Corporate Governance: Analysis of CPA Australia and its Issues

This report analyzes corporate governance issues, using the CPA Australia case as a focal point. It examines the challenges faced by the organization, including the sacking of the CEO and subsequent senate inquiry. The report delves into the application of stakeholder theory and resource dependency theory to the case, highlighting the importance of corporate governance in maintaining organizational integrity, managing relationships with stakeholders, and ensuring ethical behavior. The analysis underscores the significance of these issues for businesses and the public, emphasizing the need for transparency, accountability, and effective governance structures. The report concludes with recommendations for implementing robust corporate governance practices to foster business development and maintain public trust.

Running head: CORPORATE GOVERNANCE
Corporate governance
Name of the student:
Name of the university:
Author note:

1CORPORATE GOVERNANCE
Chosen article and its summary:
The chosen article ‘CPA Australia board dragged before senate inquiry over ongoing
scandal’ dated august third, 2017 marks that there is a prompt need of improvement of corporate
governance in all the Australian companies. The key points of this article are highlighting the
issues of the CPA board transparency in order to have proper relation with the board members
and shareholders and the other one is that in spite of the pressure on the CPA board it still
overcrowding many ways to converse along with the disaffected members. CPA or the certified
practising accountants, which is the accounting body of Australia and has over 15000 members
in 121 countries. Their motto is mainly the maintaining of integrity within the Australian
companies. This particular article highlights the importance of corporate governance in the
companies so that they can maintain the levels of governance within organisation and business as
well. This article firstly highlights the sacking of CPA’s CEO Alex Malley, due to the
controversies against him, which includes the bullying in work place, but this article also states
that the board is still under pressure even after the CEO was sacked. This article follows the
resignation of many other person of the CPA board and demonstrates that the remaining
members of the CPA board are going to face a lot of questioning before the senate of the
committee. That is why they highlighted the importance of a senate to set the improvement of the
corporate governance for all the countries. This article demonstrates that as the board is facing a
lot of questions about the corporate governance crisis of the board they have mentioned the need
of senate enquiry due to their misfortune as well as corporate governance. This article also
initiates the need of the corporation act in the century.
Relating the aspects with the theories:
Corporate sectors have become independent and powerful institutions in almost every
country. These sectors have expanded their sizes to every corners of the world and have
influenced many economies (McCahery, Sautner and Starks 2016). Due to this the impact of the
shareholders on the organisations decision-making process are largely affected. With
globalization, the pressure and ownership of the government on the organisations are decreasing
resulting to which acquiring of accountability is been necessary job. This is the sole reason that

2CORPORATE GOVERNANCE
every organisation requires the need of corporate governance to deal with the aspect of managing
organisations. Corporate governance is the rules that controls and develops the organisational
structure (Tricker and Tricker 2015). This set of rules help the organisation to stand up against
crisis and risk and determine the goal of the organisation. The rules that it sets governs the
organisational relationships with its management, shareholders and the stakeholders. It can also
be mentioned as a decision making body of the organisation which is in charge of deciding
which decision to implement within the organisation for maintaining the organisational structure
(Armstrong et al 2014). The above article specifies the importance of the corporate governance
for the organisation and in the present world there is a presence of problem in maintaining the
corporate governance in the organisation.
In the above article, the issue highlighted specifies the stakeholder theory of corporate
governance. This theory is developed by the incorporation of the corporate accountability among
the stakeholders. Stakeholder theory of corporate governance defines any group or an individual
who has the ability to affect or gets themselves affected by organisation’s objectives (Pigé 2017).
In the above article, also it is seen that the sacking of the CEO has lot of affects or impacts in the
CPA board. Hence, it is clearly implied that this theory matches the aspects of the article. This
theory suggests that the managers or the managing body has many duties and responsibilities to
fulfil and similarly it can be depicted from the article that the CPA body has responsibilities
towards the organisations and that is why they wants to initiate proper corporate governance
system within the organisation. The article also specifies the need of senate and involvement of
the other members to enable the practise of corporate governance in a proper way. The relevance
of this point with the theory is that this theory includes the involvement of the stakeholders to
participate and address to the aspects of the organisation. It is known that every organisation
aims to have a number of stakeholders for helping in managing the system and that is what is
same between the article and the theory. CPA has an initiative of expanding their networks with
the members. Stakeholder theory also focuses in determining of the decisions that will have
intrinsic value and the involvement of the stakeholders and this theory does not have the interest
of dominating others (Pigé 2017).
Stakeholder theory covers the institutions like:
1. Government

