Corporate Governance Accounting Economics â€Myassignmenthelp.Com

Question: Discuss about the Corporate Governance for Accounting and Economics. Answer: Introduction Corporate governance framework is one of the most important aspects for todays business particularly for the structured companies. The practice of corporate governance throughout the world has lot of emphasis to bring transparency to the business. The specific framework of corporate governance that provides a specific guideline to the business organization also influences the Australian business environment. The importance of the corporate governance has become essential as government of Australia is also monitoring the process (Tricker 2015). The government of Australia is associated with the implementation of corporate governance practice in such a way that influences the business from every perspective. In case of IT, business the importance of corporate governance is more because it is associated with the virtual products that can increase the customer dissatisfaction. The organizational structure in the IT Company will also determine the monitoring process. Ethical behaviour in the IT Company will lead to a good business practice, which will ensure the safety and security of the companys data. The objective of this report is to find out different risks and benefits of the organizational structure where most of the directors are either from same family or from relatives (Denis 2016). Even the chief financial officer of the company is associated with the company from long time as an external auditor of the company. All these factors may influence the corporate governance of the organization by manipulating the exact fact, which will increase the business risk of the company. Current company structure The current structure of the organization is associated with the several board of directors and the CEO of the organization. The review of the board structure will help the CEO of the organization to understand the several risk and benefits of the organization. The current structure of the organization includes the board members under the CEO (McCahery, Sautner and Starks 2016). The CEO is the Chairman as well as the Company Secretary who is responsible for the overall organizational performance and profitability. Apart from CEO, there are three executive and three non-executive board members. All the non-executive board members are the relatives of the CEO whereas the executive members of the company are responsible for the organizational performance of respective departments (Joseph, Ocasio and McDonnell 2014). Among the three executive board members chief financial officer was appointed 12 months back who has previously worked with the organization as the external auditor. Elements of effective corporate governance The importance of effective corporate governance is increasing every day because proper implementation of the corporate governance enhances the performance of the organization by implementing the good practice within the system (Honore, Munari and de La Potterie 2015). There are eight major elements of the corporate governance according to the Australian framework that are discussed below. Rule of Law Proper governance provides rational justifiable structures that are upheld by an unprejudiced executive body, in favour of the occupied satisfaction of stakeholders. Transparency - Transparency implies on the provision of the information should be given in effortless manner and media (Larcker and Tayan 2015). Responsiveness Responsiveness is the part of the good governance that requires a good design to serve the best possible outcomes to the stakeholders within a particular time. The time is one of the important aspects of the responsive attitude. Consensus Oriented Good governance obliges interview to figure out the assorted interests of partners with a specific end goal to attain an generous harmony of what is to the maximum improvement of the whole co-worker crowd and how this can be accomplished in a feasible and judicious way (Kleinknecht 2015). Equity and Inclusiveness The equity and inclusiveness is the open door for its partners to look after, upgrade, or by and large enhance their prosperity gives the most convincing message with respect to its purpose behind presence and worth to society. Effectiveness and Efficiency Good governance is one of the processes that enhance the effectiveness and efficiency by controlling the resources properly (Chan, Watson and Woodliff 2014). Most of the time good governance helps to implement the right resource to right function that enhances the effectiveness. Accountability Accountability is the key aspect of good governance that helps to document several policy statements. The organization should be accountable to those entities that might be affected by its activities. Participation Good governance will also ensure the participation of effective resources irrespective of gender or other criteria that do not associate with the individual skill (Klettner, Clarke and Boersma 2014). Every participating individual needs to be involved and organized that also provide the freedom of expression. Corporate governance framework for Australian companies According to the Australian framework of the corporate governance principles of 8000-2003, it is the system by which entities are directed and controlled. Therefore, Australian framework suggests strict regulation in terms of controlling the organization that offers flexibility to the innovative process and restricts the malpractice. Proper monitoring of the organizational functionalities is also important that offers effectiveness. The Australian framework also suggests the strict implementation of the law to the organization so that every step of the organization helps to enhance the outcome for the betterment of the stakeholder. To implement the proper governance it allows appointing the best persons in the position of the director to ensure the best performance to provide the benefit to the stakeholders of the organization. Particularly the Governance of the IT Company in Australia the law is stricter because the possibility of the information lick out is high (Ntim and Soobaroye n 2013). Every IT organization is highly dependent on the safety of their information on their employees, which can be maintained by the strict corporate governance. The board member of the organization should know the functions of the organization so that they can understand the problems of the employees. If any board member do not understand a particular function then it will be difficult for them to monitor the process (Young and Thyil 2014). Therefore, Australian corporate governance framework always suggests appointing the experienced person who is capable of working with the root level employees and can understand the problems in the system. Australian corporate governance framework is thereby emphasising on two basic part that are General governance and Operational Governance. General governance General governance is mostly associated with the legislation and case law, which largely influence the statutory directors of the organization. General governance is always concerned with the activity of the organization whether they are legal or illegal according to the law. The activity of each individual is also under the supervision of the general governance. If any representative takes any illegal action then organization will be responsible for that and they have to face legal challenges in the court. On the other hand, the general governance of the organization is also concerned and responsible for the organizational structure and control (Ahmed and Henry 2012). The organizational structure will determine that how every function is monitored and controlled to restrict any unwanted activities within the process. The control of the upper management is also associated with the organizational structure. Good governance will never clash two separate functions to decrease the effectiveness (Too and Weaver 2014). Operational governance Operational governance is associated with the operational activity of the organization. Every operation of the organization will generate some outcome that