Accounting Theory and Corporate Governance

This article discusses the role of corporate governance in any organization and how it helps in attaining strategic objectives. It compares the corporate governance principles of BHP Billiton and Rio Tinto, covers the responsibilities of the board of directors, the role of ASIC, and the importance of corporate social responsibility. It also talks about the Corporate Law Economic Reform Program and its key principles.

Accounting Theory and Corporate Governance
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1ACCOUNTING THEORY AND CORPORATE GOVERNANCE
Table of Contents
Part A.........................................................................................................................................2
Part B..........................................................................................................................................4
Reference..................................................................................................................................11

2ACCOUNTING THEORY AND CORPORATE GOVERNANCE
Part A
Approaches Considered
BHP Billiton is devoted to uppermost level of presentation with applying an operative
corporate governance system. It has struggled to grow an effort philosophy that is founded on
the moral values, corporate truthfulness and high opinion or others (BHP Billiton, 2018). In
accord with ASX listing rule, BHP Billiton has obviously illustrious the parts as well as
accountabilities of the board as well as the organisation. The Board is chosen by the
stockholders and is steadily composed.
The business classical of Rio Tinto is planned to attain its considered determined as
well as principally attentions on transporting worth for its stockholders. Though, in the
current reasonable business atmosphere, it is very significant to that occupational model shall
be flexible by way of the active market situations and purchaser’s request. In other word,
commercial perfect not solitary requirements to emphasis on generating worth for their
clienteles but also on the association structure. Even though Rio is bringing additional worth
to its purchaser through mine of the Upcoming package, it absences to shape a considerable
association with the dealers and additional commercial associates lengthways with their
source chain. Henceforth, it motionless requirements to exertion on that to guarantee long-life
inflatable processes by means of their data aptitude organisation.
BHP Billiton
Chairman- Ken Mackenzie
CEO- Andrew Mackenzie
Percentage of Share hold by executive Directors- 25%
Rio Tinto

3ACCOUNTING THEORY AND CORPORATE GOVERNANCE
Chairman- Simon Thompson
Percentage of Share hold by executive Directors- 40%
Comparison of corporate governance principle between BHP Billiton and Rio Tinto
Principle BHP Billiton Rio Tinto
1. Role of Board
Members
All the directors’ effort
autonomously to deliver
impartial report to the
shareholders so that pure
and reasonable image of
corporation presentation can
be understood.
The board members are duly
discharging their
responsibilities.
2. Size of board The Board has 10 associates,
together with the CEO.
The board has 14 associates
without CEO.
3. Implementing ethical
decision making
Has maintained its ethical
standards to strive on its
value.
Rio Tinto has also
maintained its ethics to work
on its planned strategies.
4. Risk Management The risk management
disclosures need to be more
appropriate (Bhp.com. 2019)
The disclosure of risk
management in the annual
report are adequate and
proper (Riotinto.com. 2019)

4ACCOUNTING THEORY AND CORPORATE GOVERNANCE
Part B
Introduction
The role of corporate governance in any organization is important. It has been given
the significant part so that the company can attain its strategic objectives in different
methods. With the help of corporate governance company is able to work on the strategies
planned. This happens due to effective planning of practising corporate governance. The
regulations prescribed in the corporate governance helps an organization to run effectively.
The board of directors of a company frames the strategy that is to be implemented by the
company. The board of directors of a company include people from distinct field, employees
at higher level. Those can suggests recommendations on improving the performance in the
market of corporation.

