Corporate Governance Report: Finance, Semester 2, University Analysis

This report provides a comprehensive analysis of corporate governance practices, focusing on two companies listed on the Australian Stock Exchange (ASX): Commonwealth Bank and DEXUS. The report examines the companies' corporate governance policies, strategies, and practices, including board composition, the role of independent directors, and adherence to regulatory frameworks. The analysis delves into key aspects such as corporate governance reports, code of conduct, and anti-bribery policies. Part A of the report discusses the corporate governance of the two companies. Part B provides an introduction, critical analysis, and conclusion. The report also explores the importance of corporate governance, its advantages and disadvantages, and the roles of regulatory bodies like ASIC and CLERP 9 in Australia. The assignment emphasizes the significance of transparent financial reporting, the role of independent directors, and the ethical considerations within corporate governance, providing valuable insights into how these practices impact financial performance and stakeholder interests. The report concludes with a discussion on integrated reporting and its relevance in the Australian context.

Corporate Governance
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Contents
Answer 1:.................................................................................................................................................3
Answer 2:.................................................................................................................................................3
Answer 3:.................................................................................................................................................3
Part-B...........................................................................................................................................................4
Introduction.............................................................................................................................................4
Critical Analysis........................................................................................................................................4
Conclusion...............................................................................................................................................6
References...................................................................................................................................................7
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Part -A
Answer 1: The corporate governance practices, strategies and policies of the companies
listed on ASX Australia are to be discussed here. The first company is the common
wealth bank, its corporate governance report very clearly defines that it changes as per
the introduction of new laws and as per the dynamic environment of banking industry.
The corporate governance policies of common wealth bank Australia are quite strict, as
the bank believes that policies are the back bone of any organization and they help any
organization in the task of decision making (Ian, 2016). The policies of common wealth
bank has been set on code of conduct, anti bribery and corruption, whistle blower
protection, conflicts of interests etc. Now if talk about the strategies and practices of this
organization then the practices that are followed are quite flexible, the common wealth
bank believes in having flexible work practices and in the year 2018, 73.7% of group
people works flexibly, the bank has introduced iCAN Flex program to make their people
work flexibly (Gopalan, 2016). Whereas if we talk about the second organization i.e.
DEXUS, it is also an ASX listed organization of Australia. The DEXUS organization is
in the field of providing real estate’s services to its customers. The corporate governance
of DEXUS is good but not as strong as the common wealth bank. The corporate
governance works in the area of board membership policy, anti bribery policy and
diversity and inclusion principles (Maddock, 2017).
Answer 2:
(a) The number of board of directors that the common wealth bank Australia has is nine,
where as it is eight in the case of DEXUS limited.
(b) Talking about the percentage of the non executive directors, the commonwealth bank has
12 non executive directors that are way more than the board of directors, while DEXUS
organization does not have any non executive directors.
(c) There are 8 independent executive directors in the organization commonwealth bank
Australia, and it is 6 in case of DEXUS PVT ltd.
(d) The name of the chief executive officer of the common wealth bank is Matt Comyn. The
summary of the CEO of commonwealth bank in the annual report states that the financial
statement and notes complied with the accounting standard and gave a true and fair view
of group’s financial position and performance, while the name of the chairman of the
DEXUS organization is W. Richard Sheppard (Norman, 2016).
(e) The % share hold by the executive directors of both organizations is somewhere around
27-33% in both the organization,
(f) The shares owned by the block holders and institutional investors are around 14-15%.
Answer 3:As discussed above, the corporate governance of common wealth bank is much
more strong and effective than that of the DEXUS organization. The results in common
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wealth bank Australia can be seen more frequently due to their good corporate governance
rules than that of the DEXUS ltd.
Part-B
Introduction
This essay is about the corporate governance in accounting. It is very important to have good
strict corporate governance in order to have a successful organization on every front. Now many
of the readers of this assignment may think or question, what corporate governance is all about.
Well in simpler terms, corporate governance is a set of rules and procedures, or policies and
strategies that an organization needs to follow (Solomon, 2017). These rules, regulations,
policies, procedures and strategies are made in order to ensure the interest of different
stakeholders of an organization such as customers, employers, investors, suppliers, governments
etc. There is a need for every individual to understand that a business organization never runs for
itself alone. It has a number of different stakeholders that are needed to be kept happy (Cynthnia
& Farber, 2011). Another thing that is to note here that, corporate governance is for the benefits
of an organization itself, now you may wonder how? Well when the customers are known about
the ethical practices of the organization and they know that the organization they trust in is
ethically sound and is never involved in any wrong practices then they will happily buy the
products or services produced by that firm (Kluvyer, 2017). Now here in this essay this is all we
are going to discuss about.
Critical Analysis
There are various aspects of corporate governance. It is important for us to understand first, that
why is there a need to have corporate governance and in what ways it is useful for an
organization and for its different stake holders (Linares & Vives, 2018). Lately we have come
across many financial frauds. These frauds are done on such a large scale that it does not only
haphazard, an organization but an entire economy of a nation. Just imagine an organization that
has a worth of around billion of dollars is involving in some malpractices. Such an organization
is stealing large money of nation’s economy. Now there is not only a single organization, there
are a large number of organizations that are involved in such malpractices or frauds (Cross,
2017).
Due to the incidents that have happened of late, now the government and the other financial
institutions are putting great pressures on the organizations whether small or large scale to have a
transparent corporate governance. Transparent corporate governance not only provides a crystal
clear view of an organization’s financial position but it also let the stake holders know about
what is going on in an organization.
