INTRODUCTION- Independent director play an important role in the in organization. Here is definition of the independent director “An independent director is a director of board of directors who does not have a material or pecuniary relationship with company or related person, expect sitting fees”, this definition gives the clear idea that who is an independent director. Independent director also play an important role in corporate governance, an independent director are said to be trustee of the corporate governance. A working and included board comprising of experts and sincere independent director who plays a crucial role in developing the trust between the enterprise and shareholders and act as a backer of corporate governance. Indian companies give more importance on obtaining funds from another countries investors and tapping on the worldwide monetary market, and the authentication of independent director will become very important. Ultimately capable and skilled independent director plays a crucial role in development of the companies. Indian corporate, which had employed such directors in their boards, has gained hugely from their leadership and inputs. In this essay I have talked about the roles and responsibility of the independent director, why independent director presence is important in boards, examples of companies who required the independent directors, failure of independent director and then it’s followed by conclusion. ROLE OF AN INDEPENDENT DIRECTOR- Independent director has to perform many roles in the organization. An independent director supervise the financial reporting process of the company and release the financial reports of the organization, they review the periodical financial records, revie... ... middle of paper ... ...r importance in corporate governance. The roles and responsibility of the independent directors shows how they perform their work in the organization and independent directors presence in board of director are very important in the organization and by giving the example of absence of independent director in kingfisher airline tells that they don’t have adequate number of independent directors because their financial crisis and example HCL Infosys shows need of the independent director because they have appoint new IDs in the organization. Despite having such function there is believe that independent directors have been failed. Therefore I have come to the conclusion that independent director plays a crucial role and if they gets good chances to show their skills then their will a phase when every companies will need independent director in their boards.
The audit committee must certify that the company’s auditors are independent. The audit committee must approve all professional services provided to the company by its independent auditors and ensure that auditors do not provide to the company any of the specifically prohibited services identified by SOX, such as bookkeeping services. The audit committee must receive and analyze key items of information from the independent auditors. These items of information include auditors’ analysis of critical accounting policies adopted by the
Consult PCAOB Ethics and Independence Rule 3520. What is the auditor independence, and what is its significance to the audit profession? What is the difference between independence in appearance and independence in fact?
The corporation’s business is carried out by its management, under the direction of the Board of Directors. The Board, and each committee of the Board, has complete access to management. Also, the Board and committee member’s has access to independent advisors as each considers necessary or appropriate. Mallor, Barnes, Bowers, & Langvardt (2010) state that the Board of Directors also, issues shares, Adopts articles of merger or sha...
The independence of mind or independence in fact means Betty has to have a state of mind that allow her to form an opinion without bias due to influence that compromises professional judgment. By having an independence of mind allowing an individual to perform his or her audit work with integrity, as well as, maintaining her objectivity and professional skepticism behavior. However, in this case, she did not have an independence of mind since she trusted Toby and she enjoyed working with him since he is also a CPA because it is easy for her to work with him compare to her other clients who do not have the accounting background. As a result, because of long-term relationship and trust that Betty has with Toby, it influenced her decision about the audit opinion. Additionally, to be independent in appearance Betty and her audit team must show unbiased professional judgment when she reviews her clients ' financial statements. Betty had Problems with independence in appearance because in the case study shown me that she has become too close to her client, Toby. Therefore, all auditors have to maintain their professional skepticism as well as maintain independence in their mental attitude and also independence in appearance to provide an unbiased opinion on
After all, directors are more familiar with company and its day to day transaction more than anyone else since that is their responsibility. Even though the directors have followed the procedures and received advice from qualified advisors from management and auditors that does not mean the directors do not have to assess the information received under s189 which was established in Sheahan v Verco & Hodge [2001] SASC 91. The directors stated that there were too many information which compromised of 450 pages. However, as Justin Middleton said the directors could minimise the information so they will only receive the vital information and that is intelligible to them. After all, it is important for directors to comprehend what sort of situation they are encountering and to certify that the financial statement is accurate. Otherwise, if the directors do not go through financial statement and relies solely on the auditors and management then being a director would have less requirements which can lead to an unqualified person becoming a director and causes the company to wind up. Not to mention, directors are meant to be more experienced and knowledgeable accumulated through their lifetime since that is what differentiate them from
Corporate gorverance as a system are directed and controlld by companies. Initially, their board of directors should take responsible for the gorverance of companies, which include setting strategic aims of companies , guarantee an effective leadership, supervising the proformance of business management and reporting on it to shareholders. The board's action should comply with the law, regulations and shareholders. In addition, the shareholders also play an important role in gorverance and they have right to decide who can be employed as the companies' directors and auditors to provide good governance structure for them. Therefore, corporate goverance can be regarded as what the board of a company does and how it sets the values of the company.