3CORPORATE GOVERNANCE
2. Investors
3. Political Groups
4. Supplier
5. Trade Associations
6. Customers
7. Communities
8. Employees
Though the above article has relevance to the stakeholder theory it also has relevance to the
resource dependency theory of corporate governance which clearly identifies the role of the
board in for helping the organisation to access the required resources. This can be said because
the article specifies that the CPA board has stated the need of corporate governance as well as
implementing the senate. Similarly, the resource dependency theory also highlights the role of
the directors in the process of resource providing to the organisation as well as the people linked
with it do (Pugliese, Minichilliand Zattoni 2014. The use and implementing of the resources
increases the organisational design and provides them the encouragement to increase their
performance level (Beekes, Brown and Zhang 2015). The CPA board wants to bring integrity
among the organisations and they also wants to initiate the senate as well. Similarly, the
definition of the resource dependency theory states that the management or the board wants to
bring many resources for the sake of the organisation. Hence, it can be said that the article is
relevant to the two theories of corporate governance, which are stakeholder theory and the
resource dependency theory.
Importance of these issues in business and for publics:
The issues that are mentioned in the articles are important for business because lack of
corporate governance will not help the business to reach the desired goal. Failure and absence of
corporate governance will result in financial crisis and the loss of business integrity as well.
Corporate governance in a business will result in instating the customers, implementing of
governing body within the organisation along with the implementation of policies for the
employees (Claessens and Yurtoglu 2013). Corporate governance provides the help in increasing
the accountability within the organisation and according to the article the CPA board knows the

4CORPORATE GOVERNANCE
role of corporate governance for the business and that is why mentioned the implementation of
the corporate governance among the organisation. Corporate governance for a business helps in
introducing resources for the organisation, increases the stakeholders’ value, and maintains their
relationship with the stakeholders to manage the transparency of their decisions (Christensen et
al 2015). The corporate governance is a way of directing and managing the administration of an
organisation. It also initiates the role and involvement of the stakeholders in the business. The
issues of not having a corporate governance system within the organisation can damage the
system in many ways. Most obviously, absence of corporate governance within the organisation
will damage the whole administration system. Absence of corporate governance system in the
organisation reduces its integration and the organisation seems to lack in culture as well.
Corporate governance provides the organisation hence without it the organisation will not be
able to have any strong prejudice for managing the crisis (ArAs 2016). Presence of corporate
governance also provides the organisation with the opportunity to involve the stakeholders in the
meeting to utilize their key points and understanding. Presence of corporate governance within
the organisation results to the identification of the stakeholders along with taking into
considerations their decisions; it also helps in identifying and addressing the needs of the
stakeholders in order to maintain a proper relationship with others (Iliev et al 2015). Presence of
corporate governance provides the organisations the recognition of the responsibilities that the
governing board has and will have to set a future for the organisation. Practise of ethical
behaviour is another important measure that the corporate governance system practises (Larcker
and Tayan 2015). Another use of having corporate governance system is that it helps in
maintaining the transparency, be it in business or with the shareholders, it effectively follows the
transparency so that there is no exaggeration of problem or issues. Corporate governance has a
determining importance among the public. Impact of the issues mentioned in the article can be
discussed by introducing the meaning of corporate governance according to the public (Bovens,
Goodin and Schillemans 2014). According to the public, the corporate governance is the concept
that is effective in both fiction and practice. The governing or controlling body involves
integrity, transparency and others in the process of business management to satisfy the needs of
the customers or the public (Dias, Rodrigues and Craig 2017). Hence keeping the issues of the
article in mind it can be said that the CPA board had taken the right initiative of introducing
integrity and corporate governance in the business organisation to help both the public and the

