Corporate Governance Principles and their Impact on Audit, Assurance and Compliance

Audit, Assurance and Compliance

Corporate Governance
Contents
Introduction........................................................................................................................... 3
1. Identification and explanation of the 8 principles of corporate governance................................3
Principle 1: Lay a foundation for management and oversight.........................................................3
Principle 2: structure the board to be effective and add value........................................................3
Principle 3: Instill a culture of acting lawfully, ethically and responsibly............................................4
Principle 4 - Safeguarding the integrity of corporate reports..........................................................4
Principle 5 - Make timely and balanced disclosure.......................................................................4
Principle 6 - Respect the rights of security holders.......................................................................4
Principle 7 – Recognition and management of Risk.....................................................................4
Principle 8 - Remunerate fairly and responsibility........................................................................4
2. Likely effect of full adoption of each corporate governance principle and recommendation will
have for the company.............................................................................................................. 5
3. Full adoption of the 8 principles of Corporate Governance and influence on the following :.........6
Conclusion.......................................................................................................................... 12
References.......................................................................................................................... 13
2

Corporate Governance
Introduction
With the increasing complexity and requirement for greater transparency, it has become
essential for the corporate houses to adhere to the principles of corporate governance. The
adherence is not only beneficial for the company rather provides a major support to the
community and society at large. This is the sole why corporate governance and its features
has assumed a place of special importance and considered to be pivotal during the process
of audit planning. Auditing and corporate governance should go hand in hand that will help in
fetching positive impacts. It is thereby imperative that the eight principles of corporate
governance should be followed to create greater scope of work and effectiveness. There is a
growing expectation of the regulatory as well as the investor community in the present
scenario. The application of corporate governance principles has become a major objective.
The internal audit function lies in the area of corporate governance and this is mentioned in
the recent guidance notes.
1. Identification and explanation of the 8 principles of corporate governance
The guidelines have been revised after a few records that have occurred recently. In the year
2017, the fourth edition of principles and recommendations was introduced for addressing the
issues relating to the culture, values, and trust. Many companies have different characteristics
from each other such as size and history. Search companies should follow the principles that
best suits them (ASX CG, 2019).
Principle 1: Lay a foundation for management and oversight.
Accompany that is digested should have defined the roles and responsibilities of the board
members, as well as the management and also their performance evaluation, should be done
periodically (ASX CG, 2019).
Principle 2: structure the board to be effective and add value
3

Corporate Governance
The board members of the company must have a proper scale and experience that is
required to run the operations of the company smoothly. The size of the board should be
adequate in a show that the duties are discharged effectively (ASX CG, 2019).
Principle 3: Instill a culture of acting lawfully, ethically and responsibly.
A listed company e is always expected to act ethically and follow the laws. This culture should
be followed by the top management of the company which will encourage the juniors to
practice the same (ASX CG, 2019).
Principle 4 - Safeguarding the integrity of corporate reports
An organization needs to maintain appropriate and full proof corporate report so that the
nature and size of business can be determined accordingly (ASX CG, 2019).
Principle 5 - Make timely and balanced disclosure
The organization needs to make timely disclosures to the stakeholders so that the process of
decision making can be carried out smoothly (ASX CG, 2019).
Principle 6 - Respect the rights of security holders
It is one of the most important functions of the organization to provide stakeholders and the
top-level management structure with the best and appropriate information so that they can
exercise their rights as security holders easily (ASX CG, 2019).
Principle 7 – Recognition and management of Risk
It is very important for an organization to have a proper risk management framework so that it
can ensure the effectiveness of the operations carried out by it (ASX CG, 2019).
Principle 8 - Remunerate fairly and responsibility
It is very important for the organization to properly design the remuneration structure so that
superior talent and high-quality executive can be provided with their share and the other
individuals who are not so useful for the organization are provided their share accordingly.
4