Corporate Governance: Challenges, Ethical Principles, and Impact on Company Productivity
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This report discusses corporate governance with due regard to its challenges, ethical principles, and their impact on company productivity. It also covers the nature of a corporate entity, statutory requirements of accounting and reporting in the Australian regulatory environment, contemporary accounting controversies, solutions for routine accounting problems, theories of corporate governance, principles of corporate governance, and weaknesses of firm’s corporate governance.
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Running head: FINANCIAL ACCOUNTING 1
Financial Accounting
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Financial Accounting
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FINANCIAL ACCOUNTING 2
FINANCIAL ACCOUNTING
Introduction
A corporate entity is a legal entity which is separated from its owners. Unlike sole
proprietorships and partnerships, corporations are designed differently such that owners would
not directly carry debt burdens in case of liquidation. In law, corporations are recognized as legal
persons while humans are regarded as natural persons. Managers and board of directors are
appointed to oversee the running of business as agents of shareholders who are the actual
owners. The concept of corporate governance aims to bring in legal and ethical principles to
define the roles of managers, directors, shareholders, and other stakeholders with the objective of
minimizing conflict of interest (Du Plessis, Hargovan & Harris, 2018). The end result of
successful corporate governance is the maximization of shareholder wealth and long term
continuity of the entity. This report discusses corporate governance with due regard to its
challenges, ethical principles, and their impact on company productivity.
Nature of a corporate entity
The main feature of a corporation is that it has distinct rights and liabilities separate from
those of its owners. The shareholder’s liability is limited to the amount of money invested in the
enterprise (McLaughlin, 2018). However, the shareholder has the freedom to transfer his shares
to other investors unless otherwise stated by the organizational charter. A corporation might be
owned by many shareholders owning varying amount of shares. Therefore, shareholders appoint
a board of directors whose duty is to appoint managers to run the daily operations of the entity.
The board of directors also provide strategic direction to the corporation through ensuring that
managers work towards the mission. The Australian corporation act is the primary legislation
FINANCIAL ACCOUNTING
Introduction
A corporate entity is a legal entity which is separated from its owners. Unlike sole
proprietorships and partnerships, corporations are designed differently such that owners would
not directly carry debt burdens in case of liquidation. In law, corporations are recognized as legal
persons while humans are regarded as natural persons. Managers and board of directors are
appointed to oversee the running of business as agents of shareholders who are the actual
owners. The concept of corporate governance aims to bring in legal and ethical principles to
define the roles of managers, directors, shareholders, and other stakeholders with the objective of
minimizing conflict of interest (Du Plessis, Hargovan & Harris, 2018). The end result of
successful corporate governance is the maximization of shareholder wealth and long term
continuity of the entity. This report discusses corporate governance with due regard to its
challenges, ethical principles, and their impact on company productivity.
Nature of a corporate entity
The main feature of a corporation is that it has distinct rights and liabilities separate from
those of its owners. The shareholder’s liability is limited to the amount of money invested in the
enterprise (McLaughlin, 2018). However, the shareholder has the freedom to transfer his shares
to other investors unless otherwise stated by the organizational charter. A corporation might be
owned by many shareholders owning varying amount of shares. Therefore, shareholders appoint
a board of directors whose duty is to appoint managers to run the daily operations of the entity.
The board of directors also provide strategic direction to the corporation through ensuring that
managers work towards the mission. The Australian corporation act is the primary legislation
FINANCIAL ACCOUNTING 3
that regulates legal entities in the country (Bednall, 2018). The act provided for the formation of
the Australian securities and investments commission (ASIC), an independent regulatory agency.
The commission registers corporations, and shares information about the companies available to
the public. Additionally, ASIC investigates breaches to the act and enforces its compliance.
Statutory Requirements of accounting and reporting in the Australian regulatory
environment.
Statutory requirements affecting accounting and reporting of corporate entities are state
made laws that affect the preparation, disclosure, and reporting of financial information. The
Australian corporation law governs formation, management, and liquidation of corporate entities.
