The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).
The corporate governance framework consists of
(1) explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights, and rewards,
(2) procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges, and roles, and
(3) procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances.
Corporate governance is the way an organization is governed. It is the method by which companies are directed and managed. It is all about balancing individual and societal objectives, as well as, economic and social goals. Copy the link given below and paste it in new browser window to get more information on Corporate Governance:- http://www.transtutors.com/homework-help/finance/corporate-governance.aspx
The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).
The corporate governance framework consists of
(1) explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights, and rewards,
(2) procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges, and roles, and
(3) procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances.
Corporate governance is the way an organization is governed. It is the method by which companies are directed and managed. It is all about balancing individual and societal objectives, as well as, economic and social goals. Copy the link given below and paste it in new browser window to get more information on Corporate Governance:- http://www.transtutors.com/homework-help/finance/corporate-governance.aspx
The recipient of a juris doctor from the University of Illinois-John Marshall Law School in Illinois, Robert Heist is the owner and principal attorney at R. Connor & Associates, P.C. and the Chairman of the Board at Hershey Trust Company and leading the way with corporate governance as a NACD Governance Fellow. Attorney Robert Heist has practiced in the area of general corporate laws, including corporate governance, corporate compliance, and mergers and acquisitions.
Issues in Corporate Governance: Company Directors – Their Duties According to the Company Law & Corporate Governance.
1. Directors are fiduciaries, i.e. empowered to oversee the management - to ensure that it is effective, honest, and dedicated to managing the company for the benefit of its shareholders and to enhance shareholder value.
2. Rules are largely common law and equitable rather than statutory.
3. As overseers, directors should serve as advisers, monitors, counselors, protagonists, and critics but not as bulldogs
The Cadbury Committee was set-up in May 1991 by the Financial Reporting Council of the London Stock Exchange.
The committee published its report in December 1992.
Adrian Cadbury the chairman of the Cadbury committee.
The report sets out recommendations on the arrangement of company boards and accounting systems to mitigate corporate governance risks and failures.
DISCUSSING ON VARIOUS RULES AND REGULATIONS MADE BY THE DIFFERENT COMMITTEES WITH RESPECT TO CORPORATE GOVERNANCE SO AS TO MAKE THE COMPANIES IMAGE IN A BETTER WAY FOR THE FUTURE GROWTH AND TO IDENTIFIED BY THE STAKE HOLDERS.
Role of board of directors -Corporate GovernanceRehan Ehsan
This Presentation states the role of board of directors in respect of corporate governance of Pakistan. Reviewing this clear the concept of their legal role in Pakistan.
The Importance of Corporate Social Responsibility | Glenn Keys, Executive Dir...LinkedIn Talent Solutions
In this blended business leadership and local customer keynote, Glenn Keys focuses on how corporate social responsibility is a tenet woven into the fabric of Aspen Medical. He also discusses how talent is key at Aspen Medical, including how the healthcare solutions company staffed an Ebola clinic in West Africa after winning a contract from the Australian government last year. Glenn is a 2015 Australian of the Year finalist, and also founded Project Independence, which provides independent living and home ownership for people living with intellectual disabilities.
Learn more about Talent Connect Sydney: http://linkd.in/1E9S7cN
The recipient of a juris doctor from the University of Illinois-John Marshall Law School in Illinois, Robert Heist is the owner and principal attorney at R. Connor & Associates, P.C. and the Chairman of the Board at Hershey Trust Company and leading the way with corporate governance as a NACD Governance Fellow. Attorney Robert Heist has practiced in the area of general corporate laws, including corporate governance, corporate compliance, and mergers and acquisitions.
Issues in Corporate Governance: Company Directors – Their Duties According to the Company Law & Corporate Governance.
1. Directors are fiduciaries, i.e. empowered to oversee the management - to ensure that it is effective, honest, and dedicated to managing the company for the benefit of its shareholders and to enhance shareholder value.
2. Rules are largely common law and equitable rather than statutory.
3. As overseers, directors should serve as advisers, monitors, counselors, protagonists, and critics but not as bulldogs
The Cadbury Committee was set-up in May 1991 by the Financial Reporting Council of the London Stock Exchange.
The committee published its report in December 1992.
Adrian Cadbury the chairman of the Cadbury committee.
The report sets out recommendations on the arrangement of company boards and accounting systems to mitigate corporate governance risks and failures.