In Heinz, the main focus is to uphold strong corporate governance system. In this way, they ensured that count for the company, shareholders and community, both socially and twilight competent to act. Heinz, director of the center of the board members are under 12. All the directors of the independent directors, including Heinz, 11, and chose to its shareholders.
As a consequence of the separate legal entity and limited liability doctrines within the UK’s unitary based system, company law had to develop responses to the ‘agency costs’ that arose. The central response is directors’ duties; these are owed by the directors to the company and operate as a counterbalance to the vast scope of powers given to the board. The benefit of the unitary board system is reflected in the efficiency gains it brings, however the disadvantage is clear, the directors may act to further their own interests to the detriment of the company. It is evident within executive remuneration that directors are placed in a stark conflict of interest position in that they may disproportionately reward themselves. The counterbalance to this concern is S175 Companies Act 2006 (CA 2006) this acts to prevent certain conflicts arising and punishes directors who find themselves in this position. Furthermore, there are specific provisions within the CA 2006 that empower third parties such as shareholders to influence directors’ remuneration.
The directors need to be able to view the financial performance of the group in order to make relevant and informed decisions. In order to obtain this information the correct procedures, as mentioned, must be followed to ensure that assets are not overstated and liabilities
Since the adoption of the 1996 Constitution, South African law has been reviewed comprehensively. One of the scrutinised areas is corporate governance. Because company management is a vital task to the company and the shareholders, directors play a very important role in the execution of this task. It should be noted that a company cannot act in its own. It acts through its representatives which consist of the board of directors as entrusted with the management of the company’s business. Cumulatively they are subjected to fiduciary duties. These duties bind directors, individually and collectively, with the obligation to act in the best interests of the company and to do so in good faith. Within these director’s duties to act in good faith lies the duty of director’s not to unlawfully
K, . N., ER, w., DAVID, K., PAUL, M., WALTER, O., & EVANS, A. (2012). Corporate governance theories and their application to boards of directors: A critical literature review . Prime Journal of Business Administration and Management (BAM), 2(12)(2251-1261), 782-787.
Secondly, companies have a duty to “seek balanced representation of each sex on their boards” . While the legal committee of the ANSA considers this to be a general principle without any legal force, for others, the provision is imperative. Every time a company appoints a new director, it has the obligation to show that it fulfilled its obligation (“Obligation de moyen”) to seek a balanced representation of its board.
According to Carol Padgett (2012, 1), “companies are important part of our daily lives…in today’s economy, we are bound together through a myriad of relationships with companies”. The board of directors remain the highest echelon of management in any company. It is the “group of executive and non-executive directors which forms corporate strategy and is responsible for monitoring performance on the behalf of shareholders” (Padgett, 2012:1). Boards are clearly critical to the operation of companies and they are endowed with substantial power in the statute (Companies Act, 2014). The board is responsible for directing and steering the company. The board accomplishes this by business planning and risk management through proper corporate governance.
The Role of the Directors in a Company is of a paramount importance in the discourse of the proper running of the company. Directors are the spirit of the company .The company is merely a legal entity, governed by its directors. These directors have certain duties and responsibilities. These are mainly governed by the Corporation Act, 2001. Section 198A (1) of The Corporations Act, 2001(The Corporations Act 2001 s 198A (1)), clearly states that, ‘The business of a company is to be managed by or under the direction of the directors’.
.... It is the directors’ responsibility to identify potential risks that the company is likely to face or risks already faced by the company. This is basically to prevent such risk to arise again that may negatively affect the company’s operation. By identifying the risks, it allows the company to prepare step by step solutions to prevent or overcome such risk beforehand. It also allows company to take control of risks before risks affect the company seriously.