GOVERNANCE Reviewer - System of stewardship and control to guide

organizations in fulfilling their long-term

Governance- a process whereby elements in society
economic, moral, legal and social obligations
wield power, authority and influence, and enact
towards their stakeholders
policies and decisions concerning public life and
social upliftment Purpose of CG: To facilitate effective, entrepreneurial
and prudent management that can deliver long-term
- Process of decision-making and the process
success of the company
by which decisions are implemented through
the exercise of power or authority by leaders - To maximize the organization’s long-term
of the country and organizations success, creating sustainable value for its
shareholders, stakeholders, and the nation
Kinds of Governance
Objectives of Corporate Governance
1. Corporate governance
2. International governance 1. Fair and equitable treatment of shareholders-
3. National governance equity is safeguarded by a good governance
4. Local governance structure in any organization
2. Self-assessment-enables firms to assess their
Characteristics of Good Governance
behavior and actions before they are
1. Participation- freedom of association and scrutinized by regulatory agencies
expression on one hand and an organized 3. Increase shareholder’s wealth- protect the
civil society on the other hand long-term interest of the shareholders
2. Rule of law- fair legal frameworks that are 4. Transparency and full disclosure- ensuring a
enforced impartially higher degree of transparency in an
3. Accountability- cannot be enforced without organization by encouraging full disclosure of
transparency and the rule of law transactions in the company accounts
4. Transparency- decisions taken and their
Basic Principles of Corporate Governance
enforcement are done in a manner that
follows rules and regulations 1. Transparency and full disclosure
5. Responsiveness- institutions and processes 2. Corporate control
try to serve the needs all stakeholders within 3. Accountability
a reasonable timeframe
The owners want accountability on:
6. Consensus oriented- mediation of the
different interest in society to reach a broad  Financial performance
consensus on what is in the best interest of  Financial transparency
the whole community  Stewardship
7. Equity and inclusiveness- ensures that all its  Quality of internal control
members feel that they have a stake in it and  Composition of the board of directors and the
do not feel excluded from the mainstream of nature of its activities
society
8. Effectiveness and efficiency- meets the need Parties involved in Corporate Governance
of the society 1. Shareholders- provide effective oversight
Corporate governance- system of rules, practices, and through election of board members, approval
processes by which business corporations are of major initiatives such as buying or selling
directed and controlled stock, annual reports on management
compensation, from the board
- All about controlling one’s business and so is - any individual, organization or society at
relevant and indeed vital, for all large who can affect and/or be affected by the
organizations, whatever size or structure company’s strategies, policies, business
- Specifies the distribution of rights and decisions and operations, in general
responsibilities among different participants 2. Board of directors- the major representative
in the corporation of stockholders to ensure that the
 organization is run according to the The Board of Directors is required to implement the
organization’s charter and that there is code and make sure that management and employees
proper accountability comply with the internal policies set.
- The governing body elected by the
Independent director- a person who is independent
stockholders that exercises corporate powers
of management and the controlling shareholder, and
of a corporation, conducts all its business and
is free from any business or other relationship which
controls its properties
could, or could reasonably be perceived to,
3. Non-executive or independent directors- the
,materially interfere with his exercise of independent
same as the broad role of the entire board of
judgment in carrying out his responsibilities as a
directors
director
4. Management- operations and accountability;
manage the organization effectively; provide Executive director- a director who has executive
accurate and time reports to shareholders responsibility of day-to-day operations of a part or
and other stakeholders the whole of the organization
- A group of executives given the authority by
the Board of Directors to implement the Non-executive director- a director who has no
policies it has laid down in the conduct of the executive responsibility and does not perform any
business of the corporation work related to the operations of the corporation
5. Audit committees of the board of directors- Conglomerate- a group of corporations that has
provide oversight of the internal and external diversified business activities in varied industries,
audit function and the process of preparing whereby the operations of such businesses are
the annul financial statements as well as controlled and managed by a parent corporate entity
public reports on internal control
6. Regulators- they response to society’s wishes Internal control- a process designed and effected by
to ensure that organizations, in their pursuit the board of directors, senior management, and all
of returns for their owners, act responsibly levels of personnel to provide reasonable assurance
and operate in compliance with relevant laws on the achievement of objectives through efficient
 Board of Accountancy- set accounting and and effective operations; reliable, complete and
auditing standards dictating underlying timely financial and management information; and
financial reporting and auditing concepts; set compliance with applicable laws, regulations, and the
the expectations of audit quality and organization’s policies and procedures
accounting quality
Enterprise risk management- a process, effected by
 Securities and Exchange Commission- ensure
an entity’s Board of Directors, management and other
the accuracy, timeliness, and fairness of
personnel, applied in strategy setting and across the
public reporting of financial and other
enterprise that is designed to identify potential
information for public companies
events that may affect the entity, manage risks to be
7. External Auditors- perform audits of
within its risk appetite, and provide reasonable
company financial statements to ensure that
assurance regarding the achievement of entity
the statements are free of material
objective
misstatements including misstatements that
may be due to fraud Related party- shall cover the company’s subsidiaries
8. Internal Auditors- perform audits of that the company exerts direct or indirect control
companies for compliance with company over or that exerts direct or indirect control over the
policies and laws, audits to evaluate the company
efficiency of operations, and periodic
Related party transactions- a transfer of resources,
evaluation and tests of controls
services or obligations between a reporting entity
November 10, 2016- SEC approved the Code of and a related party, regardless of whether a price is
Corporate Governance for publicly-listed companies charged