To enhance high-quality corporate governance and ensure transparent business environments, several regulatory codes have established on corporate governance. They all address the composition of audit committees. UK Corporate Governance Code and the Sarbanes-Oxley Act requires the establishment an audit committee in public companies consisting of independent non-executive directors and at least one financial
The board of directors is responsible for overseeing and exercising corporate powers and certifying the company’s business affairs while managing the goals and objectives for long-term interests of the shareholders. Organizational Annual Report and SEC Filing The SEC requires publically traded companies to file annual financial reports, and these reports are open to the public. Investors are interested in these reports because it helps in determining the financial health of a company. As a means for providing guidelines, principles, and objectives for the financial markets in the United States, the Sarbanes-Oxley Act of 2002 enhances the SEC’s roles for reforming corporate accountability. This also includes establishing a private-sector regulator to oversee the auditing profession to combat accounting fraud, and enhancing financial disclosures.
What are agency problems? * Occurs when managers act in their own interests and not on behalf of owners (stockholders) What is corporate governance? Corporate governance is the set of rules that control a company’s behavior towards its directors, managers, employees, shareholders, creditors, customers, competitors, and community. d. What should be the primary objective of managers? * The primary objective should be shareholder wealth maximization.
GAAP stands for Generally Accepted Accounting Principles. The common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information. GAAP are imposed on companies so that investors have a minimum level of consistency in the financial statements they use when analyzing companies for investment purposes. GAAP cover such things as revenue recognition, balance sheet item classification and outstanding share measurements.
2) Discuss whether Enron’s officers acted within the scope of the authority. Enron’s officers did not act within the scope of their authority. The scope of authority only goes as far as the law will allow. When Enron acted dishonestly and unethically to benefit over its shareholder and members, they were no longer in the scope of their authority. 3) Describe the corporate culture at Enron.
Society as a whole is responsible to conduct business ethically. Parallel to the formula that we use for inventing the laws that a society created to promote specific behaviors and actions that are appropriate to build trust and relationship, it is similar in corporations' behavior. According to Svensson & Woods "Society does have expectations of business and of its business leaders" (Svensson & Woods, 2008, p. 306). Ethical business behavior is a combination of values and normative ethics, which drive an organization. When analyzing Anglo-American and Primark for this case study.
Thus, if an entity has a “stake” in a corporation, managers are more likely to view that stake as legitimate. The second reason for using the word “stakeholder” is that it deliberately sounds like the word “stockholder” (or “shareholder”) which is meant to create a sense that both terms are equal and to be taken seriously in the same way (Newton & Ford, 2007). Stakeholder Theory Stakeholder theory has been identified by scholars as a prime conceptual framework for reviewing Corporate Social Responsibility (CSR) (Jamali & Mirshak, 2007) and managerial responsibility impacting a corporation and societal well-being (Donaldson & Preston, 1995). A review of the literature pertinent to the relationship between CSR and stakeholder theory
It currently continues to play a very valuable role in society and until recently accounting had set the standards for ethical and moral behaviour in business (Guy et al. 2003). Many high profile corporate failures over the recent years (e.g. Enron, HIH, AIG and Satyam) have been associated with large public international accounting firms. Calls for increased transparency and concerns about ethical behaviour ever since the Enron debacle have led to increased regulation over the financial reporting process, with the profession having lost a great deal of its credibility and public trust.
Conflicts of interests have to be dealt with in an ethical manner. Simply put, the corporation has to keep the stakeholder’s needs and agendas in consideration throughout the development of their strategic plan. The question is: What are the requirements of ethical social responsibility of a business corporation? Milton Friedman and Archie Carroll offer different views of corporate responsibilities to society. Friedman has a traditional view of corporate responsibility that urges a worldwide economy that has minimal government regulations.
The board’s action depends on regulations, laws and shareholders in general meeting. The auditor's role is to supply the shareholders with an objective and external inspect on the directors’ financial statements which form the foundation of that reporting system. The objective of the audit Committee is to raise the standards of corporate governance and the level of confidence in financial auditing and reporting by indicating obviously what it sees as the respective liabilities of those involved and what it believes is expected of