DISCUSSING ON VARIOUS RULES AND REGULATIONS MADE BY THE DIFFERENT COMMITTEES WITH RESPECT TO CORPORATE GOVERNANCE SO AS TO MAKE THE COMPANIES IMAGE IN A BETTER WAY FOR THE FUTURE GROWTH AND TO IDENTIFIED BY THE STAKE HOLDERS.
Role of board of directors -Corporate GovernanceRehan Ehsan
This Presentation states the role of board of directors in respect of corporate governance of Pakistan. Reviewing this clear the concept of their legal role in Pakistan.
The Importance of Corporate Social Responsibility | Glenn Keys, Executive Dir...LinkedIn Talent Solutions
In this blended business leadership and local customer keynote, Glenn Keys focuses on how corporate social responsibility is a tenet woven into the fabric of Aspen Medical. He also discusses how talent is key at Aspen Medical, including how the healthcare solutions company staffed an Ebola clinic in West Africa after winning a contract from the Australian government last year. Glenn is a 2015 Australian of the Year finalist, and also founded Project Independence, which provides independent living and home ownership for people living with intellectual disabilities.
Learn more about Talent Connect Sydney: http://linkd.in/1E9S7cN
Audit is the process and Assurance is the product. Auditors go through the process of testing client’s financial reports (audit) in order to give the client the confidence that their report is what it seems to be (assurance).
The above is based on a business concept often referred to as “agency theory”.
The secondary agent (auditor) delivers assurance to the principal (shareholder) that the report (financial statements) provided by the primary agent (director) is what it appears to be (shows a true and fair view).
External audit is the name given to the formal audit process of auditing financial statements prepared by directors in order to give an opinion on the truth and fairness of those financial statements to shareholders. External audit is by far the most common form of audit but its objective is the same as the objective of any other audit service. The objective of external audit is assurance. The purpose of external audit is the delivery of confidence in financial statements to the shareholders.
Fundamentals of Corporate Finance, 2e ROBERT PARRINODustiBuckner14
Fundamentals of Corporate
Finance, 2/e
ROBERT PARRINO, PH.D.
DAVID S. KIDWELL, PH.D.
THOMAS W. BATES, PH.D.
Chapter 1: The Financial Manager and
the Firm
Learning Objectives
1. IDENTIFY THE KEY FINANCIAL DECISIONS
FACING THE FINANCIAL MANAGER OF ANY
BUSINESS FIRM.
2. IDENTIFY THE BASIC FORMS OF BUSINESS
ORGANIZATION IN THE UNITED STATES AND
THEIR RESPECTIVE STRENGTHS AND
WEAKNESSES.
Learning Objectives
3. DESCRIBE THE TYPICAL ORGANIZATION OF
THE FINANCIAL FUNCTION IN A LARGE
CORPORATION.
4. EXPLAIN WHY MAXIMIZING THE CURRENT
VALUE OF THE FIRM’S STOCK IS THE
APPROPRIATE GOAL FOR MANAGEMENT.
5. DISCUSS HOW AGENCY CONFLICTS AFFECT
THE GOAL OF MAXIMIZING SHAREHOLDER
VALUE.
Learning Objectives
6. EXPLAIN WHY ETHICS IS AN APPROPRIATE
TOPIC IN THE STUDY OF CORPORATE
FINANCE.
The Role of the Financial Manager
o THREE KEY FINANCIAL DECISIONS
• Capital Budgeting: decide which long-term
assets to acquire
• Financing: decide how to pay for short-term and
long-term assets
• Working Capital: decide how to manage short-
term resources and obligations
The Role of the Financial Manager
o THREE KEY FINANCIAL DECISIONS
• Capital Budgeting
Choose the long-term assets that will yield the greatest
net benefits for the firm.
The Role of the Financial Manager
o THREE KEY FINANCIAL DECISIONS
• Financing
Finance assets with the optimal combination of short-
term debt, long-term debt, and equity.
The Role of the Financial Manager
o THREE KEY FINANCIAL DECISIONS
• Working Capital Management
Adjust current assets and current liabilities as needed
to promote growth in cash flow.
