governance and responsibility - lecture 2

7/23/2019 Governance and Responsibility - Lecture 2

http://slidepdf.com/reader/full/governance-and-responsibility-lecture-2 1/16

BAC 4201 PROFESSIONAL ACCOUNTANT

MOHD HANIFF ZAINULDIN

Governance anRe!"on!#$#%#&'



I! (overnance re%evan& &o a%%co)"an#e!*

Large listed

company

Private company Not-fo

Pr#)ar'acco+n&a$#%#&'

S,are,o%er! anre(+%a&or!

S,are,o%er! F+n "rre(+%a&"+$%#c-

Pr#nc#"a% !&a.e,o%er! S,are,o%er! S,are,o%er! Donor!"rov#e(enera)e)$e

Ma#n )e&,o o/)on#&or#n("er/or)ance

F#nanc#a% !&a&e)en&! F#nanc#a% !&a&e)en&! F#nanc#ao&,er nonn)ea!+r

Governance$oar!&r+c&+re

E3ec+&#ve! an NED!A""o#n&)en& &,ro+(,/or)a% "roce!! #n %#ne5#&, (overnance

re6+#re)en&!

E3ec+&#ve D#rec&or!A""o#n&)en& )a' $e&,e re!+%& o/!,are,o%#n( or o&,er

recr+#&)en& "roce!!

7o%+n&e"a# an)ana(eA""o#n&

recr+#&)reco))



I! (overnance re%evan& &o a%co)"an#e!*

•

CG #! )ore #)"or&an& /or %ar(e "+$%#c co)"an#e! &,e !e"ara&#on o/ o5ner!,#" an con&ro% #! )+c, co)"are &o !)a%% "r#va&e co)"an#e!

• An' o+$& o/ #n&e(r#&' o/ )ana(e)en& n "+$%#cco)"an#e!- &,e va%+e o/ co)"an'8! !,are! 5#%% $e

• T,e !co"e o/ CG /or "r#va&e an no&/or"ro& or(

re+ce co)"are &o "+$%#c co)"an' $eca+!e o/re(+%a&or' re6+#re)en&! &o co)"%' 5#&,

• In no&/or"ro& r)! a .e' (overnance /oc+! 5#%% e)on!&ra&e &o /+n "rov#er! &,a& )one' #! $e#n#n a""ro"r#a&e )anner! #n %#ne 5#&, or(an#:a&#ono$;ec&#ve!



In&erna% !&a.e,o%er! ancor"ora&e (overnance

Stakeholder Operational role Corporate

governance role

Main

compaD#rec&or! Re!"on!#$%e /or &,e

ac&#on! o/ &,ecor"ora&#on

Con&ro% co)"an' #n$e!& #n&ere!& o/!,are,o%er!

• Pa'• Per/o

$on+• S,ar• S&a&+• Re"+• Po5e

Co)"an' !ecre&ar' En!+re co)"%#ance5#&, co)"an'%e(#!%a&#on an .ee"$oar )e)$er!#n/or)e o/ &,e#rre!"on!#$#%#&#e!

Av#!e $oar oncor"ora&e (overnance)a&&er!

S+$$oar)ana(e)en&

R+n $+!#ne!!o"era&#on!I)"%e)en& $oar"o%#c#e!

Ien&#/' an eva%+a&er#!.!- en/orcecon&ro%!- )on#&or!+cce!! < re"or&concern!

• Pa'• Per/o

$on+• =o$ !• Care• >or.• S&a&+

E)"%o'ee! Carr' o+& orer! o/)ana(e)en&

Co)"%' 5#&, #n&erna%con&ro%- re"or&

$reac,e!

•



E3&erna% !&a.e,o%er! ancor"ora&e (overnance

External party Main role nterests and clai

companyA+#&or! Ine"enen& rev#e5 o/ co)"an'8!

re"or&e nanc#a% "o!#&#on• Fee!• Re"+&a&#on• ?+a%#&' o/ re%a&#on!,• Co)"%#ance 5#&, a+

re6+#re)en&!

Re(+%a&or! I)"%e)en&#n( an )on#&or#n(re(+%a&#on!

• Co)"%#ance 5#&, re(• E9ec&#vene!! o/ re(+

Govern)en& I)"%e)en&#n( an )a#n&a#n#n( %a5!5#&, 5,#c, a%% co)"an#e! )+!&co)"%'

• Co)"%#ance 5#&, %a5• Pa')en& o/ &a3e!• Leve% o/ e)"%o')en• Leve%! o/ #)"or&e3"

S&oc. e3c,an(e I)"%e)en&#n( an )a#n&a#n#n( r+%e!an re(+%a&#on! /or co)"an#e! %#!&eon &,e e3c,an(e

• Co)"%#ance 5#&, r+%ere(+%a&#on!

