BAP71B Group Assignment: Corporate Governance of ASX Listed Companies

This report provides an in-depth comparison of the corporate governance structures of Wesfarmers and BHP Billiton Limited, both listed on the Australian Securities Exchange (ASX). The analysis evaluates the application of ASX Corporate Governance Principles and Recommendations by examining their 2018 annual reports. The report explores the composition and effectiveness of the boards, risk management practices, stakeholder engagement, and adherence to ethical standards. It highlights how each company structures its board, ensures independence, and manages its corporate obligations. The report also assesses how each company complies with the ASX guidelines, including timely disclosure, the rights of security holders, and the integrity of corporate reports. The conclusion summarizes the strengths and weaknesses of each company's approach to corporate governance, providing recommendations for improvement and emphasizing the importance of a well-defined diversity policy, performance evaluation, and full disclosure of relevant information. This assessment is based on the principles of corporate governance, including ethical behavior, accountability, and transparency, and is supported by relevant references.

Running head: ACCOUNTING INFORMATION SYSTEM
Accounting information system
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

ACCOUNTING INFORMATION SYSTEM
Executive summary:
The report elucidates the evaluation of the structure of two entities listed on the Australian stock
exchange. For this purpose, the structure of corporate governance of Wesfarmers and BHP
Billiton limited has been compared. The application corporate governance principles and
recommendations of the ASX corporate governance council has been evaluated by analysing the
information presented in the annual report of the respective companies. From the analysis, it has
been found that most of the recommendations and principles have been adhered by the listed
entities which helps in facilitating their corporate governance framework.

ACCOUNTING INFORMATION SYSTEM
Table of Contents
Introduction:....................................................................................................................................2
Discussion:.......................................................................................................................................2
Comparing and commenting on the structure of corporate governance of Wesfarmers and BHP
Billiton limited:................................................................................................................................2
Evaluating the application of ASX corporate governance principles and recommendations:........2
Conclusion and recommendation:...................................................................................................2

ACCOUNTING INFORMATION SYSTEM
Introduction:
The report is prepared to demonstrate the evaluation of the corporate governance
structure of the companies listed on the ASX (Australian stock exchange). For the purpose of
analysis, two companies have been chosen from the stock exchange that is Wesfarmers limited
and BHP Billiton limited. Wesfarmers limited is the conglomerate of Australia having a
predominant interest in chemicals, fertilizers, industry, coal mining and safety products and is
headquartered in Perth. The company maintains robust policies of corporate governance in all the
spheres of business (Wesfarmers.com.au 2019). The board of the organization is committed to
maintaining high standard of corporate governance practices. BHP Billiton limited on other hand
is a multinational metal, mining and petroleum company of Australia and is the largest mining
company of the world (Bhp.com 2019). In this paper, the application of the corporate governance
principles and recommendations by Wesfarmers and BHP Billiton limited has also been
evaluated.
Discussion:
Comparing and commenting on the structure of corporate governance of Wesfarmers and
BHP Billiton limited:
The board of Wesfarmers is committed to maintain a high standard of corporate
governance and foster a culture of compliance with values personal, ethical behavior,
accountability, respect for others, corporate and personal integrity and transparency. It is ensured
by the organization that the composition of board include directors having an appropriate mix of

ACCOUNTING INFORMATION SYSTEM
experience, expertise, skills and diversity that would help them in making decisions. The
assessment of the independence of the board is ensured by development of international
standards of corporate governance. In addition to this, the board is also committed to fulfill its
corporate obligations and responsibilities that is in the best interest of the stakeholders and
company as a whole along with providing satisfactory return to its shareholders. It is the
responsibility of the management of organization to implement the sound risk management and
control system (Wesfarmers.com.au 2019).
Structure of corporate governance of Wesfarmers:
(Source: Wesfarmers.com.au 2019)
The judgment and views to the deliberation of the board that are free of any business and
are independent of the management or any relationship that materially influences exercising any
judgment are expected to handle by the board. The board of directors considers any changes in
the position, interest, relationship and association of the non-executive directors, which could
affect their independence. In addition to this, the criteria that is set for determining the