Cash Flows Between the Firm and Its
Stakeholders and Owners
How the Financial Manager’s Decisions
Affect the Balance Sheet
The Role of the Financial Manager
o THREE KEY FINANCIAL DECISIONS
• Poor decisions about capital budgeting,
financing, or working capital may lead to
bankruptcy or business failure
Basic Forms of Business Organization
o BUSINESS STRUCTURE
• Sole Proprietorship
• Partnership
• Corporation
Basic Forms of Business Organization
o SOLE PROPRIETORSHIP
• Owned by a single person who is financially
responsible for the actions and obligations of
the business
Basic Forms of Business Organization
o SOLE PROPRIETORSHIP
• Advantages
easiest to create
easiest to control
easiest to dissolve
right to all profit
Basic Forms of Business Organization
o SOLE PROPRIETORSHIP
• Disadvantages
owner’s personal assets at risk
owner’s unlimited liability for firm obligations
equity only from owner or business profit
business income taxed as personal income
difficult to transfer ownership
Basic Forms of Business Organization
o PARTNERSHIP
• A business owned by more than one person; one
or more of them financially responsible for the
actions and obligations of the business
Basic Forms of Business Org ...
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
3. Corporate GovernanceCorporate Governance
Corporate Governance is a relationship amongCorporate Governance is a relationship among
stakeholders that is used to determine andstakeholders that is used to determine and
control the strategic direction and performance ofcontrol the strategic direction and performance of
organizationsorganizations
Concerned with identifying ways to ensure thatConcerned with identifying ways to ensure that
strategic decisions are made effectivelystrategic decisions are made effectively
Used in corporations to establish order betweenUsed in corporations to establish order between
the firm’s owners and its top-level managersthe firm’s owners and its top-level managers
4. Corporate Governance PartiesCorporate Governance Parties
Shareholders – those that own theShareholders – those that own the
companycompany
Directors – Guardians of the Company’sDirectors – Guardians of the Company’s
assets for the Shareholdersassets for the Shareholders
Managers who use the Company’s assetsManagers who use the Company’s assets
5. Four PillarsFour Pillars
of Corporate Governanceof Corporate Governance
AccountabilityAccountability
FairnessFairness
TransparencyTransparency
IndependenceIndependence
6. AccountabilityAccountability
• Ensure that management is accountable to theEnsure that management is accountable to the
BoardBoard
• Ensure that the Board is accountable toEnsure that the Board is accountable to
shareholdersshareholders
FairnessFairness
• Protect Shareholders rightsProtect Shareholders rights
• Treat all shareholders including minorities,Treat all shareholders including minorities,
equitablyequitably
• Provide effective redress for violationsProvide effective redress for violations
7. TransparencyTransparency
• Ensure timely, accurate disclosure on allEnsure timely, accurate disclosure on all
material matters, including the financialmaterial matters, including the financial
situation, performance, ownership andsituation, performance, ownership and
corporate governancecorporate governance
IndependenceIndependence
• Procedures and structures are in place so as toProcedures and structures are in place so as to
minimise, or avoid completely conflicts ofminimise, or avoid completely conflicts of
interestinterest
• Independent Directors and Advisers i.e. freeIndependent Directors and Advisers i.e. free
from the influence of othersfrom the influence of others
8. Elements of Corporate GovernanceElements of Corporate Governance
Good Board practicesGood Board practices
Control EnvironmentControl Environment
Transparent disclosureTransparent disclosure
Well-defined shareholder rightsWell-defined shareholder rights
Board commitmentBoard commitment
9. Why Corporate Governance?Why Corporate Governance?
Better access to external financeBetter access to external finance
Lower costs of capital – interest rates onLower costs of capital – interest rates on
loansloans
Improved company performance –Improved company performance –
sustainabilitysustainability
Higher firm valuation and shareHigher firm valuation and share
performanceperformance
Reduced risk of corporate crisis andReduced risk of corporate crisis and
scandalsscandals
10. Why Corporate Governance?Why Corporate Governance?
In 2002, L Klapper and I Love from the WorldIn 2002, L Klapper and I Love from the World
Bank found evidence that improving a company’sBank found evidence that improving a company’s
corporate governance has proportionately greatercorporate governance has proportionately greater
impact in countries with weak legalimpact in countries with weak legal
environments.environments.
They have suggested that companies can partiallyThey have suggested that companies can partially
compensate for ineffective laws and enforcementcompensate for ineffective laws and enforcement
by establishing good corporate governance at theby establishing good corporate governance at the
company level and providing credible investorcompany level and providing credible investor
protectionprotection
11. ‘‘Independence’ as a conceptIndependence’ as a concept
An essential component of professionalism andAn essential component of professionalism and
professional behavior.professional behavior.
Refers to the avoidance of being undulyRefers to the avoidance of being unduly
influenced by a vested interest and to being freeinfluenced by a vested interest and to being free
from any constraints that would prevent a correctfrom any constraints that would prevent a correct
course of action being taken.course of action being taken.
