Report on Contemporary Issues in Accounting and Corporate Governance

This report delves into contemporary issues in accounting, focusing on corporate governance and social responsibility. It begins by highlighting the importance of corporate governance, particularly the role of the board of directors in setting company values, policies, and strategies to promote transparency and accountability. The report then explores social responsibility accounting, which incorporates non-financial measures into financial reporting to disclose the costs and benefits of a company's operations to stakeholders. Furthermore, it examines the code of corporate governance, its standards, and its impact on listed companies, including topics such as board composition, auditing, accountability, and remuneration. The report also discusses the retention of key executives through competitive remuneration packages and the role of non-executive directors in strategy formulation and oversight, while emphasizing the importance of their independence. The report concludes by advocating for aligning operations with corporate governance codes, promoting performance-based elements, and defining the roles of non-executive directors to enhance accountability and maximize shareholder wealth. The report references several academic sources to support its arguments.

CONTEMPORARY ISSUES IN ACCOUNTING
CONTEMPORARY ISSUES IN ACCOUNTING
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CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
Corporate governance is at the core of every organization’s growth. This role is greatly vested in
a company’s board of directors. The board is tasked with setting values, policies, and strategies
that govern the operations of the company. These policies are aimed at promoting transparency,
accountability, and efficiency in managing the organization.
Task 1
The concept of social responsibility accounting refers to accounting practices of incorporating
non-financial measures into financial reporting. It entails incorporating ethics and social
responsibility of a company to its stakeholders in her financial reporting mechanisms. The
purpose of social responsibility accounting is to ascertain and disclose the cost and benefit
created by the operations of the company to the society and her stakeholders at large. It is,
therefore, necessary that organization explore better mechanisms of incorporating their social
accounting to enhance accountability and sustainable economy (Guthrie, Ball, and Farneti, 2010,
p. 454). Corporate governance, on the other hand, refers to mechanisms, strategies, and policies
that define how the operations of the company are controlled. It clearly outlines the objectives
and goals that the company would pursue and by essence, it is the strategic plan of an
organization (Goergen, Marc, 2012). Corporate governance is mainly steered by the board of
directors who are mandated the corporate governance by the shareholders.
Task 2
Code of corporate governance refers to a set of standards that guide good practices in an
organization on pertinent issues regarding leadership, board composition, auditing,
accountability, remuneration, and shareholders’ interests. Listed companies are required through

CONTEMPORARY ISSUES IN ACCOUNTING
the Companies Act to report on whether they have complied with these standards in their
operations or not. In the case where the company has not complied, it should provide an
explanation as to why it failed to comply. These standards promote effectiveness within the
company. It ensures that the board and all committees have a balance of skills, independence,
and capacity to discharge their duties effectively. It also ensures that accountability is upheld by
the board by presenting a true and fair state of affairs of the company to the shareholders. The
standards also outline that remuneration and performance-based elements need to be formulated
to promote the success of the company on a long-term basis.
Task 3
Retention of key and performing executive members of the board is key for any organization that
has a long-term growth strategy. The organization should put in place measures that retain them
and one common measure is by offering a competitive remuneration package to them. This
includes basic salary and offering them competitive allowances. The remuneration scheme
should be restructured to include performance-based bonuses. This will act as an incentive to
them to work and maximize shareholders wealth which is in line with the long-term goal of the
company (K. Murphy, 2012). These performance-based bonuses may be in the form of cash or
share options. Share options make the executives part of the company and thus will motivate
them to work hard as besides maximizing the wealth of the company, they will maximize their
wealth to being part of the company. Therefore these measures should be considered to boost
performance as well as retain the hardworking executives in the company.

CONTEMPORARY ISSUES IN ACCOUNTING
Task 4
Non-executive directors play a key role in an organization’s success. Their role majorly on
strategy formulation. Non-executive directors should constructively be engaged in developing
and challenging strategy formulation (Kakabadse, N, Yang, H. and Sanders, R, 2010). They
independently assess the performance of the company and offer their advice or opinion
concerning the management and control measures. Non-executive directors are also tasked with
setting the remuneration of executive directors including the performance schemes (Lin, Tom C.
W, 2011). They also play a key role in the appointment and dismissal of executive directors
where necessary. However, non-executive directors should not receive performance-based
elements as was the case of Boom Co. so as to strengthen their independence and transparency
with regards to their oversight role. This would also prevent conflicts of interests as they are not
part of the shareholders.
Conclusion
Organizations should, therefore, align their operations as per the code of corporate governance so
as to promote best practices in an organization on pertinent issues such as accountability,
leadership. Organizations should also promote performance-based elements so as to boost
performance and maximize shareholder wealth. This will not only motivate the executive
directors and employees at large but also boost their productivity in maximizing shareholders’
wealth. The non-executive directors should not receive performance-based remuneration so as to
boost their independence and prevent conflict of interest. Their roles should be clearly defined
which majorly lies in strategy formulation and promoting transparency and accountability
(Kakabadse, N, Yang, H. and Sanders, R, 2010).

CONTEMPORARY ISSUES IN ACCOUNTING
References
Lin, Tom C. W., The Corporate Governance of Iconic Executives (2011). 87 Notre Dame Law
Review 351 (2011).
Goergen, Marc, International Corporate Governance, Prentice Hall, Harlow, January 2012,
Chapter 3.
Firzli, Nicolas (3 April 2018). "Greening, Governance, and Growth in the Age of Popular
Empowerment". FT Pensions Experts. Financial Times. Retrieved 27 April 2018.
K. Murphy. The Politics of Pay: A Legislative History of Executive Compensation. In J. Hill and
R. Thomas, eds., Research Handbook on Executive Pay, Cheltenham, UK and Northampton,
MA, USA: Edward Elgar Publishing, 11-40, 2012.
The Corporate Governance of Iconic Executives, 87 Notre Dame Law Review 351 (2011)
Guthrie, J., Ball, A. & Farneti, F. (2010). Advancing Sustainable Management of Public and Not
For Profit Organizations, Public Management Review, 12(4), 449–459.
Kakabadse, N.,Yang, H. and Sanders, R.(2010). The effectiveness of non-executive directors in
Chinese state-owned enterprises. Management Decision, 48(7), pp.1063-1079

CONTEMPORARY ISSUES IN ACCOUNTING