ACCOUNTING INFORMATION SYSTEM
materiality of any fact and the assessment of the independence of the board is done in regard to
the ASX principles (Wesfarmers.com.au 2019). In particular, the guidelines of materiality is
applied according to the Australian accounting standards.
The board of committees comprised of nomination committee, audit and risk committee,
Gresham mandate review committee and remuneration committee and the board of directors
governs this board of committee. All these committees provide assistance to the board in
discharging the duties with the responsibilities. The overall functioning of the board is facilitated
by the accountability of the company secretary to the board on all the concerned matter.
Moreover, the company secretary also manages the flow of information between the committees
and board by working closely with the chairman. Furthermore, the importance of the
shareholders is widely recognized by the Wesfarmers and with the facility to access up to date
with the high quality information by enabling shareholders to participate in the decisions
(Wesfarmers.com.au 2019).
The corporate governance underpins the way business is conducted by BHP Billiton
limited and they strive for fostering the culture that rewards and value exemplary corporate and
personal integrity, ethical standard, respect for others, and is committed to highest level of
governance. The new governance code emphasize on the importance of demonstrating how the
governance achieves the long-term sustainable success of the organization. In addition, the board
recognizes the important of building trust with key stakeholders by forging strong relationship.
The importance of corporate culture is well understood by the board, it should be well aligned
with the business strategy, and purpose of the company as it helps in including diversity and
promoting integrity (Bhp.com 2019).

ACCOUNTING INFORMATION SYSTEM
Framework of corporate governance of BHP Billiton limited:
(Source: Bhp.com 2019)
The diagram presented above depicts the structure of the corporate govern ace of BHP
Billiton limited and it demonstrate the relationship between the board and the shareholders as
well as the relationship between the chief executive officer and the board. There is a robust
process for ensuring that the delegation flows from the committees and board to the team of

ACCOUNTING INFORMATION SYSTEM
executive leadership, chief executive officer and into the organization and thereby ensuring that
the process is well aligned with the stakeholders. The charter being central to the framework of
corporate governance of the organization embodies the strategy, corporate purpose and values
(North 2018). A culture incorporating reward and values with high ethical standards and
corporate and personal integrity is fostered in the structure of corporate governance. In addition
to this, the commitment of the board to the high quality of governance is expressed through the
approach of organization to communicate and engage with the shareholders. During financial
year 2018, BHP Billiton has taken a coordinated approach to engagement by responding to a
wide range of shareholders, non-governmental organizations and their relatives. Therefore,
investor engagement has been the new added approach to enhance the corporate governance
structure. The board is accountable for the shareholders to create and deliver value using the
effective governance structure (Bhp.com 2019).
Evaluating the application of ASX corporate governance principles and recommendations:
The recommendation and principle of ASX corporate governance applies to all the listed
entities. They recommend promoting the principles such as structuring the board to add value
and to be effective, laying down solid foundation for the management, safeguarding the
corporate report integrity, instilling the culture of acting ethically, lawfully and responsibly,
managing and recognizing risk along with respecting the security holder’s rights (Asx.com.au
2013). The statement of corporate governance of entities must ensure that they provide
appropriate level of information about the practices of governances.
From the annual report of Wesfarmers, it has been found that the company complies with
the recommendations that is contained in the principles of the corporate governance set out by