Company law review Act was later enacted to improve corporate regulation through streamlining
provisions of the corporation’s law. The Australian corporation law provides that government
has jurisdiction over all companies incorporated under Australian Law (Garcia- Sanchez &
Martinez- Ferrero, 2017). The law requires that the board of directors is responsible for ensuring
that functional audit and finance are established. The aim of this provision is to have financial
reports and audit opinions that are reliable. The Australian Securities Exchange commission
outlines that corporate entities should have separate CEO and chairperson. The international
financial reporting standards and the International financial accounting standards are other
authoritative provisions that guide financial accounting and reporting in Australia.
Contemporary accounting controversies
Goodwill is an intangible asset that occurs when an existing business is acquired. It is
basically the value attached to an existing business by virtue of its location and existing
customers (Annisette, Vesty & Amslem, 2017). The issue of goodwill remains a controversial
that regulates legal entities in the country (Bednall, 2018). The act provided for the formation of
the Australian securities and investments commission (ASIC), an independent regulatory agency.
The commission registers corporations, and shares information about the companies available to
the public. Additionally, ASIC investigates breaches to the act and enforces its compliance.
Statutory Requirements of accounting and reporting in the Australian regulatory
environment.
Statutory requirements affecting accounting and reporting of corporate entities are state
made laws that affect the preparation, disclosure, and reporting of financial information. The
Australian corporation law governs formation, management, and liquidation of corporate entities.
Company law review Act was later enacted to improve corporate regulation through streamlining
provisions of the corporation’s law. The Australian corporation law provides that government
has jurisdiction over all companies incorporated under Australian Law (Garcia- Sanchez &
Martinez- Ferrero, 2017). The law requires that the board of directors is responsible for ensuring
that functional audit and finance are established. The aim of this provision is to have financial
reports and audit opinions that are reliable. The Australian Securities Exchange commission
outlines that corporate entities should have separate CEO and chairperson. The international
financial reporting standards and the International financial accounting standards are other
authoritative provisions that guide financial accounting and reporting in Australia.
Contemporary accounting controversies
Goodwill is an intangible asset that occurs when an existing business is acquired. It is
basically the value attached to an existing business by virtue of its location and existing
customers (Annisette, Vesty & Amslem, 2017). The issue of goodwill remains a controversial
FINANCIAL ACCOUNTING 4
issue since there is no universally accepted treatment despite the existence of generally accepted
accounting standards. Depreciation techniques are methods of accessing the decline in value of a
commodity over time. Common depreciation techniques are reducing balance method and the
straight line method. Accountants are yet to devise a single depreciation technique that is
applicable in every industry.
Solutions for routine accounting problems
Accounting professional bodies should convene meetings to discuss controversial issues
in accounting so as to arrive at an agreement on how they should be accounted for. A uniform
agreement on treatment of accounting issues promotes the achievement of uniformity and
comparability in accounting. A global perspective is the agreement of a common measure or
method of treatment of a transaction or activity. Globally accepted standards are supported by
ethical perspectives imposed by professional bodies and the law. Regulatory solutions involve
the use of laws and statutes to enhance compliance.
Benefits of corporate governance
The implementation of stricter corporate governance provides confidence to investors and
company stakeholders who fear the abuse of powers by corporate leaders and allows
transparency in the corporation. Corporate governance helps with the regulations and policies
that controls corporates from any misconduct (Su & Sauerwald, 2018). The Organization of
Economic Cooperation and Development (OECD) defines principles of good corporate
governance as – the rights to shareholders, equitable treatment of shareholders, role of
stakeholders in corporate governance, disclosure and transparency and the responsibilities of the
board. This protects the rights of shareholders and stakeholders, resolve internal conflicts and
issue since there is no universally accepted treatment despite the existence of generally accepted
accounting standards. Depreciation techniques are methods of accessing the decline in value of a
commodity over time. Common depreciation techniques are reducing balance method and the
straight line method. Accountants are yet to devise a single depreciation technique that is
applicable in every industry.
Solutions for routine accounting problems
Accounting professional bodies should convene meetings to discuss controversial issues
in accounting so as to arrive at an agreement on how they should be accounted for. A uniform
agreement on treatment of accounting issues promotes the achievement of uniformity and
comparability in accounting. A global perspective is the agreement of a common measure or
method of treatment of a transaction or activity. Globally accepted standards are supported by
ethical perspectives imposed by professional bodies and the law. Regulatory solutions involve
the use of laws and statutes to enhance compliance.
