Po a Lod Ce Unit : Corporate Governance Regulatory Framework in ndia @® [Link] // Shiksha Dham #>O@@ eeecod a cc as es)Auditing The Institute of Chartered Accountants of India has defined auditing as "a ystematid and [independent examination | of data, statements, records, operations, and performance (financial or otherwise) for a [Stated purpose). In EMEC ae Beceem tec Re Moe eM ee See Dee Rm CIC aot eae et een eae Raed Pees CMe oes ua meme hater te) era) vat Primary Objective J i reac ee tn enon ee cael ener isatad financial statements. The main objective of auditing is to state whether the eer eee ee ae Rete Rr Cmdr cue financial state of affairs of the company at the end of financial year and, in case of Pein eee ake asd Cok uu ei ig Cerne(S) Corporate Governance a ( Companies Fires, LL 8, Trotiduals AA yn eh a =] jettlechlbetlks pride ale peel gel giite bd al ea Tce Coline!IL SCOPE eet aN OF CORPORATE GOVERNANCE } ® 1. Accountability : Accountability means a situation in which any person is Oe and needs to give a satisfactory reason\for anything wrong in work. 2. Fairness: CSSD >(COtreat all shareholders equally including |minorities|i.e. who has small part of company's ownership. > Provides effective [redressal| for any mane’ ie Customer care) roei) Melilla >» CG makes ensure timely, accurate disclosure on ‘all(material matters) of the company including the financial situation, performance, ownership. ndependence: CG makes procedures, rules, and structures in place to minimize or Elle B i ae mom aie ie id 5-Compliance with rules > CG ensures compliance with all the|laws)and code of spiri > Corporate governance is necessary to meet the requirement of SEBI for listed companies Ceteraae ) | THEORIES OF CORPORATE GOVERNANCE | : Eon)The theory is based on the concept of separation of ownership and control. Shareholders as owners of the company decide the objectives of the company and appoint the managers as their agents to pursue their objectives. Thus, the managers (agents) run the company on behalf of the shareholders (principals). The agency problem arises because the managers will not solely act to maximize the shareholders' wealth, they may protect their own interests or seek the goal of maximizing companies' growth instead of earnings. eas Le Tal Criticism of the Agency theory DR Clee RT ered Not relevent for developing countries. BION et Le eee Re LU ioe Coen(OSSWAceiemtes Stewardship theory of corporate governance is an alternative to the agency theory. It argues that managers are trustworthy and not prone to misappropriate the funds of the investors. Managers if left on their own, will indeed act as responsible stewards of 1M aly elt ne) The theory is also referred to as|'trusteeship theory'| The theory argues that managers are not merely agents of the shareholders, they are good stewards of the company and work diligently to attain high levels of corporate /profit\and shareholders’ returns. Criticism of the Stewardship Theory Delete [aR are Rl oe td ale Res ORCC cutee lec tae Col ty not consider the interests and rights of other-stakeholders> Corenn)This theory adopts a broader proach and lays emphasis on interests of the society while TO tre MU oM ol ht a hi Gall erm According to the stakeholders' theory, the objective of corporate or a MED ool od A CM oi) ao MLL aod Coole) only. The objectives of corporate governance are changed from "maximize the interests of shareholders" to "maximize the value of the company" Stokehald oy This theory is icized for/the following reasons: The theory is criticized the ground aoe (ered ater) am at} corporate governance is/the accountability. (lf the directors attempt to serve too many(principals, they will fail to satisfy those who have a genuine claim on the o1 Trehatoya) CoenThis theory developed by Pfeffer and ene ane See knoe Sn eae Se TO Brrr eae a Resource dependency theory describe about the ose We Cae) Car Ce UCR Uae acu aR agen Bnd eae eae Oe ee Cee OMe care eee Si RUC ne Rk eC enue cis RUE Ce os at OCS a RECUR Uy CCE aera unui ear Dace oe (ii) Financial Resources: It includes funds obtained through investments, loans, grants, or revenues from sales. It is important for expansion of business Bate eeee Urol ard CMM lg oe machinery, technology systems, raw materials, and anything else that's Perl used re Pies try goods rg Seen RA eC eek ae ey the (Connections and relationships) with other businesses, government, media, and influential figures in the industry, which can provide support, Er rela or Pears Peau EON CeCe ee ON and other technical capabilities that enable a company to improve PS CuOAn Cun hier CC uae Be ato ers un ata ea UC of internal governance structures and decision-making processes. Seen)BeR Une ecco ck ar aera organizations, managers hold [significant_ power] and [influence} overshadowing shareholders and even the board of eae such cases, management can dominate decision-making processes, which can lead to decisions that benefit managers