5ACCOUNTING THEORY AND CORPORATE GOVERNANCE
Discussion
Corporate Governance in Australia
The companies in Australia are compulsory to be completely equipped through all
governing measures to consume a strong stability in the world market. If the corporation
independently as well as the nation on a larger part has such corporate governance put into
practise in place then confidence gets generated in the residential as well as overseas
investors. The place of Australia is very robust in opinion of the corporate governance put
into practise on the other hand through fluctuating time as well as face of the worldwide
market it is very significant to retain altogether the strategies as well as practices existing
including applicable even in those emerging requirements. These performs want to be revised
and modernised to emphasis on native as well as international expansions proceeding and
these practices shall be capable to support transparency in the business of the companies.
Role of ASIC
ASIC subsidises to Australia's monetary status as well as welfare by guaranteeing that
Australia's fiscal markets are reasonable as well as clear, maintained by assured and
knowledgeable stockholders and customers. ASIC is an autonomous Commonwealth
Government body. It is established underneath and manage the Australian Securities and
Investments Commission Act (ASIC Act), along with it convey out maximum of their effort
underneath the Corporations Act. Australian Corporations Act usually obeys through the
OECD principle concerning actual compensation for investors whose moralities have
remained desecrated. The Companies Law affords that, in the situation of a merger, creditors
of merging corporations, company bond holders, and any stockholders might purpose to the
appropriate.

6ACCOUNTING THEORY AND CORPORATE GOVERNANCE
Under ASX Listing Rule, corporations are mandatory to offer a declaration in their
annual report revealing the degree to that they have followed the references in the reporting
period. Wherever corporations have not monitored all the References, they necessity of
classifying the References that have not been monitored as well as reasons of not monitoring
them is not given. Annual reporting does not moderate the corporation's obligation to deliver
revelation under ASX Listing Rule 3.1. The Australian Securities and Investments
Commission accountable for supervising the medium of corporate governance rule, ASIC is
decided wide controls of study through the ASIC Act 1989. ASIC correspondingly has an
over-all control to do 'whatever is essential for or in assembly with, or rationally
accompanying to, the presentation of its purposes. Unconnectedly, necessities in the
Corporations Act discuss additional analytical controls on ASIC. At the assumption of an
analysis, if ASIC have faith in that the wrongdoing might had been dedicated, it can begin
trial itself or mention the substance to the Commonwealth Director of Public Prosecutions
(DPP).
Responsibilities of board of directors
The OECD principles of the corporate governance of recommends that the board of
directors must follow the rules below:
1. Board members must act morally as well as in decent faith in the finest attention of
the stockholders.
2. Guarantee official as well as clear voting procedure.
3. Superintend foremost attainment, unions, auctions as well as disinvestments.
4. Assessment of corporate strategy commencing from period to period.
Control and Ownership Structures

7ACCOUNTING THEORY AND CORPORATE GOVERNANCE
Corporate governance guidelines, extremely significant for corporate governance law,
similarly contract with subjects such as double class stocks, possession pyramid, elective
alliances, substitution elections as well as sections in the courses of suggestion that discuss
surplus voting privileges. These are certain of the regulator as well as rights subjects in
corporate governance allocated by business guidelines.
Corporate Social Responsibility (CSR)
This is an additional part of corporate governance that is used broadly to originate
through corporate governance. It could be well-defined as a procedure of commercial self-
regulation that comprises a set of principled performs combined into the commercial model
of a given corporation. CSR is a procedure of commercial self-regulation, used in abundance
in corporate governance, whereby commercial household keep a watch concluded its own
operational rendering to principled values, rules and world-wide standards 9 (Bovens 2014).
The corporation embrace the wellbeing of its workers, clienteles as well as altogether the
additional associates of the public, clarify out corporate governance. It also retains in
awareness the wellbeing of the atmosphere, aggressively encourage the welfares of the
community as well as reject performance that are possibly damaging to the public, described
in particulars in corporate governance.
Role of CLERP 9
After the Ramsey proposals on audit regulations as well as corporate disclosure rule.
The aim of CLERP is to safeguard that commercial guideline is dependable with endorsing a
robust as well as vibrant economy as well as offers a framework that supports commercial
familiarise to alteration. The co-regulatory agenda relative to accountant liberation
underneath the CLERP 9 offers is planned to attain an operative implementation rule in
relative to non-audit facilities. The specialised accounting organisations would be predictable

