Corporate Governance, Accounting Ethics, and Reporting Failure Report

This report critically examines the importance of corporate governance and ethical behavior within the accounting profession. It defines corporate governance and discusses its significance to corporate management, highlighting aspects like ownership structure, social responsibility, and globalization. The report addresses the role of accountants in maintaining good corporate governance practices and explains how a lack of ethical behavior from accountants and auditors can lead to reporting failures. Furthermore, it analyzes key ethical issues such as tax evasion, manipulation of financial statements, and the importance of presenting financial information accurately to enhance public interest in financial reporting. The report uses the article 'Accountants, Ethical Issues and the Corporate Governance Context' by Leung and Cooper as a foundation for its arguments and conclusions.

Running head: Accounting Theory
Accounting Theory
Name of the Student
Name of the University
Author Note

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Financial Accounting Assignment
Table of Contents
Question No 1............................................................................................................................2
Importance of the Corporate Governance to Corporate Management...................................2
Question No 3............................................................................................................................4
Reference....................................................................................................................................6

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Financial Accounting Assignment
Question No 1
Corporate governance means the framework and norms from the management of the
company show that the company accounts is been made properly and it is been showing
transparency of the account in regards of the relationship with the stakeholders of the
company (Armstrong et al., 2015). These are the set of rules and regulation which the
company made in order to carry its business in the market. It basically take into consideration
of the about the company stakeholders and other members before taking any decision in
regards of the company. This is been made so that the company can able to run their business
smoothly and effectively. The company develop an board who take all the necessary decision
of the company and while taking the decision it take in to consideration all the interest of the
stakeholder and other members so that it can able to satisfy the interest of all the members in
the company (Chan, Watson & Woodliff 2014). It is the line of communication in which
many member participate as shareholder, board of directors and management of company in
the meeting they say how the company is performing in the corporate governance and how it
should perform in the coming years of the business.
It is the method which help the company to know about the different strategies which
the company should made in order to provide better resources to the stakeholder of the
company. It show an transparency in the decision of the company so it help them to develop a
good economy and also the corporate governance take care of all the interest of the
stakeholder so it also help in safeguard of their interest in the company (Crowther & Seifi
2018). It even affect the operational risk of the company and help them in the sustainability
development in the organization.
Importance of the Corporate Governance to Corporate Management
The importance which it holds in the Corporate Management is been listed below:

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Financial Accounting Assignment
1. Ownership Structure – The owner of the company keep checking the company
board rules and regulation so it gives a pressure upon the board to keep following all
the rules and regulation in regards of the corporate governance so this let them do
more efficiency, transparency and accountable of the decision which the management
takes so it make the company more public friendly and able to get more trust of the
public in the company (Deegan 2014). The owners also force the management to take
eco-friendly decision so that it can able to save the environment which is been
affected by the company activities.
2. Social Responsibility – As the use of the corporate governance help the company to
minimize the issue related to social as well it help the company to check all the right
of the customer, employee and other section so if the company follow the corporate
governance than only it will able to protect the right of the same in the company so
the corporate governance rule help the company to follow all the social responsibility
which the company should follow (Du Plessis, Hargovan & Harris 2018).
3. Growing in the rate of Scam – As there are so many scams which have occur in the
recent years so the public have lost the faith in the public company and as a result it is
not able to invest in such company so by following the corporate governance
company are able to give real information to the stakeholder and it have also increase
the transparency of the report so these help them to get back the confidence of the
public and as a result it able to get back the amount of investment in the company
(Edmans 2014).
4. Shareholder of the company – It is been seen that the company shareholder are not
very much active in regards of the company decision making process as they only
attend the Annual general meeting so all the company decision are basically taken by
the company directors so it may happen that the company director takes decision