Ability to make the correct and uncontaminatedAbility to make the correct and uncontaminated
decision on a given issue.decision on a given issue.
12. ExampleExample
If an auditor is a longstanding friend of a client,If an auditor is a longstanding friend of a client,
the auditor may not be sufficiently independent ofthe auditor may not be sufficiently independent of
the client. Given that it is an auditor’s job to actthe client. Given that it is an auditor’s job to act
on behalf of shareholders and not the client, theon behalf of shareholders and not the client, the
friendship with the client may compromise thefriendship with the client may compromise the
auditor’s ability to effectively represent theauditor’s ability to effectively represent the
interests of the shareholders. He may beinterests of the shareholders. He may be
influenced to give the benefit of a doubt to theinfluenced to give the benefit of a doubt to the
client when he should not be doing so.client when he should not be doing so.
13. IndependenceIndependence
In corporate governance, independence isIn corporate governance, independence is
therefore important in a number of contexts. It istherefore important in a number of contexts. It is
vital thatvital that external auditors are independent ofexternal auditors are independent of
their clientstheir clients, that, that internal auditors areinternal auditors are
independent of the colleagues they are auditingindependent of the colleagues they are auditing,,
and thatand that non-executive directors have a degree ofnon-executive directors have a degree of
independence from their executive colleagues onindependence from their executive colleagues on
a board.a board.
14. External Auditors to beExternal Auditors to be
independentindependent
Why?Why?
• Act on behalf of the owners of the business, normallyAct on behalf of the owners of the business, normally
the shareholder.the shareholder.
• Report on the financial statements prepared byReport on the financial statements prepared by
management for the benefit of shareholders.management for the benefit of shareholders.
If External Auditors are not independent:If External Auditors are not independent:
• their ability to form an objective opinion on the financialtheir ability to form an objective opinion on the financial
statements will be impaired.statements will be impaired.
• the owners of the business will not have confidence inthe owners of the business will not have confidence in
the audit reports that the audits issue.the audit reports that the audits issue.
15. Phar-MorPhar-Mor
declared bankrupt in the year 1995.declared bankrupt in the year 1995.
Factor related to independent contributing to theFactor related to independent contributing to the
fraud:fraud:
• Familiarity threatFamiliarity threat
Phar-Mor’s fraud team was made up of several former auditors,Phar-Mor’s fraud team was made up of several former auditors,
including at least one former auditor who had worked for Coopersincluding at least one former auditor who had worked for Coopers
on the Phar-Mor auditon the Phar-Mor audit
Coopers checks only 4 stores out of 129.Coopers checks only 4 stores out of 129.
they knew in advance which stores will be checked and what thethey knew in advance which stores will be checked and what the
auditors were looking forauditors were looking for
16. Internal auditors to beInternal auditors to be
independentindependent
Internal auditing is an advisory functionInternal auditing is an advisory function
Independence and objectivity of internal auditorsIndependence and objectivity of internal auditors
must exist in both appearance and in fact;must exist in both appearance and in fact;
otherwise the credibility of the internal auditingotherwise the credibility of the internal auditing
work product is jeopardized.work product is jeopardized.
Internal auditors have to be independent fromInternal auditors have to be independent from
the activities they audit so that they can evaluatethe activities they audit so that they can evaluate
them objectively.them objectively.
17. Non-Executive DirectorsNon-Executive Directors
THE CODE OF CORPORATE GOVERNANCE FORTHE CODE OF CORPORATE GOVERNANCE FOR
MAURITIUSMAURITIUS
Independent directorIndependent director - a director who is non-executive and who:- a director who is non-executive and who:
(a) is not a representative or member of the immediate family (spouse, child,(a) is not a representative or member of the immediate family (spouse, child,
parent, grandparent or grandchild) of a shareholder who has the ability to control orparent, grandparent or grandchild) of a shareholder who has the ability to control or
significantly influence the board or management. This would include any directorsignificantly influence the board or management. This would include any director
who is appointed to the board (by virtue of a shareholders’ agreement or other suchwho is appointed to the board (by virtue of a shareholders’ agreement or other such
agreement) at the instigation of a party with a substantial direct or indirectagreement) at the instigation of a party with a substantial direct or indirect
shareholding in the company;shareholding in the company;
(b) has not been employed by the company or the group of which the company(b) has not been employed by the company or the group of which the company
currently forms part, in any executive capacity for the preceding three financialcurrently forms part, in any executive capacity for the preceding three financial
years;years;
(c) is not a professional advisor to the company or the group other than in a director(c) is not a professional advisor to the company or the group other than in a director
capacity;capacity;
(d) is not a significant supplier to, debtor or creditor of, or customer of the company(d) is not a significant supplier to, debtor or creditor of, or customer of the company
or group, or does not have a significant influence in a group related company in anyor group, or does not have a significant influence in a group related company in any
one of the above roles;one of the above roles;
(e) has no significant contractual relationship with the company or group;(e) has no significant contractual relationship with the company or group;
(f) is free from any business or other relationship which could be seen to materially(f) is free from any business or other relationship which could be seen to materially
impede the individual’s capacity to act in an independent manner;impede the individual’s capacity to act in an independent manner;
(g) in the case of banks, the Bank of Mauritius’ definition of independent applies.(g) in the case of banks, the Bank of Mauritius’ definition of independent applies.