8ACCOUNTING THEORY AND CORPORATE GOVERNANCE
to strictly display agreement by their specialised individuality ethics by their associates as
well as to take operative corrective achievement in contrast to associates who be unsuccessful
to meet the necessities in the moral instructions that would comprise postponement or
withdrawal of affiliation. The FRC will be essential to observe the efficiency of the
accounting organisations’ implementation of their specialised guidelines (Sivathaasan 2016).
The aim of the Corporate Law Economic Reform Program is to ‘confirm that commercial
guideline is reliable by endorsing a robust as well as vibrant economical as well as affords a
framework that supports commercial familiarise to alter. The key principles of CLERP 9 are
as follow:
 Charge advantage investigation of anticipated fluctuations;
 Expansion of supervisory as well as governmental outline that is reliable, elastic,
adjustable as well as cost operative;
 The decrease of communications charges for businesses as well as additional
market members (Bovens 2014).
 An suitable stability among rule guideline and manufacturing directive;
 The exclusion of barricades to admission for facility breadwinners; and
 Enhanced co-ordination among the Australia’s controlling outlines with those
smearing in foremost biosphere fiscal markets.
The Council recognised that respectable corporate governance must be calculated to attain the
following results:
 Defend the moralities of stockholders;
 Distinguish the securities of the general community;
 Safeguard well-timed and precise revelation of all measureable materials moving the
company

9ACCOUNTING THEORY AND CORPORATE GOVERNANCE
 Provide an agenda for the panel and organisation to follow purposes that are in the
finest wellbeing of stockholders and the corporation;
 Encourage the industrious as well as well-organized usage of commercial possessions;
and
 Arrange for clear as well as accountability for the use of commercial possessions.
The planned best preparation guidelines on announcements of conferences will comprise a
segment business with the descriptive substantial for bundled determinations. The rules
would comprise bodily on best repetition for:
 explanation of bundled determinations counting the main determination, influence as
well as substantial suggestions;
 Provided that admittance to fill evidence on the module determinations for those
stockholders who search for it and (Ebrahim Battilana and Mair 2014).
 Describing groups of determination that must not be hurried but continuously
apportioned with as a distinct entry, with a distinct description providing for instance,
communications moving decision-making payment.

10ACCOUNTING THEORY AND CORPORATE GOVERNANCE
Conclusion
The secret of a positive company is the capability of its panel as well as senior
management to measure its values and guidelines in instruction to brand conclusions that
attain the accurate stability over period. Though the best companies’ do this well, inferior
corporations do it not as much of efficiently as well as those that do it poorest practically
inescapably conclude to exist. The many instructions and prospects challenging corporations,
lengthways by the associations essential be assumed and accomplished. It has been
recognized that together conformance as well as presentation are fundamental modules of
corporate governance. Both features of corporate governance requirement be fulfilled so that
assorted international civilisations attain real operation of the capital properties working in
their enterprises.

11ACCOUNTING THEORY AND CORPORATE GOVERNANCE
Reference
Bhp.com. (2019). [online] Available at:
https://www.bhp.com/-/media/documents/investors/annual-reports/2018/
bhpannualreport2018.pdf [Accessed 4 Feb. 2019].
Bovens, M., 2014. Two Concepts of Accountability: Accountability as a Virtue and as a
Mechanism. In Accountability and European Governance (pp. 28-49). Routledge.
Ebrahim, A., Battilana, J. and Mair, J., 2014. The governance of social enterprises: Mission
drift and accountability challenges in hybrid organizations. Research in Organizational
Behavior, 34, pp.81-100.
Riotinto.com. (2019). [online] Available at:
https://www.riotinto.com/documents/RT_2017_annual_report_governance.pdf [Accessed 4
Feb. 2019].
Salim, R., Arjomandi, A. and Seufert, J.H., 2016. Does corporate governance affect
Australian banks' performance?. Journal of International Financial Markets, Institutions and
Money, 43, pp.113-125.
Sivathaasan, N., 2016. Corporate governance and leverage in Australia: A pitch. Accounting
and Management Information Systems, 15(4), p.819.
Sun, L. and Farooque, O.A., 2017. An Exploratory Analysis of Earnings Management before
and after the Governance and Disclosure Regulatory Changes in Australia and New Zealand.