Corporate Governance & Ethics

CORPORATE GOVERNANCE & ETHICS

Table of Contents
1.0 Introduction................................................................................................................................3
2.0 Overview of OECD...................................................................................................................5
3.0 Regulatory Framework under OECD........................................................................................8
3.1 Transparency & Accountability.............................................................................................8
3.2 Prudence & Integrity..............................................................................................................9
3.3 Monitoring and Reporting Operations.................................................................................10
3.4 Maintaining Sufficient Resources........................................................................................10
3.5 Ensuring Adequate Internal Control....................................................................................10
3.6 Risk Management................................................................................................................11
3.7 Sound Corporate Governance..............................................................................................11
3.8 Compliance with FR Rules..................................................................................................11
3.9 Producing Accurate Timely Information.............................................................................12
4.0 Corporate Governance and Corporate Social Responsibility..................................................14
5.0 Conclusion...............................................................................................................................16
References......................................................................................................................................18
Page 2 of 21

1.0 Introduction
Corporate governance may be considered to be one of the most crucial and success-critical
aspects of the business as the implementation of the same involves considerations of lots of
factors that are internal and external to the business (Regling and Watson, 2010). Respective
regulatory authorities in the countries aim to maintain the sound corporate governance
environment within the business affairs for the nation in order to ensure compliance with the
global standards. Also, the global authorities responsible for maintaining the transparency in the
corporate reporting, time to time, release various standards for the purpose of country-specific
regulators to comply with the same and thereby attain the global convergence and comparability
of the financial statements in a most efficient manner. As a result, it may be noted that global
regulators play a critical role in ensuring corporate governance at a macro level.
Organisation for Economic Co-operation and Development (hereinafter may be referred to as
“OECD” or the organisation or the regulator, as the case may be) is such a regulatory body, that
attempts to regulate the business transactions by stimulating economic progress and making the
world trade compliant with the global standards set for the purpose.
There have been cases where the business across the world has faced a setback in spite of strong
regulatory framework existing there at. The financial crisis of the year 2008 is such an example
when it was observed that any organisations failed to comply with the respective standards
pronouncements and thus experienced major fall in their operations in terms of non-compliance
and mismanagement that eventually suffered substantial financial loss as well (Wanyama, Burton
and Helliar, 2017).
Page 3 of 21

In such a context, a need was felt by OECD to have a relook into the existing sets of standards
and benchmark practices in terms of corporate governance and corporate reporting for the
purpose of assessing the need of their revaluation against the changing economic backdrop. After
due consultation with other standard setters across the worlds and brainstorming, OCED released
quite a few publications specifying the exact cause of such failures experienced by the
corporations across the globe and probable remedial measures that could have been adopted at
that particular point of time. The reports have also specified the recommendatory actions that
may need to be adhered by the management of the business going forward in order to comply
with the regulations at a global level (Davies, 2016).
The instant report briefly discusses the implications of those publications and the respective
regulatory framework as advised therein for the organisations to be followed. At the very outset
of the study, the background of the study has been explained in brief followed by the overview of
the OECD and their roles in global corporate reporting and corporate governance. In the main
parts of the paper, the researcher intends to identify the theoretical and regulatory framework that
may emerge out of the critical evaluation and thorough analysis of various publications of OCED
and also the journal articles released on the given topic. Such secondary research has also been
supported by a brief discussion on the concept of corporate governance and corporate social
responsibility (CSR) as well. Finally, the researcher wraps up the discussion by way of
concluding note.
Page 4 of 21

2.0 Overview of OECD
OECD is an autonomous body based in France, the primary purpose of which is to provide a
regulatory framework for corporate reporting and governance related matters. Different countries
are the members of the OECD and provide consultation with respect to the different corporate
governance-related crisis that may arise globally from time to time (Oecd.org, 2019). As per the
report of IMF (international monetary fund), in the year 2017, the members of OCED
collectively accounted for more than 60% of global economy in terms of nominal GDP (gross
domestic product) and it has been observed that most of the members have high HDI (human
development index) as well and therefore may be considered to be developed economies
(Imf.org, 2019).
Budget Contribution for 2017 (OECD)
Member Countries % Contribution
France 5.40
Germany 7.40
Japan 9.40
United Kingdom 5.50
United States 20.60
Total 48.30
Table 1: Budget Contribution for 2017 (OECD)
Page 5 of 21

(Source: Oecd.org, 2019)
OECD prepares a budget for every year in order to provide its planning, implementation and
financial support to any counties or any issues that may adversely affect the global corporate
governance structure. As per the report of OECD, the 1st part budget for the year 2017 is
approximately Euro 200 million (Oecd.org, 2019). 2nd part of the budget has also been developed
where different participating counties have contributed to the tent of Euro 98 million
approximately (Oecd.org, 2019).
The aims and objectives of OECD are primarily centred on maintaining the compliance
framework with respect to the corporate affairs in respect of corporate governance, taxation,
financial reporting and also sustainability reporting at the global level. Few of the activities that
OECD has undertaken are briefly mentioned below:
On a regular basis, OECD releases publication on various model income tax convention that may
be applied globally addressing some specific international taxation related issues like transfer
pricing and so on,. In this context, it may be noted that OECD has a large number of books and
online materials in their database which is accessible to anyone from member countries (Oecd-
ilibrary.org, 2019). The library contains various publications for various sectors like agriculture,
energy, education, employment, taxation, transport, governance etc. (Oecd-ilibrary.org, 2019).
There is a number of books, journals and working papers available in the database which may be
referred time to time.
The mission statement of OCED indicates that the objective of the organisation is to promote
various policies related to corporate governance that may significantly impact and improve the
Page 6 of 21