Benefits of corporate governance
The implementation of stricter corporate governance provides confidence to investors and
company stakeholders who fear the abuse of powers by corporate leaders and allows
transparency in the corporation. Corporate governance helps with the regulations and policies
that controls corporates from any misconduct (Su & Sauerwald, 2018). The Organization of
Economic Cooperation and Development (OECD) defines principles of good corporate
governance as – the rights to shareholders, equitable treatment of shareholders, role of
stakeholders in corporate governance, disclosure and transparency and the responsibilities of the
board. This protects the rights of shareholders and stakeholders, resolve internal conflicts and
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FINANCIAL ACCOUNTING 5
differences that may arise. Also, it would contribute to economic growth on a larger scale and
give confidence to foreign and domestic investors to invest in the company.
Shareholders are the owners of the corporation. They can either be corporate shareholders
or individual shareholders. Corporate shareholders are companies that have interests in form of
shares in the corporation (Schwartz, 2017). Individual shareholders on the other hand are people
investors who also hold stocks. Shareholders have voting rights which they exercise during
annual general meetings. Voting power is dependent on the by-laws of the organization such that
in others, the one man one vote rule applies. However, the voting rights of shareholders in other
organizations is dependent on the number of shares they own.
Theories of corporate governance
There are several theories that explain corporate governance. The agency theory defines
corporate governance as a relationship between an agent and a principal. The agent and the
principal are the managers and the shareholders respectively. The agent is employed to carry
pursue the interests of the principal. A company for instance might have many shareholders
which makes it impossible for them to run the company. They authorize few individuals to run
the operations of the company on their behalf. The agency theory argues that good corporate
governance is achieved when agents strictly serve the interests of their principal without any
form of conflict of interest.
Stewardship theory originates from psychology and sociology. The Stewards are the
managers, directors, and employees. The steward’s role under this theory is to protect and
maximize owner’s wealth (Naranjo, Saavedra & Verdi, 2017). This theory majors on the roles of
managers as stewards of the business and not as agents of the principal. The stewards integrate
differences that may arise. Also, it would contribute to economic growth on a larger scale and
give confidence to foreign and domestic investors to invest in the company.
Shareholders are the owners of the corporation. They can either be corporate shareholders
or individual shareholders. Corporate shareholders are companies that have interests in form of
shares in the corporation (Schwartz, 2017). Individual shareholders on the other hand are people
investors who also hold stocks. Shareholders have voting rights which they exercise during
annual general meetings. Voting power is dependent on the by-laws of the organization such that
in others, the one man one vote rule applies. However, the voting rights of shareholders in other
organizations is dependent on the number of shares they own.
Theories of corporate governance
There are several theories that explain corporate governance. The agency theory defines
corporate governance as a relationship between an agent and a principal. The agent and the
principal are the managers and the shareholders respectively. The agent is employed to carry
pursue the interests of the principal. A company for instance might have many shareholders
which makes it impossible for them to run the company. They authorize few individuals to run
the operations of the company on their behalf. The agency theory argues that good corporate
governance is achieved when agents strictly serve the interests of their principal without any
form of conflict of interest.
Stewardship theory originates from psychology and sociology. The Stewards are the
managers, directors, and employees. The steward’s role under this theory is to protect and
maximize owner’s wealth (Naranjo, Saavedra & Verdi, 2017). This theory majors on the roles of
managers as stewards of the business and not as agents of the principal. The stewards integrate
FINANCIAL ACCOUNTING 6
their goals with the firm’s goals such that the success of the organization is perceived as their
success as well. Stewards are not self- interested and thus their satisfaction is higher when
organizational goals are attained. Good corporate governance under the stewardship theory is the
development of structures simultaneously promotes the interests of both the company and the
steward. The independence of the steward is viewed as a motivating factor that enhances
performance.
The stakeholder theory of corporate governance is based on the argument that managers
serve a network of parties such as suppliers, employees, and owners. The maintenance of a good
and productive relationship between the manager and these other parties, promotes the
achievement of shareholder’s wealth (Jones, Wicks & Freeman, 2017). The role of the managers
under this theory is to ensure that stakeholders obtain fair returns from their stake in the firm.
This theory proposes some kind of corporate social responsibility principles that emphasizes on
ethical practice (Schaltegger & Burritt, 2017).