but are not necessarily in the best interest of shareholders or other Bie ete [ Te Thic theory may not apply univoreally and can be coon ae overly POSS eer On eC een UE ae ce excessive power and may overlook situations where management acts in the TCE eR UR SL eeu 4 Pree_X Brings[Honesty| &(Transparency| 2. Access Foreign Capital a feel evades o a Neild Re ra em ale Teto acolo ale LAL Accountability _5 Improves Shareholder Communication _6) em Rak corporate governance by conducting a (period risk assessment) See ee he eee ace ee Cem ri ace pee rue sea teamed nice Pane Ce ye Ree emu Re ame et eo COM URC ee ee 1) show their(trust towards them. renMe OPO UC ROMO daC Ce Chk oeLE Lee mt Te OR Ce in all the processes, with the aim of enhancing government ability to address the needs of the gene! PL ay Lilt basic purpose of e-governance is to sim) Daehn Pl OCS oe Wea Do Coe: ETO EL ESCM MCR mC EUIMPORTANCE/S OF E GOVERNANCE od Puck aa ae mel suits 2. It gives Varied departments information to the public and helps in decision making. RMS eee en rac rire cre ci ete CaCl Reece ad eRe eu c em lilo es ATs Lace isielelr CRE RE Ole Cs 6. Public can get their work smartly done and save'their time. 7. It cuts(middlemen and bribery/jif any from the picture. fl COUTTS(ADVANTAGES OF E-GOVERNANCE: } te) hnology makes communication swifter. Internet, smartphones have ESCO Rae RO ROR Ce Roce A lot the Government expenditure goes towards the cost of buy stationery for official purposes. However, replacing them with smartphones and the PC ee eM ROT Bran: eM nnirCrenn re Ct ce tants erent ene ete mre ee Cee ment tetas smrnt| ll a Transparency directly links to accountability. Once the functions SR cae Reo nen ee eee rae Peo eee Con{DISADVANTAGES OF E-GOVERNANCE } e 1,Loss of Interpersonal Communication: The main disadvantage of e- POR CA mom ITT one meen Te tConMe crestor) communication is an aspect of communication (that many people consider vital 2,High Setup Cost and Technical Difficulties: Technology has its Cee e ie INNS TS oe teed ec ona Tee eT Pte Tee Nee Ocoee Cc 3 Alliteracy: A large number of people in India are illiterate|and do not know tare e Re nent none tm OM ent CR CR Conair a Cg TSR oe eee Un Seer 4/Cybercrime/Leakage of Personal Information: There is always the Be Om ENMU Me) eto Mc Octo n aC crac) cond ee5, Fechnical: There are technical problems in implementing e-governance nant Computer Hardware and Software. ens aur DA ehe ee aah problem. There are concerns about|hacking defence information )and other Pomerat sina Mooi ent ce orem ROE data PPO eC AO smc Ome RCE Cn neem oct cog (destruction of data }s one of the main concerns. 8,kack of Training and Qualified Personnel: Lack of digital skills KOR eet mien acti Come Tonner tl training the personnel to acquire appropriate technical and functional skills is SRS MoT tom arene Oh eat cccecitTy CANNES)E-GOVERNANCE } Pree a ot eee eect eer enn the periphery of the government, is termed as G2G interaction. This can be bot!{horizontal] ic., among various government entities and{vertical] i.e. between national, state and local government entities and within different levels of the entity. 2-G2C (Government to Citizen): The interaction interaction, Here Citizens have access to wide variety of public services and freedom tgShare th on government policies. Eel N CCTs ST eee Ceca cost ea eae quality of communication, 4G2E (Government to Employees): The government of any country is the biggest employer and 0 it also deals with employees on a regular basis, as otheremployers do. ICT helps in providing, perquisites and add-on benefits OF INTERACTIONS IN l {TYPE t eee ee eereg ear ere re in this case, the e-governance helps the business class to interact SOO ee esse S fe)| ZGreen Governance Environmental problems caused by human behaviour have become increasingly serious in recent decades, thereby driving global green governance issue to become an important research agenda. Green governance is a systematic approach to help organisations Sor eee ent NMR Reet Rc Ce Orne TEA eo MCE Ta CO ters ton Td PystiennC nna cs PERO ORONO Sera {energy and other natural resources. ECVE)Objectives of Green Governance e@ To ensure sustainable development To conserve non-renewable naturel resources BCoMetT col Get EMS eCLCod) To permit the companies for online(compliance ETSBenefits of Green Governance: d e Reduce waste and pollution. e Competitive Advantages and(mprove Brand image CMa latelacalail dy tL ILL eee ¢ Easy to[maintain)Rules and Regulation) (aupiraveAnavsin)Coie e orca alata eyes a eae Renew C ieee ea Bre CLC es Governance At least one separate director Bence ure ines Cat} general knowledge in environmental Peon eee ied ede El Committees bocinee re clemiennens Committee or|Risk Mgt) Committee. Cerca n err eee ic) Pe Rey Er Pee rile feels e Le) Peer SECLICs \Includes. Reporting and Disclosures as | ace Econ cnn eer ts Corporate Social Responsibility(CSR) ports ‘AUDIT BY CA AJAY SIR