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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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.
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