Corporate Governance and Good Practices for Financial Accounting | Desklib

RUNNING HEAD: FINANCIAL ACCOUNTING
Corporate governance

Financial accounting 2
Contents
Introduction.................................................................................................................................................3
Corporate Governance.................................................................................................................................3
Good corporate governance.........................................................................................................................4
Analysis of the Case study...........................................................................................................................7
Weaknesses identified in the case................................................................................................................9
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11

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Introduction
The report provides explanation on corporate governance, its theories and weaknesses. It
discusses the characteristics of good corporate governance and explains the theories that support
the same. Furthermore, the report analyses a case study and provide recommendations on its
structure of corporate governance. It identifies its weaknesses and explains the steps to improve
the same in its later part.
Corporate Governance
The system of rules, practices, policies and procedures that guides, directs and controlled a firm
and its operations is known as corporate governance. Company directs its managers to control
and monitor the functioning of a firm in such a way that protects the interest of the shareholders.
It helps in balancing the interest of many stakeholders that includes management, customers,
suppliers, government, investors and community. The concept of corporate governance offers a
framework with the help of which a company can easily attain its objectives and establish
appropriate internal control measures for making the performance effective and efficient (Bajpai,
2016).
In general, it lay down some rules and regulations which direct the corporate behaviour of board
of directors. The board is the key element of corporate governance as it is responsible for making
important and suitable decisions for the firm such as deciding the dividend policies, executive
compensations and many more (Fernando, 2012). There are some principles of Corporate
Governance Council which are been recommended to be followed by every company listed on
Australian Stock Exchange. It includes the process through which the objectives of the entity are

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set and pursued in context of social regulatory and market environment. The mechanisms include
monitoring the actions, plans, practices and the decisions of stakeholders and their agents. The
activities of corporate governance are much affected by the conflict of interests between the
stakeholders and management of the corporation. Therefore, it is very much necessary for a
company to have a good corporate governance so to facilitate smooth functioning and become
successful in future (Calder, 2008).
Good corporate governance
Corporate governance is considered as good when the process of transparency and disclosure is
followed within the organizations with a motive of providing accurate and true information to the
regulators and shareholders as well as to the general public. The company should represent true
and fair data about its financial, operational and other aspects of the business. The main aim of
pursuing a good CG is to earn profits and present them in a transparent and accountable manner.
Following are the characteristics the good corporate governance holds for itself.
 Clear strategy
The procedure of creating good CG starts with developing a clear strategy for the corporation.
The board of directors and the management should be clearly aware about the organization’s
goals and the practices required achieving the same. The managers and employees should know
about the strategy at each stage of the process so as to keep themselves focused towards
company’s objectives and goals (Yocam, 2010).
 Efficient and effective management of risk