The Professional Accountant's Role: Corporate Governance Analysis

This report delves into the pivotal role of professional accountants within the framework of corporate governance, particularly within the United Kingdom. It begins by highlighting the significance of accounting techniques in organizational success and the importance of qualified professionals in implementing them. The report explores the evolution of corporate governance in the UK, referencing the Cadbury Report and the shift towards a principles-based approach. It discusses the benefits and drawbacks of this approach, contrasting it with rule-based systems. The report then examines ways to enhance the UK's corporate governance system, emphasizing the importance of independent audits and the role of the Chief Financial Officer. Task 2 of the report focuses on the functions of a non-executive director, detailing their responsibilities, strategies, and the importance of ethical conduct, with a specific focus on the role of a chartered accountant in this capacity. The report concludes by underscoring the value a professional accountant brings to corporate governance and decision making.

The Professional Accountant

Table of Contents
........................................................................................................................................................1
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
TASK.2............................................................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
In this era, organisations are trying to to go ahead to their competitors and this is only
possible when the company adopt well specified accounting techniques. An illiterate person in
the firm are not able to use accounting tools and techniques so that the firm can not lead from
their competitors because of non application of such accounting techniques. (Cernusca and
Balaciu, 2015). A professional qualified accountant is required to handle all such tools and
techniques for the betterment of organisational performance. In any organisation, company needs
to appoint such qualified accountants for the implementation of accounting tools and techniques
for finance related matters and tries to manage such issues. As, accountants are the person who
overlook entire corporate governance and finance related issues.
PART 1
a). In United Kingdom, there were having lesser interest before the adherence of
corporate governance practices. Corporate governance practices varies in different countries due
to cultural and political issues so that the adequate universal Code cannot be established around
the globe. In Cadbury report, 1992 Corporate governance code was adopted for the first time in
UK and in this report, there has been mentioned that CG is the methodology by which
organisation are directed and controlled. In a simple way, senior managers or the leaders in the
company have to make framework for effective and efficient practices. In many company, such
senior mangers are the chief persons who formulate the best strategy in the company in order to
attain the long term objectives in the company. In UK, there is a principle based approach in the
organisation. While in other countries, these are mainly based on rules-based approach and
others countries followed hybrid. A principles based approach have the undermentioned benefits
or disadvantages.
Benefits:
 directors of the company report on the real incidences of their organisation. Such report
must be more understandable than one based on certain detailed requirements.
 A code can be varied easily than legal requirements. It means that Code can be upgraded
to reply the changing environments and changing expectations of owners and other
stakeholders((Koonce, 2015).

 Principles based approach stimulates the directors to adhere the sprite of the code ,while
in rule based approach emphasis on complying rules. As per the rule based approach the
directors might adhere the letter of the rules, rather than their spirit.
Disadvantages:
 a principles based approach is focused on only general meaning and waste statements.
 It might be tough for the directors to overlook whether they have followed the specific
need of the Code.
Corporate governance is an important thing in any organisation as the limited firms are mainly
responsible to its shareholders. But they also have to take care of other stakeholders. Mainly the
companies which are listed on recognised stock exchanges are the centre of complying corporate
governance code this is because such types of company are having lot of shareholders and
stakeholders as well whose investment is basically depends on the company's top level
authorities and their investment are being compromised or improved. Although the shareholders
who are having substantially large stake in the company then, they have to take part in the
company's investment decision process (Triyuwono, 2015). The cadbury committee of London
stock exchange launched their Combined Code of Corporate Governance this was principle
based approach. While other countries followed rule based approach and such countries wants to
shows to the entire planet that their organisations follow least standards of practices.
b). Certain ways to enhace and improve UK systems:
In UK corporate governance code was emerged after the fall of maxwell communication plc and
pollypeck international plc. Then the UK government felt that there was a need to remove all
such difficulties by way of implementing strong requirement of corporate governance for the
better transparency in the organisation. Before implementation of corporate governance code, it
was found that most senior managers and the professional accountant and the other main player
did wrong thing on their part and due to such effect, small shareholders investments got down.
As there were no strong Act to punish all such people. Many of the countries uses a principle
based approach. It covers constructing an entire set of best practices to which company should

