Corporate Governance, Reports, and Ethics Flashcards

Flashcards on Corporate Governance, Reports, and Ethics.

A system that provides the layout for managing or running a company.

Governance

Appointed by shareholders at the AGM to manage the company, ensuring good corporate governance and compliance with legislation.

Directors

Involved in the day-to-day management and internal operations of the company.

Executive Directors

Attend board meetings and bring independent judgment, offering a wider perspective and acting in the company's best interest.

Non-Executive Directors

Found guilty of serious misconduct or tempted to engage in unethical activities.

Delinquent Director

Accountable for inspecting the internal control of the company.

Internal Auditors

Accountable for expressing an unbiased opinion on the reliability of the company’s financial statements.

External Auditors

Disclosing all information about the business to stakeholders.

High Level of Transparency

Acting in the best interest of the company and all stakeholders.

Stakeholder Benefits

Gaining trust from stakeholders due to ethical management.

Good Reputation Recognition

A negative outcome of poor corporate governance that damages a company's image and investor confidence.

Bad Publicity

Occurs when executive management or the board neglects their duties and responsibilities, engaging in fraud and corruption.

Poor Corporate Governance

Explains important information that does not form part of the Income Statement or Balance Sheet.

Directors’ Report

Ensures integrity in financial controls by identifying and managing financial risks.

Audit Committee

Focuses on recommending the level and form of directors’ remuneration.

Remuneration Committee

Promotes equality in the workplace and ensures the company contributes to community development.

Ethics Committee

Identifies areas of risk and appropriate methods for managing them.

Risk Committee

Assist the Board in controlling the shareholders’ grievances against the company and redresses the complaints of the shareholders

Shareholders Grievance Committee

Informs shareholders about the auditor's findings and the reliability of the financial statements.

Purpose of Audit Report

Financial statements are reliable, faithful, and honest with no material misstatements.

Unqualified Audit Report

Financial statements are reliable except for a specific problem noted.

Qualified Audit Report

Auditor unable to obtain sufficient audit evidence to form an opinion, indicating potential unreliability.

Disclaimer Audit Report

Auditor concludes that the financial statements are not fairly presented.

Inverse Audit Report

Sets out the ethical and effective leadership expected of companies.

King Code III

Encourages companies to focus on profit, people, and the planet.

Triple Bottom Line

Dishonest dealings and any misrepresentation of the truth to take money from a person.

Fraud

Those responsible for directing the actions of others need to ensure that their own actions and those of the people that they lead are always according to the code of ethics.

Leadership

All members of an organisation need to behave with restraint and ensure that their actions are always governed by the code of ethics.

Discipline

If your actions are always ethical then there should be no problem if others are informed of your decisions and the reasons for them.

Transparency

In all situations the members of the organisation should be prepared to take responsibility for their actions - whether they are good or bad.

Accountability

All people and situations should be handled objectively and without bias.

Fairness

The resources that businesses use in the daily running of their business should be capable of being replaced.

Sustainability

The people responsible for running the business should always behave in a conscientious and trustworthy manner.

Responsible Management