administration budget and related progress reports. At the level of the Board of Governors, accountability for performance is observed through strategic planning that includes a methodology for performance evaluation contributing directly to greater accountability, the annual reports, including a report by independent external auditors, consolidated financial statements and related notes, and a summary on AMF activity performance.