5CORPORATE GOVERNANCE
business. However, corporate governance can be known as an efficient governance form that
needs to be implemented in every organisation. Corporate governance of every organisation
depends on the capital it has. This is because corporate governance is dependent on many factors
like the accountability, involvement of stakeholders and their decisions (Ferrell and Fraedrich
2015). From the above it can be said that corporate governance is a very important system that is
helpful for both the organisation and the public as without this, the business will not be able
acquire their desired goal nor will the public be kept satisfied with needs. Every organisation
needs to imply corporate governance in order to avail a proper managing and administrative
board, which will help them to provide the customers the loyal services and have a better
relationship with the stakeholders and for the public, corporate governance will provide
assurance on behalf of the organisation (Strange 2016).
Conclusion:
From all the above discussion and having knowledge about the issues mentioned in the
article, it can be concluded that every organisation has a massive need of corporate governance
implementation in order to develop their business. The article mentioned the CPA’s role on
introducing the practise of corporate governance in the organisation, the board does this to
initiate the integrity among the members of the organisation so that they do not face the problem
that the CPA boards is facing after the sacking of the CEO. The CPA board is seen to be facing a
lot of problems and that is why it has decided to bring integrity among the organisation and
involve the stakeholders in an expanded way in the organisation. corporate governance is a
process that will provide the organisation with integration and involvement of the stakeholders. It
can be recommended that for initiating the system of corporate governance within the
organisation, every organisation must have positivity so that the practise can be properly
implemented. Corporate governance will help the Australian organisation in expanding their
business with the help the shareholders. The involvement of the shareholders may help the
organisations with better development and decisions that will have positive impact. The
governance body will also deal with the risk management so that the organisation can be free to
trade overseas. Corporate governance is very important for the small business, as this governing
and managing body will provide them the acquisition to better future. In the article, it can be
seen that the big businesses are not at all happy with the CPA’s decision but it is necessary for

6CORPORATE GOVERNANCE
every business to have an administrative body, which will be responsible for the decision making
process and also help in building organisational culture. Organisational culture is very important
for the entire organisational sector and corporate governance is more important than that.

7CORPORATE GOVERNANCE
References:
ArAs, G., 2016. A handbook of corporate governance and social responsibility. CRC Press.
Armstrong, C.S., Blouin, J.L., Jagolinzer, A.D. and Larcker, D.F., 2015. Corporate governance,
incentives, and tax avoidance. Journal of Accounting and Economics, 60(1), pp.1-17.
Beekes, W., Brown, P. and Zhang, Q., 2015. Corporate governance and the informativeness of
disclosures in Australia: a re‐examination. Accounting & Finance, 55(4), pp.931-963.
Bovens, M., Goodin, R.E. and Schillemans, T. eds., 2014. The Oxford handbook public
accountability. Oxford University Press.
Christensen, J., Kent, P., Routledge, J. and Stewart, J., 2015. Do corporate governance
recommendations improve the performance and accountability of small listed
companies?. Accounting & Finance, 55(1), pp.133-164.
Claessens, S. and Yurtoglu, B.B., 2013. Corporate governance in emerging markets: A
survey. Emerging markets review, 15, pp.1-33.
Dias, A., Rodrigues, L.L. and Craig, R., 2017. Corporate governance effects on social
responsibility disclosures. Australasian Accounting Business & Finance Journal, 11(2).
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson
Education.
Iliev, P., Lins, K.V., Miller, D.P. and Roth, L., 2015. Shareholder voting and corporate
governance around the world. The Review of Financial Studies, 28(8), pp.2167-2202.
Larcker, D. and Tayan, B., 2015. Corporate governance matters: A closer look at organizational
choices and their consequences. Pearson Education.
McCahery, J.A., Sautner, Z. and Starks, L.T., 2016. Behind the scenes: The corporate
governance preferences of institutional investors. The Journal of Finance, 71(6), pp.2905-2932.

8CORPORATE GOVERNANCE
Pigé, B., 2017. Stakeholder theory and corporate governance: the nature of the board
information. Management: journal of contemporary management issues, 7(1), pp.1-17.
Pugliese, A., Minichilli, A. and Zattoni, A., 2014. Integrating agency and resource dependence
theory: Firm profitability, industry regulation, and board task performance. Journal of Business
Research, 67(6), pp.1189-1200.
Strange, R., 2016. MNE theory and the importance of corporate governance.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices.
Oxford University Press, USA.
Young, S. and Thyil, V., 2014. Corporate social responsibility and corporate governance: Role of
context in international settings. Journal of Business Ethics, 122(1), pp.1-24.

9CORPORATE GOVERNANCE
Appendix: