Corporate Governance:
Responsibilities and
Accountabilities
RELATIONSHIP BETWEEN SHAREHOLDERS/
OWNERS AND OTHER STAKEHOLDERS
Learning Objectives:
ØDescribe relationships within corporate governance.
ØIdentify relevant parties in corporate governance.
ØExplain responsibilities and accountabilities of each
identified party.
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RESPONSIBILITIES AND
ACCOUNTABILITIES
1. Shareholders
ØElect the board of directors
ØApprove major corporate initiatives
ØReview management’s incentives
2. Board of Directors
ØMajor representative of the shareholders
ØOverall operations
- establishing vision, mission, values and ethical
standards
- delegating authority to management
- appointing officers and their compensation
- recommending auditors
2. Board of directors
Ø Performance
ü Enhancing the financial position and ensuring long term
success
ü Formulating and overseeing implementation of corporate
strategies
ü Approving plan, budget and corporate policies
ü Monitoring/assessing performance
ü Overseeing business risks
ü Being up to date to current trends and developments
ü Supervising the entity's controls and accounting systems
ü Approving capital expenditures and capital management
2. Board of directors
ØCompliance
- Requiring and monitoring compliance with prevailing laws,
accounting standards, occupational health and safety and
environment standards.
-Approving financial statements and other external reports
-Ensuring effectiveness of internal control
3. Non-Executive or Independent
Directors
Ø Representative of the shareholders
Ø Specific roles include:
◦Understand the nature of the entity
◦Not an auditor nor member of the management
team
◦To attend board meetings
4. Management
Ø Operations
Ø Provide accurate reports to stakeholders
Ø Recommend strategic plans and implement approved plans
Ø Comply with relevant laws and policies applicable to the organization
Ø Develop, implement and update internal controls and policies
Ø Be up to date to trends/developments
Ø Provide information to the board
5. Audit Committee
Ø Provide oversight to auditors (external and internal)
Ø Selecting external audit firm
Ø Selection/Appointment of Internal Auditor
Ø Discussing audit findings with the auditors and the subsequent reporting to the board
6. Regulators
Ø Board of accountancy
– set accounting and auditing standards to be applied in the preparation of financial
statements
Ø Securities and exchange commission
-Ensure the accuracy, timeliness and fairness of public reporting of financial and other
information for public companies.
-reviewing financial statements
-interacting with FRSC in setting accounting standards
-specifying independence standards required for auditors
-identifying corporate frauds, investigate causes and suggest remedial actions
7. External auditors
– perform procedures to ensure financial statements are not materially
misstated.
8. Internal auditors
-perform procedures to check the organization's compliance with laws and
policies
-audit to evaluate effectiveness and efficiency of operations
-evaluate internal controls
Questions:
1.)How important is Corporate Governance?
2.)Where does the board of directors derive its
authority?
3.)
Thank you