ACCOUNTING INFORMATION SYSTEM
ASX. The directors of Wesfarmers have followed and supported the third edition of corporate
governance principles and recommendations of the ASX corporate governance council. In
addition to this, the guidelines, procedures and policies complies with a set of guidelines that is
consistent with the principles of integrity, honesty, respect and fairness. It is recognized by the
board that the fact fundamental to the framework of effective risk management is sound culture.
The management monitors the effectiveness of the risk management and its compliance.
Moreover, the auditors of the company is proactively engaged in managing the internal control
system along with reviewing the risk parameters. A program on the investor management is
developed to enable the engagement of stakeholders and organization on wider basis (Safari et
al. 2016). Furthermore, Wesfarmers is also committed to provide its shareholders with
satisfactory return by using exception diversified portfolio management.
The effectiveness of the risk management system of BHP is reviewed in accordance with
the recommendations and principle of the corporate governance, internal control and guidance on
risk management. The approach to diversity is defined by supporting the achievement of
diversity and requirement of standard. Main principles have been applied and complied as per
the provisions set out in the UK code. In addition to this, BHP has also effectively applied the
principles of remuneration by designing the policy to recognize and reward the delivery of
strategy that helps in promoting the shareholder interest and long-term success of business. The
compliance framework of risk is governed and designed by the ethics and compliance function.
BHP facilitate the corporate governance through stakeholder engagement as it provides a
platform to communicate with them and include in the decision making process (Lama and
Anderson 2015). All the ethical responsibilities have been fulfilled by BHP in accordance with
the ethical standards and code of conduct.

ACCOUNTING INFORMATION SYSTEM
Conclusion and recommendation:
The report has demonstrated the comparison of the corporate governance structure of
BHP Billiton and Wesfarmers limited by outlining their compliance with then recommendations
and principles of the corporate governance council of ASX. It has been found from the analysis
that both the organizations have effectively applied the principles of corporate governance.
However, Wesfarmers have applied the principle of stakeholder engagement in the recent years
foe enabling their participation in the decision making process and this is indicative of the fact
that it complies effectively with the recommendations. BHP Billiton on other hand has
effectively applied most of the recommendation and principles of the corporate governance.
In order to ensure that the listed entities is complying all the principles and
recommendations of the corporate governance, it is required by the reporting entity to have a
well-designed diversity policy and appropriate policies in place to evaluate performance along
with full disclosure of all the relevant information.

ACCOUNTING INFORMATION SYSTEM
References list:
Asx.com.au., 2013. Corporate Governance Council. [online] Available at:
https://www.asx.com.au/regulation/corporate-governance-council.htm [Accessed 31 Jul. 2019].
Asx.com.au., 2019. [online] Available at:
https://www.asx.com.au/documents/asx-compliance/final-revised-principles-complete.pdf
[Accessed 31 Jul. 2019].
Ben-Amar, W., Chang, M. and McIlkenny, P., 2017. Board gender diversity and corporate
response to sustainability initiatives: Evidence from the carbon disclosure project. Journal of
Business Ethics, 142(2), pp.369-383.
Bhp.com., 2019. [online] Available at:
https://www.bhp.com/-/media/documents/investors/annual-reports/2018/
bhpannualreport2018.pdf#page=97 [Accessed 31 Jul. 2019].
Bottomley, S., 2016. The constitutional corporation: Rethinking corporate governance.
Routledge.

ACCOUNTING INFORMATION SYSTEM
Hay, D., Stewart, J. and Botica Redmayne, N., 2017. The role of auditing in corporate
governance in Australia and New Zealand: a research synthesis. Australian Accounting
Review, 27(4), pp.457-479.
Klettner, A., 2016. Corporate Governance Codes and Gender Diversity: Management-Based
Regulation in Action. UNSWLJ, 39, p.715.
Lama, T. and Anderson, W.W., 2015. Company characteristics and compliance with ASX
corporate governance principles. Pacific Accounting Review, 27(3), pp.373-392.
Mees, B. and Smith, S.A., 2019. Corporate governance reform in Australia: a new institutional
approach. British Journal of Management, 30(1), pp.75-89.
North, G., 2018. Are Corporate Governance Code Disclosure and Engagement Principles
Effective Vehicles for Corporate Accountability: The United Kingdom as a Case Study. Deakin
L. Rev., 23, p.177.
Safari, M., Cooper, B.J. and Dellaportas, S., 2016. The influence of remuneration structures on
financial reporting quality: evidence from Australia. Australian Accounting Review, 26(1),
pp.66-75.
Shimeld, S., Williams, B. and Shimeld, J., 2017. Diversity ASX corporate governance
recommendations: a step towards change?. Sustainability Accounting, Management and Policy
Journal, 8(3), pp.335-357.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices.
Oxford University Press, USA.