18. Non-Executive DirectorsNon-Executive Directors
The primary purpose of a NED is to bringThe primary purpose of a NED is to bring
objective scrutiny on behalf of the shareholdersobjective scrutiny on behalf of the shareholders
Independence, when it comes to boards, allows aIndependence, when it comes to boards, allows a
director to be objective and evaluate thedirector to be objective and evaluate the
performance and well being of the companyperformance and well being of the company
without any conflict of interest or the unduewithout any conflict of interest or the undue
influence of interested parties.influence of interested parties.
Having a majority of independent directors (or atHaving a majority of independent directors (or at
least a critical mass) allows outside directors toleast a critical mass) allows outside directors to
feel they have support in raising contrary pointsfeel they have support in raising contrary points
of view.of view.
19. Non-Executive DirectorsNon-Executive Directors
A board with a majority of independent directors,A board with a majority of independent directors,
can bring expertise and objectivity whichcan bring expertise and objectivity which
• Assures owners that the company is being run legally,Assures owners that the company is being run legally,
ethically, effectively and in the best interest of itsethically, effectively and in the best interest of its
ownersowners
• And that they have “representatives” who are objectiveAnd that they have “representatives” who are objective
and have no “ax to grind”and have no “ax to grind”
• Who will look at issues with no vested interest orWho will look at issues with no vested interest or
“hidden agendas.”“hidden agendas.”
20. Non-Executive Directors inNon-Executive Directors in
Family BusinessFamily Business
For a family business, independence is even moreFor a family business, independence is even more
important. The independent director can helpimportant. The independent director can help
with issues where the family tends to lackswith issues where the family tends to lacks
objectivity and independence such as:objectivity and independence such as:
• Hiring, firing, promoting, and compensating familyHiring, firing, promoting, and compensating family
members as well as determining succession plans;members as well as determining succession plans;
• Bringing expertise and perspective to a business whichBringing expertise and perspective to a business which
is run on tradition and sentimental loyalty (“this is theis run on tradition and sentimental loyalty (“this is the
way dad did it”) rather than by current best businessway dad did it”) rather than by current best business
practices;practices;
• Acting as a neutral bridge between family owners andActing as a neutral bridge between family owners and
non-family managers.non-family managers.
21. Non-Executive DirectorsNon-Executive Directors
Some of the main arguments for havingSome of the main arguments for having
independent directors are the following:independent directors are the following:
• Selected to provide specialist skills;Selected to provide specialist skills;
• Add diversity to the board, thereby modifying theAdd diversity to the board, thereby modifying the
culture of a unitary Board;culture of a unitary Board;
• Provide independent appraisal – separation of ownershipProvide independent appraisal – separation of ownership
and control;and control;
• Corporate experience and leadership qualities;Corporate experience and leadership qualities;
• Provide expertise, explicitly to support the CEO;Provide expertise, explicitly to support the CEO;
• To provide leadership and vision; andTo provide leadership and vision; and
• Status and credibility of the governance model – toStatus and credibility of the governance model – to
represent the public face of the business.represent the public face of the business.
22. CONCLUSIONCONCLUSION
Independence is an essential quality in a numberIndependence is an essential quality in a number
of situations in corporate governance and inof situations in corporate governance and in
professional behaviour. Independence isprofessional behaviour. Independence is
sometimes enhanced and underpinned bysometimes enhanced and underpinned by
regulation and legislation, but over and aboveregulation and legislation, but over and above
that, it is expected of every professional personthat, it is expected of every professional person
and of every professional accountant.and of every professional accountant.