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Financial Accounting Assignment
which only able to satisfy their need and as a result it will overlook the shareholders
need so to stop that corporate governance should be there in the company as it will
take into consideration all the need of the members of the company so it help the
company to make proper decision as this will help the company to maintain their
name in the business and also able to keep satisfy the need of all the members of the
company (Jacoby 2018).
5. Globalisation – The company have to do the business in the global market and to do
so it should have a corporate governance in the company as without it the company
will not able to enter the market so to make the business expansion the company
requires the corporate governance in the company (Jizi et al., 2014)
6. Mergers – It is been found that the company are usually doing mergers very easily so
as the mergers take place it directly affect the rights of the stakeholder so if the
company will have corporate governance than the right will be saved as the time
merger the corporate governance will save the right of the all the stakeholders of the
company (Mason & Simmons 2014).
7. Investors – The investor who do the investment in the company consider the
corporate governance report important as it help them to do the analysis of the
financial performance of the company so if the company have corporate governance
than it will able to get more number of the investor so this help the company to get
more amount of money in the business and help them to extend the business more
(McCahery, Sautner & Starks 2016).
Question No 3
Ethical behaviour means that the company is able perform as per the business needs
will taking into consideration about the public need in the business (Samra 2016). It means
that the company have work with honesty, equality and taking all the individual right into

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Financial Accounting Assignment
consideration. It can be seen that the accountant and the auditor are lacking ethical behaviour
as a result it is directly affecting the reporting of the company. It is been explained below
how this can affect the reporting of the company.
Accountant of the company - As it is the duty of the accountant of the company to follow
all the professional ethics while carrying its duties in the organization (Tricker & Tricker
2015). As it should do all the duty by honesty to the profession so it can happen that the
accountant have done the manipulation of the account so that it can able to make some
amount of profit which is not there in the company so that it can able to show a good position
of the company in front of the stakeholder of the company so this been done by the order of
the ,management as it done some manipulation and did not able to follow the ethical
behaviour principle so as a result it able to do a wrong reporting of the financial statement of
the company which will directly affect the decision of the financial user as they will be able
to take wrong decision in regards of the financial statement of the company (Deegan 2014).
Auditor of the Company – The primary duty of the auditor is to check whether the financial
statement is showing true and fair view or not (Deegan 2014). It carry many process in the
company so that it can able to find the risk which is been associated in the financial statement
of the company so that it able to give proper judgement upon the financial statement off the
company. So if the auditor does not able to follow the ethical behaviour principle and gave a
decision in the favour of the management than this will directly affect the financial decision
of thee stakeholder of the company as they take the audited financial statement as there base
so if the auditor does not give a proper amount of decision than the user will get affected by it
(Deegan 2014).

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Financial Accounting Assignment
Reference
Armstrong, C. S., Blouin, J. L., Jagolinzer, A. D., & Larcker, D. F. (2015). Corporate
governance, incentives, and tax avoidance. Journal of Accounting and Economics, 60(1), 1-
17.
Chan, M. C., Watson, J., & Woodliff, D. (2014). Corporate governance quality and CSR
disclosures. Journal of Business Ethics, 125(1), 59-73.
Crowther, D., & Seifi, S. (Eds.). (2018). Redefining Corporate Social Responsibility. Emerald
Group Publishing.
Deegan, C. (2014). An overview of legitimacy theory as applied within the social and
environmental accounting literature. Sustainability accounting and accountability, 2, 248-
272.
Du Plessis, J. J., Hargovan, A., & Harris, J. (2018). Principles of contemporary corporate
governance. Cambridge University Press.
Edmans, A. (2014). Blockholders and corporate governance. Annu. Rev. Financ. Econ., 6(1),
23-50.
Jacoby, S. M. (2018). The embedded corporation: Corporate governance and employment
relations in Japan and the United States. Princeton University Press.
Jizi, M. I., Salama, A., Dixon, R., & Stratling, R. (2014). Corporate governance and corporate
social responsibility disclosure: Evidence from the US banking sector. Journal of Business
Ethics, 125(4), 601-615.
Mason, C., & Simmons, J. (2014). Embedding corporate social responsibility in corporate
governance: A stakeholder systems approach. Journal of Business Ethics, 119(1), 77-86.

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Financial Accounting Assignment
McCahery, J. A., Sautner, Z., & Starks, L. T. (2016). Behind the scenes: The corporate
governance preferences of institutional investors. The Journal of Finance, 71(6), 2905-2932.
Samra, E. (2016). Corporate governance in Islamic financial institutions.
Tricker, R. B., & Tricker, R. I. (2015). Corporate governance: Principles, policies, and
practices. Oxford University Press, USA.