• Fee!

S)a%% #nve!&or! L#)#&e "o5er 5#&, +!e o/ vo&e Ma3#)#!a&#on o/ !,are,

In!&#&+&#ona%#nve!&or!

T,ro+(, con!#ere +!e o/ &,e#rvo&e! can $enec#a%%' #n@+ence

• 7a%+e o/ !,are! an "a')en&!



A(enc' &,eor'

• Den#&#on A (ro+" o/ conce"&! e!cr#$#n( &,e n

&,e a(enc' re%a&#on!,#" er#v#n( /ro) &,e !e"ar$e&5een o5ner!,#" an con&ro%

• e' conce"&!

• !gent e)"%o'e $' principal &o carr' o+& &a!. on $e,a%/

•

!gency re%a&#on!,#" $e&5een "r#nc#"a% an a(en&• !gency costs #nc+rre $' "r#nc#"a%! #n )on#&or#n(

$e,av#or $eca+!e o/ %ac. o/ &r+!& #n &,e (oo /a#&, o/

• !cco"nta#ility $' acce"&#n( &o +ner&a.e a &a!. o$e,a%/- an a(en& $eco)e! acco+n&a$%e &o "r#nc#"a%

• $id"ciary responsi#ility A(en&! ,ave &,e +c#ar

ac& #n &,e $e!& #n&ere!&! o/ "r#nc#"a%!



A(enc' co!&!• Monitoring costs

• A! a re!+%&! o/ "r#nc#"a%! )on#&or#n( ac&#v#&#e! o/ a(en&!• Ma' $e v#e5e #n )one&ar' &er)!- re!o+rce! con!+)e

&a.en #n )on#&or#n(

• Co!&! $orne $' "r#nc#"a%! $+& )a' $e #n#rec&%' #nc+rre a(en& !"en! &#)e an re!o+rce! on cer&a#n ac&#v#&#e! E3

• Incen&#ve! !c,e)e! an re)+nera&#on "ac.a(e!

•

Co!&! o/ "re"ar#n( ann+a% re"or&!• Co!&! o/ e!&a$%#!,#n( )ana(e)en& a+#& "roce+re!

• Co!&! o/ )ee&#n( 5#&, nanc#a% ana%'!&! an "r#)ar' !,are,o%er

• %esid"al loss

• Re%a&e! &o #rec&or! /+rn#!,#n( &,e)!e%ve! e3"en!#ve car"%ane!

•

T,e!e co!&! are a$ove an $e'on &,e re)+nera&#on "ac



A(enc' "ro$%e) re!o%+&#on)ea!+re!

• Mee&#n( 5#&, #rec&or! an .e' #n!&#&+&#ona%

!,are,o%er!• 7o&#n( r#(,&! a& &,e AGM #n !+""or& o/ or a(a

re!o%+&#on

• Pro"o!#n( re!o%+&#on! /or vo&e $' !,are,o%eAGM

• Acce"&#n( &a.eover!• D#ve!&)en& o/ !,are! #! &,e +%&#)a&e &,rea&



Nee /or cor"ora&e (overn

• T,e )ar.e& )ec,an#!)! an !,are,o%er ac

are no& eno+(, &o )on#&or &,e co)"an'• T,ere are a n+)$er o/ coe o/ cor"ora&e

(overnance #!!+e $' (overn)en&! an re(A%&,o+(, &,e co)"%#ance #! vo%+n&ar'- &,e /ea)a(e &o re"+&a&#on ar#!#n( /ro) (overnan

5ea.ne!!e! an &,e &,rea& o/ e%#!&#n( rene#c+%& &o no& co)"%'



Tran!ac&#on co!& &,eor'

• Den#&#on I& e!cr#$e! (overnance /ra)e5or.! a

$a!e on &,e ne& e9ec&! o/ #n&erna% an e3&erna%&ran!ac&#on! ra&,er &,an con&rac&+a% re%a&#on!,#"&,e r)

• I& #! $a!e on &,e "r#nc#"%e &,a& co!&! 5#%% ar#!e 5(e& !o)eone e%!e &o o !o)e&,#n( /or 'o+

• Tran!ac&#on co!&! &,a& occ+r 5,en ea%#n( 5#&, e

"ar&#e!• Searc, an #n/or)a&#on co!&!

• Bar(a#n#n( an ec#!#on co!&!

• Po%#c#n( an en/orce)en& co!&!

• Mana(e)en& 5#%% &r' &o #n&erna%#:e &ran!ac&#on! a

a! "o!!#$%e



Tran!ac&#on co!& &,eor'

• Tran!ac&#on co!&! can $e /+r&,er #)"ac&e $'

• Bo+ne ra&#ona%#&' %#)#&e ca"ac#&' &o +ner!&a$+!#ne!! !#&+a&#on! 5,#c, %#)#&! &,e /ac&or! 5e c&,e ec#!#on

• O""or&+n#!) ac&#on! &a.en #n an #n#v#+a%8! $e#n&ere!&! 5,#c, crea&e +ncer&a#n&' #n ea%#n(! an

)#!&r+!& $e&5een "ar&#e!• T,e !#(n#cance an #)"ac& o/ &,e!e cr#&er#a

a%%o5 &,e co)"an' &o ec#e 5,e&,er &o e3"#n&erna%%' or ea% 5#&, e3&erna% "ar&#e!



Tran!ac&#on co!& &,eor' v!a(enc' &,eor'

• Bo&, &,eor#e! ea% 5#&, !a)e #!!+e! an "roA(enc' &,eor' /oc+!e! on #n#v#+a% a(en& a&ran!ac&#on co!& &,eor' /oc+!e! on #n#v#+a&ran!ac&#on

• A(enc' &,eor' %oo.! a& &,e &enenc' o/ a(en#n &,e#r o5n $e!& #n&ere!&! $+& &ran!ac&#on c

&,eor' con!#er! &,a& a(en&! )a' arran(e&ran!ac&#on! #n an o""or&+n#!&#c 5a'

• T,e CG "ro$%e) o/ &ran!ac&#on co!& &,eor' #!"ro&ec&#on o/ o5ner!,#" r#(,&! o/ !,are,o%e&,e e9ec&#ve an ec#en& acco)"%#!,)en& o

&ran!ac&#on! $' r)



S&a.e,o%er &,eor'

• T,e $a!#! co)"an#e! are !o %ar(e an &,e#r on !oc#e&' are !o "erva!#ve &,a& &,e' !,o+%#!c,ar(e acco+n&a$#%#&' &o )an' )ore !ec&o!oc#e&' &,an !o%e%' &,e#r !,are,o%er!

• S&a.e,o%er &,eor' #! &,e nece!!ar' o+&co)a(enc' &,eor' (#ven &,a& &,ere #! $+!#ne!! c

con!#er#n( &,e nee! o/ !&a.e,o%er!• A(enc' &,eor' #! a narro5 /or) o/ !&a.e,o%

&,eor'



In@+ence! on cor"ora&e(overnance

• A(enc' &,eor' %ea! &o !,are,o%er! "re!!+r!,are,o%er! ac&#v#!)

• S&a.e,o%er &,eor' %ea! &o !&a.e,o%er %o$$an concern! over !oc#a% re!"on!#$#%#&'

• Co)"an' %a5! "rov#e! /ra)e5or. 5#&,#n 5o"era&#on! occ+r

• A+#& an a+#&or! #)"ac& on (overnance

• Coe o/ cor"ora&e (overnance



Rea!on! /or eve%o"#n( a c

• I& !,o+% re+ce #n!&ance! o/ /ra+ an corr+#)"rov#n( !,are,o%er! "erce"&#on an )ar.conence

• T,ere are !&a&#!&#ca% ev#ence! &,a& "oor(overnance %ea! &o "oor "er/or)ance

• G%o$a% #nve!&or! 5ere 5#%%#n( &o "a' a !#(n#

"re)#+)! /or co)"an#e! &,a& are 5e%% (over• T,e ec#!#on /ac&or /or #n!&#&+&#ona% #nve!&or!

• I/ #& oe! no& a va%+e- 5#%% #ncrea!e r#!.! ane3"o!e! ,+(e "o&en&#a% %o!!e! &o !,are,o%e



Pro$%e)! 5#&, coe

• T,e "roce!! #! reac&#onar' ra&,er &,an "roacre!"on#n( &o a )a;or /a#%+re! #n (overnance&,an !e&&#n( &,e a(ena

• T,e #)"ac& var#e! e"en#n( o/ &,e na&+re oco)"an' an &,e (%o$a% v#e5"o#n&

• I& a! re &a"e an $+rea+crac' #n &,e +!e

co))#&&ee! an #!c%o!+re re6+#re)en&!• A,erence &o (overnance re6+#re)en&! ,ar)

co)"e&#&#vene!! an oe! no& a va%+e

• I& canno& !&o" /ra+

governance and responsibility - lecture 2

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