follow (Brusca and et. Al 2016). If the organisation does not comply any of the principles of the
company then professional accountants will disclose such non compliance in the their audit
reports and also make impression on such audit report that why it was not followed. With the
help of such audit report company's shareholders and other interested persons would get to
know about such incidence. All countries are mainly focused to the audit report in the
organisation. By way of such audit report, it emphasis on the the independence working on
professinal accountants part. And UK government need to focus mainly on this point as it can
create a huge scam in the organisation which can create many obstructions in the country and
also need to provide an adequate system where organisation can render an independent
interference in the audit part. CG Code must have to implement in the organisation for the
transparency in the organisation for enlarging their operation. If any organisation does not
comply CG Code then such company may lead to face severe penalties and prosecution. As the
chief financial officer have the key important position in any company. They manages the
financial issues of the company and also assure that all the financial resources of the
organisation are being used in effective way. CFO's also highlights the fundamental value of the
role. UK government wants to improve their accounting systems by adopting certain rule based
approaches as most of the accountants favour the prospect of implementing rule based
approaches, because in the absence of rules they can face the legal actions if their financial
statements were having misleading informations if such rules will be followed then the chances
of legal actions will be reduced. By using a series of rules may increase the accuracy and avoid
the ambiguity which can generate the appropriate decisions by the management.
CFO duties charged with and leading and guiding financial strategies and operations. CFO in
any organisation not only followed professional slandered but also other Acts which are
applicable to organisation. Being the finance head, CFO need to lead and guide finance functions
in the organisation and make the company viable by way of strategy. This is possible when CEO
would be professional qualified. This means that the professional accountants are the persons
who have done their courses from any certified independent body. In UK, Association of
Chartered Certified Accountants(ACCA) is a independent accounting body which produces
qualified professional accountants. Who further take the company on the top by way of inventing
strategies and advance practical application. These are the person who are most qualified in the

field of accounting and auditing and able to manage all the applicable corporate governance.
Code (Salvioni,2015).
TASK.2
They are the non active participant in an organisation. They are also helpful in decision
making as the active directors of a firm. They have same legal responsibilities like active
participants. They are helpful as in recovering out their company from all the risk and helps them
to manage their situation which are not even in their favour. They are also work as the leader of
an organisation so, that they can show right path.
They also helps in setting strategies for organisation. And helps in ensuring that their
financial and human resources are at their place or not. They monitor these activities so that they
can meet their objectives as early as possible in an effective manner. And take a review of their
management performance(Carey, 2015). They also establish the companies policies and rules
according to standard. Ensuring that their members obligations will be met properly and
understood all the policies.
Strategy: They are helpful in maintaining strategy on correct proposals which are mainly helpful
for organisation. They have a right to challenge any kind of acceptance on proposal taken by
active directors. So, that their presence will be always be effective for conserving organisation as
a whole.
Performance: They are helpful in scrutinising management performance for completing
management goals and targets. And their objectives also. They are helpful in monitoring
management performance.
So, a charted accountant can work as a non executive director for this they have to learn all of
their rights and responsibilities towards organisation. They are helpful in contributing to the
board by giving effective ideas for an organisation. In which they can also helpful in making
strategy, risk management and reporting. To be more effective they have to be more competent
and be ethical for all the activities (Cernusca, 2015).
Non executive director which are working as charted accountant have to follow ICAEW
code of ethic in which they have to maintain confidentiality towards an organisation. Not only
this they have to be professional and objective for any time to their firm. The high standard
professionalism plays vital role in maintaining accountancy profession and also leads to
ensuring trust in reporting and practises of an organisation.

They role is wide ranging and challenging. They have to maintain their focus on board
not on daily basis activities of an business. So, that they can provide independent and objective
decisions for their business for better growth. With the help of their decision and suggestions a
business can survive for long period by solving issues. They also have some special knowledge
and experience so that they can suggest effective ways to their company. As by giving wise
suggestion they maintain a high standard in the eyes of active board directors as they have some
personal qualities for working (Brouard and et. al.2016).
He can be more effective as non executive director by auditing financial report for their
organisation. So, if they have any kind of circumstances related to this concern he can help them
out from that. Also, they have proper knowledge about all the accounting standard so, it is quiet
beneficial to accept apply those in business. By auditing financial reports they are more
im0portant for taking all the decisions towards their shareholders. Also, they can help them in
introducing their firm in public sector. So, as that they can earn higher profit. In financial reports
they can easily maintain and saves the cost of hiring accountant for their firm. Also, they have
proper knowledge about all the laws. So, it helps them to do ethical activities not unethical. Also,
they can maintain balance between laws and unlawful activities. So, firm cannot be get sue by
anyone.
They can provide necessary suggestion for the remuneration for their employees and
div8idend to their shareholders. For this they can maintain a proper amount for reserve. They can
helpful in controlling cost related factors by giving nice suggestion. So, that they can provide
best quality. The can helpful in solving all the tax related disputes of their firm. The firm is going
to save their tax amount for their firm. Also, they can helpful in sorting out any time of raid by
tax department. They can be helpful in generating reserve. By generating more and more reserve,
any firm can survive at the time of depression. Reserve are also helpful for them by increasing
their property. Their fixed assets are going to increase day by day so that they can produce more
quantity and give best quality service to their customers.
They can helpful in fulfil all the tax compliances on time. So, they can not be bear any
kind of tax penalty. They can also helpful in sustainable management by their fir. So that
professional accountants can make correct decisions while they are having a post of non-
executive directors (Joshi and et. Al 2016). They can manage all the process for penalty made by
any misinterpretation. So, company can maintain a minimum balance all the time. They can

ensures that their shareholders relation with board of directors. If not, they are helpful in making
a bond between them. So, company is not going to face any kind of problem in near future. The
role of non executive director as charted accountant is to ensures that their annual reports are fair
or not. Authenticity of report are very necessary for all their stakeholders. Stakeholders are the
backbone of any firm. It can establish a better relation between them. So, all the conditions can
be fulfilled with a specific time duration.
They have to maintain a confidentiality of their company. They have to maintain proper
security for that. If, reports or personal information is going to leak by any source then it totally
affects their goodwill. So, they have to maintain proper security in this concern. They can also
helpful in establishing all general guidelines, policies and rules. So, that they can be always
aware for that. And not be getting involve in any kind of illegal activity. A non executive
director plays a important role for distributing all the remuneration of all their employees are
doing properly or not. Not only to their employees but also their board of directors or managers.
(The rise of the professional accountant in British management.2017)
CONCLUSION
From the above mentioned facts and figure, it has been found that there is a strong need to follow
corporate governance code in every organisation for the transparency in the operations and for
implementation, it is important for the requirement of qualified professional accountants who
can look after the company's entire rules and regulations and to offering better transparency in
the company. A professional accountant in the designation of non executive director can detect
the non compliances of the corporate governance code and helps auditors to express such
incidence ion the audit report so that shareholders and the other interested person would aware
about the company.
REFERENCES
Books and Journals

Brouard, F and et. al., 2016. Professional Accountants’ Identity Formation: An Integrative
Framework. Journal of Business Ethics, pp.1-14.
Brusca, I and et. al., 2016. Public sector accounting and auditing in Europe: The challenge of
harmonization. Springer.
Carey, P.J., 2015. External accountants’ business advice and SME performance. Pacific
Accounting Review. 27(2). pp.166-188.
Cernusca, L. and Balaciu, D.E., 2015. The Perception of the Accounting Students on the Image
of the Accountant and the Accounting Profession. Journal of Economics and Business
Research. 21(1). pp.7-24.
Joshi, M and et. al., 2016. IFRS adoption in ASEAN countries: Perceptions of professional
accountants from Singapore, Malaysia and Indonesia. International Journal of
Managerial Finance, 12(2), pp.211-240.
Koonce, L and et. al., 2015. The effects of norms on investor reactions to derivative use.
Contemporary Accounting Research. 32(4). pp.1529-1554.
Salvioni, D.M., 2015. Market-Driven Management and Corporate Governance.
Triyuwono, I., 2015. Awakening the conscience inside: the spirituality of code of ethics for
professional accountants. Procedia-Social and Behavioral Sciences. 172, pp.254-261.
Online
The rise of the professional accountant in British management. 2017. [Online]. Available
through: <http://onlinelibrary.wiley.com/doi/10.1111/1468-0289.00062/abstract>.
[Accessed on 17th march 2017].