Auditors and Corporate Governance

Running head: AUDITORS AND CORPORATE GOVERNANCE
Auditors and corporate governance
Name of the student
Name of the university
Student ID
Author note

1AUDITORS AND CORPORATE GOVERNANCE
Executive summary
Aim of the report is concentrating on the importance of ASX corporate governance, its
principles and recommendations. The report will discuss how the adoption of these principles
as well as recommendations by the entities will have impact on the risk assessment
procedure, audit strategies, audit approaches and the audit evidences. Based on the details
of corporate governance principles and recommendation the report will analyse the impact of
full adoption of corporate governance principles as well as recommendations on entities its
influence on audit.

2AUDITORS AND CORPORATE GOVERNANCE
Table of Contents
Introduction.................................................................................................................................2
Principles of ASX corporate governance....................................................................................2
Principle 1 –serving the management with solid foundation and oversight............................2
Principle 2 – effective board’s structure for adding value.......................................................3
Principle 3 – culture of acting ethically, responsibly and lawfully............................................4
Principle 4 – safeguarding integrity of the corporate reports..................................................5
Principle 5 – making balanced as well as timely disclosure...................................................6
Principle 6 – Respecting rights of the security holders...........................................................6
Principle 7 – recognising along with measuring risks.............................................................6
Principle 8 – remunerate in fair and responsible manner.......................................................7
Impact of full adoption of corporate governance principles as well as recommendations on
entities.........................................................................................................................................8
Adoption of ASX corporate governance and its influence on audit............................................9
Conclusion..................................................................................................................................9
Reference..................................................................................................................................11

3AUDITORS AND CORPORATE GOVERNANCE
Introduction
Corporate governance combines the processes, laws or rules through which the
businesses are controlled, regulated and operated. The term further includes both external as
well as internal factors that may have impact on the interest of the organization’s stakeholders
including suppliers, shareholders, management and government regulators. Apart from that,
the board of directors is accountable in creating framework for the corporate governance that
can be used to align the business conducts with the objectives in the best way. Particular
purposes those can be outlined under corporate governance consists measurement of
performance, action plans, practice for disclosures, decision regarding the executive
compensation, dividend policies, process to reconcile conflicts interests as well as implicit or
explicit contracts among the stakeholders and the entity (Asx.com.au 2019).
Principles of ASX corporate governance
ASX corporate governance outlines the recommended practices under corporate
governance for the ASX listed organizations and those who are as per the view of the
councils are expected to achieve good outcomes for the governance and met reasonable
expectations under most of the situation of most of the investors. However, it has been
recognized by the council that the corporate governance can be adopted legitimately based
on different factors like corporate culture, size, history and complexity (Buckby, Gallery and
Ma 2015) Owing to that, principles along with the recommendations are not compulsory and
do not prescribe that the same must be complied with by any entity.8 principles as well as
recommendations of ASX corporate governance are as follows –
Principle 1 –serving the management with solid foundation and oversight
An entity listed under ASX shall outline respective responsibilities and roles clearly
regarding its management as well as board and review their performance on regular basis.
Different recommendations provided for this principle are as follows –
Recommendation 1.1
An entity listed under ASX shall have and provide disclosure regarding board charter
explaining –
 Respective responsibilities along with roles of the management and board and
 Matters those are reserved expressly to board and those expressly delegated to the
management (Tricker and Tricker 2015)
Recommendation 1.2
An entity listed under ASX shall –
 Offer the security holders with all the information those are considered to be material
with regard to the possession pertinent to the decision concerning whether director
shall be elected or re-elected.
 Undertake proper checks prior to appointment of senior executive or director or
keeping someone forward while election is conducted for the post of director
(Asx.com.au 2019).