Principles of corporate governance
Adoption of corporate governance best practices contributes immensely to the
achievement of the firms objectives. The goals of corporate governance best practices is to
propose actions that private and public corporations should adopt in their management structure
to promote accountability ( Bowie, 2017). Shareholders, managers, board of directors, and
independent auditors are the main stakeholders addressed. Shareholders who are keen to enhance
performance and improve access to capital should insist that best practices be adopted. As a
company, we should enhance our corporate governance principles to serve the interests of the
shareholders. It is worth noting that shareholders are interested in wealth maximization and
sustainability of production.
their goals with the firm’s goals such that the success of the organization is perceived as their
success as well. Stewards are not self- interested and thus their satisfaction is higher when
organizational goals are attained. Good corporate governance under the stewardship theory is the
development of structures simultaneously promotes the interests of both the company and the
steward. The independence of the steward is viewed as a motivating factor that enhances
performance.
The stakeholder theory of corporate governance is based on the argument that managers
serve a network of parties such as suppliers, employees, and owners. The maintenance of a good
and productive relationship between the manager and these other parties, promotes the
achievement of shareholder’s wealth (Jones, Wicks & Freeman, 2017). The role of the managers
under this theory is to ensure that stakeholders obtain fair returns from their stake in the firm.
This theory proposes some kind of corporate social responsibility principles that emphasizes on
ethical practice (Schaltegger & Burritt, 2017).
Principles of corporate governance
Adoption of corporate governance best practices contributes immensely to the
achievement of the firms objectives. The goals of corporate governance best practices is to
propose actions that private and public corporations should adopt in their management structure
to promote accountability ( Bowie, 2017). Shareholders, managers, board of directors, and
independent auditors are the main stakeholders addressed. Shareholders who are keen to enhance
performance and improve access to capital should insist that best practices be adopted. As a
company, we should enhance our corporate governance principles to serve the interests of the
shareholders. It is worth noting that shareholders are interested in wealth maximization and
sustainability of production.
FINANCIAL ACCOUNTING 7
Shareholders as owners of the company expect transparency from the side of the
management. The chief executive officer and his team should make relevant information relating
to the firm easily accessible by shareholders, board of directors, and auditors. The shareholders
have the right to disclosure of information that would enable them to oversight the managers.
These information include general company activities, future plans, and risks attached to the
business strategy. Stakeholders especially shareholders and potential investors are able to make
rational decisions when they have access to all relevant information ( Johnson & Petacchi, 2017).
Financial regulators, professional bodies, and governments recognize the benefits of
transparency in making truth available to relevant stakeholders. Financial reporting standards
require that company managers should timely disclose financial information.
Accountability requires board of directors, management, and independent auditors who
are agents of corporate governance to be answerable to their principal. The accountability
principle states that agents have the obligation and responsibility make explanation for their
actions and conduct (Rossouw & Van Vuuren, 2017). Shareholders expect the management and
directors to carry out their duties and responsibilities with due diligence. Also, shareholders
require the board to account for the company’s risk management strategies, create appropriate
stakeholder communication channels, and present periodic reports of the company’s
performance.
Fairness is an important corporate governance principle that requires managers,
shareholders, and board members to be treated fairly. Shareholders of companies hold varied
amount of shares. Majority shareholders and minority shareholders should be given equal
treatment irrespective of the size of their shareholding. The one man one vote rule supports this
principles since all shareholders hold equal influence on the firms. In cases where the one man
Shareholders as owners of the company expect transparency from the side of the
management. The chief executive officer and his team should make relevant information relating
to the firm easily accessible by shareholders, board of directors, and auditors. The shareholders
have the right to disclosure of information that would enable them to oversight the managers.
These information include general company activities, future plans, and risks attached to the
business strategy. Stakeholders especially shareholders and potential investors are able to make
rational decisions when they have access to all relevant information ( Johnson & Petacchi, 2017).
Financial regulators, professional bodies, and governments recognize the benefits of
transparency in making truth available to relevant stakeholders. Financial reporting standards
require that company managers should timely disclose financial information.
