02-ACCA-F1-讲义-基础...

更新时间:2023-05-10 11:28:29 阅读: 评论:0

02-ACCA-F1-讲义-基础...
Chapter 10. Governance and Social Responsibility in Business General concept of corporate governance (C.G.) Definition of corporate governance
Corporate governance is the system by which organisation is directed and controlled by nior officers. Though it is discusd in relation to large quoted public companies, corporate governance is directed at all bodies corporate; commercial and not for profit.
1. Separation of Ownership and Control
Board of directors vs. Shareholders
(a) Board of directors
In simple words, BOD is responsible for managing and controlling the operation of company.
Before implementation of C.G. the BOD consists of the executive directors only.
Decision made by connsus (simple majority) through the meeting of BOD.
(b) Shareholders
A company’s members or equity shareholders are the owners of company.
Decisions made by voting rights attached to each category of shares, through the general meeting (Annual General Meetings - AGM; Extraordinary General Meetings - EGM )
(c) In small private companies the directors are also shareholders most likely.
However, for the large public companies especially in modern UK and US capital market the shareholders are normally not directors, Thereby the situation of paration of ownership and control aroud.
1.1 Agency theory
The situation of ‘divorce’ of ownership and controll could lead to the issues guided by agency theory:
‘Principals’ - Shareholders
‘Agent’ - BOD
Principals would delegate right or authority to agents.
Agents should act in the best interest of principals.
1.2 Agency problem
However, if the agents have ‘moral hazard’, that will lead to notorious ‘agency problem’. E.g. the dire
ctors do not act in the best interest of shareholders instead of satisfying the own lf-interest as the result of sacrificing the shareholder interest.
1.3 Conflict of interest
(a) Independence of external auditor
According to Company Law, the rights of appointment of external auditor lie with the shareholders. However, in practice, the executive directors make the recommending list of external auditor for shareholder’s approv al.
This practice may affect the independency of external auditor.
(b) Remuneration problem
Executive directors may also pay themlves excessive remuneration.
(c) Nomination problem
Executive directors may also lect the incapable candidates sat in the board.
(d) There are also many types of conflicts of interests.
(1) Investment decision
(2) Stakeholders’ claims.
2. How to solve the agency problem
2.1 Introducing the role of external auditor
The purpo of an audit is to enhance the degree of confidence of intended urs in the financial statements. This is achieved by the expression of an opinion by the auditor on whether the financial statements are prepared, in all material respects, show true and fair view.
As the basis for the auditor’s opinion, International Standards on Auditing (ISAs) require the auditor to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error.
Finally, communicate the result to shareholder through external audit report. (E.g. Unqualified Opinion Report– good report; Qualified Opinion Report– bad report, Adver Opinion Report-worst report, and Disclaimer of Opinion Report-no opinion)
When conducting substantive tests, the internal auditor is examining figures which he has extracted directly from the company's financial records. For this sort of test, the auditor is concerned only with establishing whether or not the figure in the ledger is correct. He or she is not concerned as to how it got there.
2.2 Only dependence on external auditor is not enough to solve problem
(a) Financial focus
(b) A kind of detection control
(c) Other inherent limitations of the auditing arrangements
2.3 Introductions the role of non-executive director (majority)
Definition of NEDs
They are directors who attend to the board meetings, and committee meetings when required and do not involve in the day-to-day running of organisation.
(a) Have external experience and knowledge
(b) Provide a wider perspective
(c) Be a comfort factor for third parties such as investors, customers, suppliers
(d) Dual roles of the NED. They are full board members at the same time they are meant to provide the strong, independent element on the board.
2.4 Sub-committees
(a) Remuneration committee
Consist of only NEDs in order to determine remuneration policy and package related to executive directors.
(b) Nomination committee
Consist of majority of NEDs in order to lect suitable candidates to sit in the board and evaluate the individual director performance.
(c) Audit committee
Consist of only NEDs, one of them should posss current development knowledge of accounting and auditing.
3. Internal control system
The responsibility related to design, implementation and monitoring of the internal control system lie with BOD
3.1 Nature and purpos of internal control system
Risk
Risks are uncertain events or factors relating to any activities that would make the organisation not to achieve its objectives. Risk consists of fraud and error.
Fraud is intentional behaviors.

本文发布于:2023-05-10 11:28:29,感谢您对本站的认可!

本文链接:https://www.wtabcd.cn/fanwen/fan/90/103252.html

版权声明:本站内容均来自互联网,仅供演示用,请勿用于商业和其他非法用途。如果侵犯了您的权益请与我们联系,我们将在24小时内删除。

标签:讲义   基础
相关文章
留言与评论(共有 0 条评论)
   
验证码:
Copyright ©2019-2022 Comsenz Inc.Powered by © 专利检索| 网站地图