should be authentic by the law therefore it is also the most important part of the corporate governance. Therefore, operational governance is suggested to monitor from the top of each function. In case of IT Company, every board member should understand the basic of IT so that they can handle the information and the data in a proper manner (Subramaniam et al. 2013). Operational governance is also associated with the employee benefit because if the employees of the organization are getting proper benefit for their job then they will become loyal to the organization and dissatisfaction will reduce. Risk of changing corporate governance The company is operated by six board of directors among them three are nonexecutive director who belong from the same family of CEO. The educational qualifications of the nonexecutive directors are not as per the company standard therefore, there are risks with the control of the organization. If the organization is thinking to change the governance policy then it will hamper the current performance because most of the employees are familiar to it and they will resist the change. Therefore, proper response is the key factor with the changing corporate governance (Christensen et al. 2015). The change will happen in the organizational structure, which will bring a functional change in the organization, and employees will become less effective. Governance of listed organizations keeps on moving in a more shareholder-driven course. This is confirming by the expanding corporate impact of shareholder engagement and activism, and shareholder recommendations and votes. This pattern is connec ted to the grouping of possession in broad daylight and private annuity reserves and other institutional speculators in the course of recent years, and has picked up backing from different government legislative and administrative activities. Most as of late, it has been driven by the ascent in support stock investments activism. The changing in the governance is associated with the risk of short-term return versus long-term investment, the value of shareholders to the organization and Litigation Protectionism (Tao and Hutchinson 2013). All these factors will bring lot of changes to the organization and their unknown outcome is the biggest risk. Benefits of changing corporate governance From the earliest, corporate governance has procured undertone of policing the cheats. Significant explanation behind "confrontationist" feeling is that administrators stay unconvinced that corporate administration is an effective device for straightforward, judicious and participative administration that could be reasonable to all partners and still upgrade estimation of an undertaking and additionally compensate them proportionate with execution. Thus, a few administrators watch corporate governance since it is hard to straightforwardly protest responsibility to shareholders, who have taken a chance with their capital and obligation to different partners, whose vocation relies on judicious administration (Kim and Lu 2013). Nor would they be able to be seen to resentment the privilege of partners to get a genuine picture of business execution and style of administration. Maybe disappointment in tolerating entire heartedly the soul of corporate governance is because of trepidation of weakening of power as opposed to with any arrangement for misconduct. Understanding this internal problem of directors and resting confidence in them, the Committee, while highlighting uncalled for governance practices, selected deliberate consistence and composed a standardizing set of principles. In the event that corporate governance has expected negative undertone, it is largely because of defenselessness with respect to shareholders to manage degenerate and bumbling supervisors (Pham, Suchard and Zein 2012). Unexpectedly, focused business environment is bringing the best out of administrators as a class. Corporate governance has turned into a disputes issue in light of the fact that while engaging sheets and shareholders to manage uncouth and degenerate chiefs is a moderately simple matter, managing merciless infringement of soul of corporate administration by 'astounding supervisors, who have made extraordinary shareholder quality, is one the greatest difficulties. Good gover nance is an essential circumstance for achieving superiority, not a sufficient one (Allegrini and Greco 2013). Good governance is a source of competitive advantage and critical to economic progress. The company will get the benefit through the change governance by implementing the proper functional area to the right person. The board director should consist of only executive members so that they take responsibility of every activity and employees will become more responsible to the organization. Proper monitoring will also improve because directors are aware of the activities and no one will be able to misguide them (Khan, Muttakin and Siddiqui 2013). Considerations for a successful board For the company to develop and stay sound, board individuals must develop in their parts to wind up to a greater degree a "governing board". Organization will guarantee that your board has the essential parts, strategies and practices set up from which to build up a sound governing board. A perfect panel is one that facilitate intimately with the CEO or the President of the organization to provide not just backing or course to him or her, yet other, that likewise challenges the chief executive officer to ensure that they drives the organization as per the organization's arrangements (Tao and Hutchinson 2013). These are unsuccessful and the board ought to be the column that holds the organization awake. The panel is in charge of the achievement or disappointment of the organization. Besides, it is the spirit in addition to inner voice of the endeavor. On the other hand, that administration is not doing its occupation that is because the board is not burden its employment in the princi pal occasion. The command of the chief executive officer, guided by a dynamic board, is to force the estimation of the organization. A panel serves the business - not particular shareholders; therefore, several considerations that are important for the successful board development. The qualification of the board members should match certain criteria to become eligible (McCahery, Sautner and Starks 2016). The responsibility of the board members is one of the aspects because he is responsible to benefit the organization and the shareholders. To become a successful board member it is important to adhere to the applicable legislation such as Employment values, community Services, Tax Act, and Workers reimbursement. Leaving a directorship will not evacuate any obligation that happened while being a board member. Board members are still in charge of activities, which happened amid their position (Klettner, Clarke and Boersma 2014). Anybody thinking about a board position should look for t heir own legitimate counsel and step to "slug verification" him or herself. Recommendations Solid foundation should be laid for the management so that they can operate through a particular direction and support employees to enhance their effectiveness. The structure of the board is also important that should cover every functional area of the organization to support every activity in a legal manner. The board member should act ethically because they will incorporate the same practice to the employees and the organization will develop a unique culture. Integrity should be maintained during the corporate reporting because it will have the same effect during the organizational activity. The board structure should respect and value to the shareholder of the organization so further investment become easier and the growth will remain in a continuous pace. Conclusion The law does not support corporate governance of the organization because CEO is supporting the three non-executive members who are not eligible in their respective position to support the different functions. The report summarizes the importance of developing good governance with proper experience and qualified personnel. 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