Accountability requires board of directors, management, and independent auditors who
are agents of corporate governance to be answerable to their principal. The accountability
principle states that agents have the obligation and responsibility make explanation for their
actions and conduct (Rossouw & Van Vuuren, 2017). Shareholders expect the management and
directors to carry out their duties and responsibilities with due diligence. Also, shareholders
require the board to account for the company’s risk management strategies, create appropriate
stakeholder communication channels, and present periodic reports of the company’s
performance.
Fairness is an important corporate governance principle that requires managers,
shareholders, and board members to be treated fairly. Shareholders of companies hold varied
amount of shares. Majority shareholders and minority shareholders should be given equal
treatment irrespective of the size of their shareholding. The one man one vote rule supports this
principles since all shareholders hold equal influence on the firms. In cases where the one man
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one vote rule does not hold, shareholder agreement policies might exist to facilitate the
protection of minorities. Employees, public officials, and the community in general should also
be treated fairly. Corporate social responsibility activities is one of the ways by which companies
compensate local communities for use if their resources (Aguilera & Crespi- Cladera, 2016).
The board is tasked with the authority to act on the corporation’s behalf. They should
take full responsibility for authority bestowed upon them by shareholders. The board of directors
oversee management of the enterprise, appoint the CEO, and oversight company performance
(Johnston & Petacchi, 2017). While undertaking these duties, the interests of the organization
should come first. Directors and managers should not pursue high risk investments to increase
chances of securing high bonuses. Investment decisions should be made after due assessment of
risk and return is conducted. The risk-return trade off theory states that, the higher the risk, the
higher the expected return. However, when expected returns are not realized, there is a chance of
huge loss.
Weaknesses of firm’s corporate governance
Corporate governance determines how a company is directed and controlled. Effective
corporate governance leads to effective, entrepreneurial and rational management which can
support long-term success of the organization. Loop holes in corporate governance compromises
the company’s progress placing it at risk of not fulfilling its objectives (Epstein, 2018). Our
company is experiencing weaknesses in corporate governance. Identifying these issues is a first
step towards solving them.
Earnings management is a key accounting controversy. It involves the use of accounting
techniques to alter financial statements and reports. Common earnings management strategies
one vote rule does not hold, shareholder agreement policies might exist to facilitate the
protection of minorities. Employees, public officials, and the community in general should also
be treated fairly. Corporate social responsibility activities is one of the ways by which companies
compensate local communities for use if their resources (Aguilera & Crespi- Cladera, 2016).
The board is tasked with the authority to act on the corporation’s behalf. They should
take full responsibility for authority bestowed upon them by shareholders. The board of directors
oversee management of the enterprise, appoint the CEO, and oversight company performance
(Johnston & Petacchi, 2017). While undertaking these duties, the interests of the organization
should come first. Directors and managers should not pursue high risk investments to increase
chances of securing high bonuses. Investment decisions should be made after due assessment of
risk and return is conducted. The risk-return trade off theory states that, the higher the risk, the
higher the expected return. However, when expected returns are not realized, there is a chance of
huge loss.
Weaknesses of firm’s corporate governance
Corporate governance determines how a company is directed and controlled. Effective
corporate governance leads to effective, entrepreneurial and rational management which can
support long-term success of the organization. Loop holes in corporate governance compromises
the company’s progress placing it at risk of not fulfilling its objectives (Epstein, 2018). Our
company is experiencing weaknesses in corporate governance. Identifying these issues is a first
step towards solving them.
Earnings management is a key accounting controversy. It involves the use of accounting
techniques to alter financial statements and reports. Common earnings management strategies
FINANCIAL ACCOUNTING 9
aim at overstating profits and understating losses. Managers pursue these unethical undertakings
especially when their earnings are linked to the performance of the firm. Companies that offer
bonuses to managers when higher profits are recorded are major victims of this practice
( Narrajo, Saavedra & Vedri, 2017). Organizations should employ manager performance
appraisal techniques that are promote sustainability of performance. Appraisal techniques based
on short term performance breeds unethical practices such as alteration of profits.
The Chief Executive Officer is unethical. Ethics is a virtue that defines the moral conduct
of an individual. The chief executive officer as the senior most manager in an organization. His
role is to manage the day to day operations of the company. Also, the overall success of the
organization is a responsibility of the CEO. Shareholders expect the CEO to make rational
decisions that would propel the company towards achievement of its goals (Mayer, 2017).