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The approach of the corporate governance are determined by the laws of some acts or by the
laws made by the government in order to have transparent corporate governance reporting. The
other thing is when an organization follows an approach of corporate governance by law, and
then it has some certain sets of rules and procedures to be followed, which makes it more reliable
and trustworthy firm in a market (Mustoros, 2018). There are some advantages and
disadvantages of following an approach in the making of the corporate governance. Some of its
advantages are as under (Rathod, 2015):
 The first and the most beneficial advantage that an organization may enjoy following an
approach in corporate governance is that it will get the confidence of the customers and
the investors in the market. Nothing is as good as having the confidence of the investors
in your vision and working.
 Now second important thing is, when an organization is following an approach then the
chances of committing frauds by the organization or anyone in the organization
minimizes to a great extent, which is again a very good thing for the organization itself
and for its different stakeholders as well.
Now coming to the disadvantages of the approach of the corporate governance are as follows
(Carnes, 2017):
 It is to be understood that the rules of law of corporate governance are same for every
organization, i.e. whether small or large an organization need to follow the same set of
rules, which is not possible all the times.
 Small organizations sometimes find it difficult to follow all the rules because of the size
of the organization.
Corporate governance is not a tiny concept but a huge world, full of rules and regulations but it
should be kept in mind that these rules and regulations are set by an appropriate authority of law
and these set of rules are only meant to safeguard the interests of the investors, creditors and the
customers of a business (Armstrong, 2015). Here now in this paragraph we are going to discuss
about two Australian bodies that are constituted for better company and services law in
Australia. The first we are going to discuss is about the ASIC. The ASIC means the Australian
Securities & Investment Commission; it is a government body that works in the field of
protecting and safeguarding the interests of the different stakeholders of a business organization.
Its main area of work is to provide online information about an organization’s directors; it’s past,
present and about almost anything that is related to its financial matters. The information is
provided to the customers not just to safe guard the interests of the investors or customers but to
maintain a great transparency in all the financial field of the economy.
Coming to the discussion of CLERP 9, it is an act that was made in the year 2004. CLERP
means corporate law economic reform program act 2004. CLERP 9 was introduced in Australia
with a view to strengthen the prevailing disclosure of the financial reporting system in Australia.
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The CLERP 9 was introduced in order to give more power and strength to the ASIC framework.
Many changes were made with the introduction of the CLERP 9 program. The main purpose or
the objective behind the introduction of the CLERP 9 was to maintain the confidence or to
improve the confidence of the investors and the customers in the business organization. Many
changes in CLERP 9 affected the board of directors of many small organizations and the auditors
as well.
In short the main purpose of having ASIC and CLERP 9 in Australia is to have a good strong
financial framework for corporate and financial services law. When the government of a nation
wants to work on financial loopholes of the economy the trust of the investors and the customers
automatically rises in the system. This rise in trust of the investors and the customers in the
system will ultimately benefit the market and it will help the nation to get a more and more of
international business as well.
Coming to a main topic of discussion in this assignment i.e. an independent director. There is no
clear definition of who an independent director is in the company’s act 1956. Though as per the
government rules every listed and unlisted organization is required to have independent directors
on their board of directors. Now it is easy to understand who independent director is with the
following statement. An independent director is someone that is free from an organization yet it
helps an organization in area of credibility, as an independent director is free and independent
he/she can make any suggestions or judgment for the organization. Hence the main purpose of an
independent director is to help the organization to improve its corporate credibility and social
governance. Every listed company in Australia is required to have at least 1/3rd of independent
directors out of total directors.
If we talk about the ethics and corporate governance together, then thereis a slight difference
which can be seen in both of these terms. Corporate governance is a set of laws, while ethics are
the general sense of responsibilities towards the investor. However it won’t be wrong to say that
the laws are the guide for the ethics in an organization (Larcker, 2016). In Australia, integrated
reporting is not required as per the laws; however all the organizations or most of the
organizations are taking it in a positive manner and providing an integrated financial reporting to
its stakeholders. An integrated financial reporting is a complete report having all the financial as
well as the information regarding the company’s strategy, performance and plans of upcoming
future.
Conclusion
After going through all the facts and information a clear and a concise conclusion has been
provided here. Australia is way serious about the corporate governance and its laws and expects
each and every organization to follow these laws with true fidelity.
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References
Armstrong, C. (2015). Corporate Governance. Journals of Accounting & Economics , 5 (2), 60.
Carnes, D. (2017). Disadvantages of Corporate Governance. Accounting Journals , 10 (5), 2.
Cross, C. (2017). The Frauds in Australia lead to strict Laws. The Shine Business Journals , 10 (8), 5.
Cynthnia, & Farber, D. (2011). Highlights of Corporate Governance Research. Journal of Accountancy , 10 (2), 46.
Gopalan, S. (2016). The Common Wealth Bank CG. Journal of Banking , 50-62.
Ian, R. (2016). Corporate Governance. The Business Times Journals , 4 (2), 3.
Kluvyer, C. A. (2017). A Primer on Corporate Governance (Vol. 10). London: Haris Publishers.
Larcker, D. (2016). Business Ethics & Corporate Governance Laws. Journals of Accounting & Economics , 5 (2), 4.
Linares, S., & Vives, M. (2018). Financial performance and distress profiles. From classification according to
financial ratios to compositional classification. Journal of Accounting , 40 (2), 1-110.
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Mustoros, L. (2018). Special Issue: Corporate Governance Transformation in the Digital Era. Journal of
Accounting , 10 (2), 14-16.
Norman, J. (2016). The Comparison of CWB and DEXUS. Journal of Accounting , 12 (2), 3.
Rathod, L. (2015). The Advantages of Corporate Governance. Academic Research Papers on Business , 8 (2), 3.
Solomon, A. (2017). Corporate Governance & Accountability. Journal of Accounting , 10 (5), 3.
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