2- CORPORATE GOVERNANCE RESPONSIBILITIES AND ACCOUNTABILITIES Flashcards
Provide effective oversight through election of board members, approval of major initiatives such as buying or selling stock, annual
reports on management compensation, from the board
Shareholders
Broad Role:
The major representative of stockholders to ensure that the organization is run according to the organization’s charter and that there is proper accountability.
Specific activities include among others
1. Overall Operations
• Establishing the organization’s vision, mission, values and ethical standards.
• Delegating an appropriate level of authority to management.
Demonstrating leadership
Assuming responsibility for the business relationship with CEO including his or her
appointment, succession, performance
remuneration and dismissal.
• Overseeing aspects of the employment of the management team including management
remuneration, performance and succession
• planning.
Recommending auditors and new directors to shareholders
• Ensuring effective communication with shareholders other slakeholders.
• Crisis management.
Appointment of the CFO and corporate secretary.
Board of Directors
Performance
Ensuring the organization’s long term viablity and
enhancing the fnancial position.
• Formulating and overseeing implementation of
corporate strategy.
Approving the pian, budget and corporate policies.
Agreeing key performance indicators (KPis)
Monitoring / assessing assessment pertommance of the organization, the board itself, management and major projects.
Overseeing the risk management framework and monitoring business nsks.
• Monitoring developments in the industry and the operating environment.
Oversight of the and organization, including its
control and accountabilty systems.
• Approving and monitoring the progress of major capital expenditure, capital management and acquisitions and divestitures.
Board of Directors
Compliance / Legal Conformance
• Understanding and protecting the organization’s financial position.
• Requiring and monitoring legal and regulatory compliance including compiance with accounting
slandards, unfair trading legislations, occupational
health and safety and environmental standards.
• Approving annual financial reports, annual reports and other public documents / sensitive reports.
Ensuring an effective system of internal controls
exists and is operating as expected.
Board of Directors
The same as the broad role of the entire board of directors
Non-Executive or
Independent
Directors
Specific activities include among others:
• to understand the organization, its business, its operating environment and its financial position,
best interests,
• to apply expertise and skills in the organization’s
• to assist management to keep performance objectives at the top of its agenda,
• to understand that his/her role is not to act as
auditor, nor to act as a member of the management team,
• to respect the collectve, cabinet nature of the
board’s dedisions,
• to prepare for and attend board meetings, to seek information on a timely basis to ensure that
he/she is in a position to contibute to the
discussion when a matter comes before the board, or alert the chairman in advance to the need tor
further informason in relation to a partioular matter. n and
• to ask appropriate questions relative to ogerations.
Non-Executive or
Independent
Directors
Broad Role:
Operations and accountabilty. Manage the organization
effectively, provide accurate and tmely reports to shareholders
and other stakeholders.
Management
Specte estates include among others:
• recommend the strategic direction and translate the
strategic plan into the operatons of the business
• manage the company’s human, physical and fnancial
resources to achieve the organization’s objectives - run the business
• assume day to day responsibility for the organization’s
conformance with relevant laws and regulatons and is
complance framework
• develop, implement and manage the organization’s risk
management and internal control frameworks
• develop, implement and update polcies and procedures be alert to relevant trends in the industry and the organization’s operating envronment
• provide information to the board
• act as conduit between the board and organization
• developing financial and other reports that meet public, stakeholder and regulatory requirements.
Management
Broad Role:
Provide oversight of the internal and external audit function and the process of preparing the annual financal statemenls as well as
public reports on internal control.
Audit Committees of the Board of Directors
Specific activities include among others:
• Selecting the external audit firm
• Approving any non-audit work performed by the audit firm
• Selecting and / or approving the appointment of the Chief Audit Executive (Internal Auditor)
• Reviewing and approving the scope and budget of the internal audit function
• Discussing audit findings with internal auditor and external auditor and advising the board (and management) on specific actions that should be taken
Audit Committees of the Board of Directors
Broad Role:
Set accounting and auditing standards dictating underlying financial reporting and auditing concepts; set the expectations of audit quality and accounting quality.
Regulators
a. Board of Accountancy
Specific activities include among others:
Conducting CPA Licensure Board Examinations
Approving accounting principles
Approving auditing standards
Interpreting previously issued standards implementing quality control processes to ensure audit quality Educating members on audit and accounting requirements
Regulators
a. Board of Accountancy
Broad Role:
Ensure the accuracy, timeliness and fairness of public reporting of
financial and other information for public companies.
Regulators
b.Securities and Exchange Commission
Specific activities include among others:
Reviewing flings with the SEC
Interacting with the Financial Reporting Standards
Council in setting accounting standards
• Specifying independence standards required of auditors that report on public financial statements
• Identify corporate frauds, investigate causes, and suggest remedial actions
Regulators
b.Securities and Exchange Commission
Broad Role:
Perform audits of company financial statements to ensure that the statements are free of material misstatements including misstatements that may be due to fraud.
External Auditors
Specific activties include among others:
Audits of public company financial statements
Audits of nonpublic company financial statements
Other services such as tax or consulting
External Auditors
Specific actvities include among others:
• Reporting results and analyses to management (including operational management) and audit committees
• Evaluating internal controls
Internal Auditors
Broad Role:
Perform audits of companies for compliance with company policies and laws, audits to evaluate the efficiency of operations, and periodic evaluation and tests of controls.
Internal Auditors