Corporate governance principles prescribe that officers should carry out their duties ethically.
The shareholders have the right to truthful information regarding the performance of the
organization. The C.E.O or any other officer should therefore not engage in fraudulent
misreporting aimed at providing false information to shareholders. Decline in profits in a year
compared to that of a previous year should be reported. Manipulation of financial information to
hide facts leads to poor decision making among shareholders and investors.
Non- Executive directors are not part of the management. In corporate governance, their
role is to provide strategic leadership. Since they are not part of the executive, they should aid in
the development of strategy by providing independent expert input (Garcis- Sanchez &
Martinez- Ferrero, 2017). They also scrutinize the management and monitor performance
reporting. Additionally, these directors ensure the integrity of financial reporting. In our
organization, some non- executive officers lack the independence to carry out their duties
aim at overstating profits and understating losses. Managers pursue these unethical undertakings
especially when their earnings are linked to the performance of the firm. Companies that offer
bonuses to managers when higher profits are recorded are major victims of this practice
( Narrajo, Saavedra & Vedri, 2017). Organizations should employ manager performance
appraisal techniques that are promote sustainability of performance. Appraisal techniques based
on short term performance breeds unethical practices such as alteration of profits.
The Chief Executive Officer is unethical. Ethics is a virtue that defines the moral conduct
of an individual. The chief executive officer as the senior most manager in an organization. His
role is to manage the day to day operations of the company. Also, the overall success of the
organization is a responsibility of the CEO. Shareholders expect the CEO to make rational
decisions that would propel the company towards achievement of its goals (Mayer, 2017).
Corporate governance principles prescribe that officers should carry out their duties ethically.
The shareholders have the right to truthful information regarding the performance of the
organization. The C.E.O or any other officer should therefore not engage in fraudulent
misreporting aimed at providing false information to shareholders. Decline in profits in a year
compared to that of a previous year should be reported. Manipulation of financial information to
hide facts leads to poor decision making among shareholders and investors.
Non- Executive directors are not part of the management. In corporate governance, their
role is to provide strategic leadership. Since they are not part of the executive, they should aid in
the development of strategy by providing independent expert input (Garcis- Sanchez &
Martinez- Ferrero, 2017). They also scrutinize the management and monitor performance
reporting. Additionally, these directors ensure the integrity of financial reporting. In our
organization, some non- executive officers lack the independence to carry out their duties
FINANCIAL ACCOUNTING 10
without the influence of the management. The non- executive director in some instances have
been noted colluding with the chief executive officer to fraudulently hide a decline in yearly
profits. This is a clear breach of duty and corporate governance in general.
An effective internal controls system reduces the occurrence of fraud in the organization
by implementing procedures that might lead to identification and frustration of fraud plans
(Darby, 2018). Our organization has a weak internal controls system. Few individuals such as the
CEO and a non – executive director can interfere with financial information without being
discovered. The board of directors lapsed in their duty since they failed to implement a strong
internal controls system. Shareholders expect the board of directors to devise and implement
efficient risk management systems. Transparency is an essential corporate governance principle.
Our company should disclose truthful financial information to shareholder, investors, and other
stakeholders. The management should not hide facts from the users of these accounting
information.
Conclusion
A corporate entity is an organization whose owners are separated from its owners.
Corporate governance is a critical aspect that defines the way a company is controlled. Corporate
governance principles include accountability, responsibility, fairness, and transparency. The goal
of these principles is to minimize conflict of interest and ensure that managers pursue the
maximization of shareholder’s wealth. Unethical practices such as window dressing financial
information, collusion between managers and non- executive members, and inadequate internal
controls are among the critical corporate governance weaknesses witnessed in the organization.
without the influence of the management. The non- executive director in some instances have
been noted colluding with the chief executive officer to fraudulently hide a decline in yearly
profits. This is a clear breach of duty and corporate governance in general.
An effective internal controls system reduces the occurrence of fraud in the organization
by implementing procedures that might lead to identification and frustration of fraud plans
(Darby, 2018). Our organization has a weak internal controls system. Few individuals such as the
CEO and a non – executive director can interfere with financial information without being
discovered. The board of directors lapsed in their duty since they failed to implement a strong
internal controls system. Shareholders expect the board of directors to devise and implement
efficient risk management systems. Transparency is an essential corporate governance principle.
