Corporate Governance, Audit Committee & director independence
A spate of shattering corporate collapses, particularly among large listed companies despite their annual reports and accounts have raised numerous issues in corporate governance. The corporate meteoric rise and fall was associated with serious deficiencies in its corporate governance, including weaknesses in internal control, financial reporting, audit quality, board’s scrutiny of management. The collapse of a number of businesses have several important lessons on the role of corporate governance in preventing corporate collapse with the subject of increasing regulatory measure. Considering this, on 30 June 2010, a revised version of corporate governance principles and recommendations with 2010 amendments was issued to provide guidance to companies & investors on best practice of corporate governance and to increase the transparency of a listed company. These principles are not strictly binding “hybrid regulation” but generally entail some form of sanction if they are not followed the approach of the ASX is an ‘if not, why not’ approach where companies are asked to (1) detail whether they comply with each best practice recommendation and (2) explain why they do not comply if this is the case.
Role of the Audit Committee
The audit committee plays a crucial role in assisting the board to accomplish its corporate governance and oversight responsibilities in relation to a company’s financial reporting; internal control systems, risk management systems and the internal and external audit functions, along with the integrity and transparency of corporate reporting. (Anon., 2011)
The role and responsibilities of the audit committee is usually to review and make recom...
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3. http://www.anao.gov.au/html/Files/BPG%20HTML/BPG_PublicSectorAuditCommittees/3_3.html
4. http://www.asx.com.au/documents/asx-compliance/cgc-principles-and-recommendations-3rd-edn.pdf
5. http://www.asx.com.au/documents/rules/Chapter04.pdf
6. ASX Corporate Governance Council 2003, ‘Principles of Good Corporate Governance and Best Practice Recommendations’, Sydney.
7. Australian Securities and Investment Commission v. Rich 2009, New South Wales Supreme Court (NSWSC) 1229.
8. Barry, P. 2002, Rich Kids, Bantom Books, Sydney.
9. Bhagat, S. and Bolton, B. 2008, ‘Corporate Governance and Firm Performance’, Journal of Corporate Finance, 14, 3:257–73.
10. Brown, L. and Caylor, M. 2009, ‘Corporate Governance and Firm Operating Performance’, Review of Quantitative Finance and Accounting, 32, 2: 129–44.
Shivdasani, A., & Zenner, M. (2004). Best practices in corporate governance: What two decades of research reveals. Journal of applied corporate finance, 16(2/3), 29-41.
The Australian Stock Exchange’s (ASX) Corporate Governance Council (2014) defines corporate governance as “A framework of rules, relationships, systems and processes within and by which authority is exercised and controlled within corporations”. One goal of corporate governance is for the board members to increase shareholder value (Tricker 2015). In order to achieve this, it is important that the board act appropriately and justly so that the best interest of investors are protected. This report will explore the effectiveness of JB Hi-Fi’s corporate governance. JB Hi-Fi is Australia’s largest home entertainment retailer, selling a variety of products at discounted prices. Over the years, they have maintained a substantial
In recent years, general public start to raise questions about the level of audit independence and the quality of audit information, especially after corporate collapses such as HIH, Enron and One.Tel where independent audit reports showed that the companies were making a profit, when in fact they were heavily in debt. This essay is to provide a brief overview of the current regulation of corporate governance in Australia in the role of auditors, and illustrate some gaps in the regulation with examples. In addition, a few recommendations are given accordingly for changes.
"Principles of Corporate Governance." 2012. The Harvard School of Law Forum. Ed. Noam Noked. Web. 2 April 2014. .
This report aims to evaluate how M&S applies the expectations and requirements of corporate governance based on their recent annual report, review of composition of...
Even though there are various views on the main components of the term corporate governance, this study will examine board structure, managerial incentives, antitakeover measures and ownership structure in more detail to see how these mechanisms are used to reduce the so-called agency conflict and how the relationship between CSR and company performance is affected (Gillan, 2006; Bhagat & Bolton,
According to ASX Corporate Governance Council (2003) the basis of good corporate governance involves solid foundation for management and oversight, promotion of responsible and ethical decision making, integrity in financial reporting, safeguarding right...
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
Corporate governance often refers to a set of rules and principles by which a company is directed. It provides a guideline for directing a company in order to fulfil its objective, brings added value to the enterprise, and is beneficial to the shareholders in long-term. (1) The rules and principals of corporate governance to an extent might be different in various companies, but some of these rules are similar in all the firms; such as accountability and responsibility towards the shareholders and commitment to conducting business in an ethical manner. (2)
The audit committee a part of the board of directors plays an important role in preventing fraud. They are directly responsible for overseeing the work of any public accounting firm, such as PwC, employed by the company. They also must preapprove all audit services provided by the auditors.
Auditing is performed by an auditor in an organization during a specified financial period that guides that organization. The main objective in requiring audit performance in an organization is to assess whether financial information provided by the organization conform to the Generally Accepted Accounting Principles (GAAP). Auditors are independent professionals in the field of Accounting and Auditing and an organization should ensure that their auditors have no other interests with the organization or its stakeholders. At the end of an auditing process an auditor is supposed to give an opinion based on the assessment done.
Corporate governance defined as the process whereby managers or directors of a company are being controlled and monitored during the decision making process, monitoring and accountability. Existence of corporate governance is to resolves problems which rises from the principal and agent relationship. This happen whereby the mangers are more interested in the private interest than maximise the value of the investors’ shares. Therefore, a question is asked whereby either internal or external audit contributes more in a company’s framework of corporate governance, and yet the answer is still unpredictable. Hence, research is carried out to investigate the contribution of each of the internal and external contribution accordingly.
The end of 2001 and the start of 2002 saw the end of a period of magnified share prices and booming businesses. All speculations of misrepresentation came to light and those firms which once seem unconquerable were now filing for bankruptcy. Within this essay, I shall discuss the corporate governance mechanisms and failures which led to the Enron scandal resulting in global corporate governance reforms being encouraged.
Internal auditing has become an important part of corporate governance. Internal auditors are tasked with protecting an entity’s assets and producing reliable accounting reports used in decision-making processes. However, the most vital role of today’s internal auditor is testing the efficiency and effectiveness of all aspects of an entity’s operations (e.g., financial and nonfinancial; In’airat, 2015). According to In’airat, the components of corporate governance must cooperate with each other to ensure the efficiency of a functioning business. These components of corporate governance include, but are not limited to, the audit committee, internal auditor, executive management, financial management, and external auditors. Of these components,
Nottingham Trent University. (2013). Lecture 1 - An Introduction to Corporate Governance. Available: https://now.ntu.ac.uk/d2l/le/content/248250/viewContent/1053845/View. Last accessed 16th Dec 2013.