Our company should disclose truthful financial information to shareholder, investors, and other
stakeholders. The management should not hide facts from the users of these accounting
information.
Conclusion
A corporate entity is an organization whose owners are separated from its owners.
Corporate governance is a critical aspect that defines the way a company is controlled. Corporate
governance principles include accountability, responsibility, fairness, and transparency. The goal
of these principles is to minimize conflict of interest and ensure that managers pursue the
maximization of shareholder’s wealth. Unethical practices such as window dressing financial
information, collusion between managers and non- executive members, and inadequate internal
controls are among the critical corporate governance weaknesses witnessed in the organization.
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FINANCIAL ACCOUNTING 11
References
Annisette, M., Vesty, G., & Amslem, T. (2017). Accounting values, controversies, and
compromises in tests of worth. In Justification, evaluation and critique in the study of
organizations: Contributions from French pragmatist sociology (pp. 209-239). Emerald
Publishing Limited.
Aguilera, R. V., & Crespi-Cladera, R. (2016). Global corporate governance: On the relevance of
firms’ ownership structure. Journal of World Business, 51(1), 50-57.
Bednall, T. (2018). Australian Securities and Investments Commission v flugge: section 180
strikes again. Company and securities law journal, 36(1), 61-73.
Bowie, N. E. (2017). Business ethics: A Kantian perspective. Cambridge University Press.
Darby, S. (2018). Natural Resource Governance: New Frontiers in Transparency and
Accountability. London, UK: Transparency & Accountability Initiative, Open Society
Foundation.
Du Plessis, J. J., Hargovan, A., & Harris, J. (2018). Principles of contemporary corporate
governance. Cambridge University Press.
Epstein, M. J. (2018). Making sustFjainability work: Best practices in managing and measuring
cForporate social, environmental and economic impacts. Routledge.
References
Annisette, M., Vesty, G., & Amslem, T. (2017). Accounting values, controversies, and
compromises in tests of worth. In Justification, evaluation and critique in the study of
organizations: Contributions from French pragmatist sociology (pp. 209-239). Emerald
Publishing Limited.
Aguilera, R. V., & Crespi-Cladera, R. (2016). Global corporate governance: On the relevance of
firms’ ownership structure. Journal of World Business, 51(1), 50-57.
Bednall, T. (2018). Australian Securities and Investments Commission v flugge: section 180
strikes again. Company and securities law journal, 36(1), 61-73.
Bowie, N. E. (2017). Business ethics: A Kantian perspective. Cambridge University Press.
Darby, S. (2018). Natural Resource Governance: New Frontiers in Transparency and
Accountability. London, UK: Transparency & Accountability Initiative, Open Society
Foundation.
Du Plessis, J. J., Hargovan, A., & Harris, J. (2018). Principles of contemporary corporate
governance. Cambridge University Press.
Epstein, M. J. (2018). Making sustFjainability work: Best practices in managing and measuring
cForporate social, environmental and economic impacts. Routledge.
FINANCIAL ACCOUNTING 12
García‐Sánchez, I. M., & Martínez‐Ferrero, J. (2017). Independent directors and CSR
disclosures: The moderating effects of proprietary costs. Corporate Social Responsibility
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Johnston, R., & Petacchi, R. (2017). Regulatory oversight of financial reporting: Securities and
Exchange Commission comment letters. Contemporary Accounting Research, 34(2),
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Jones, T. M., Wicks, A. C., & Freeman, R. E. (2017). Stakeholder theory: The state of the
art. The Blackwell guide to business ethics, 17-37.
Mayer, D. (2017). The law and ethics of CEO social activism. JL Bus. & Ethics, 23, 21.
McLaughlin, S. (2018). Unlocking company law. Routledge.
Naranjo, P., Saavedra, D., & Verdi, R. (2017). Financial reporting regulation and financing
decisions.
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Schwartz, M. S. (2017). Corporate social responsibility. Routledge.
Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues, concepts
and practice. Routledge.
Su, W., & Sauerwald, S. (2018). Does corporate philanthropy increase firm value? The
moderating role of corporate governance. Business & Society, 57(4), 599-635.
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