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Finance and accounting: Governance, Accountability and Audit
Finance & Accounting
Pages 12 (3012 words)
Governance, Accountability and Audit Table of Contents Question 1 3 Question 2 7 Question 3 12 Question 4 16 References 20 Question 1 Corporate governance is considered as the set of mechanisms which assists in protecting the interests of shareholders. Corporate governance also facilitates in enhancing the economic perspective with regard to an organisation.
The characteristic of corporate governance in the United Kingdom is based on ‘comply or explain’ approach i.e. either organisations’ need to comply with the existing code or need to explain new code to government authorities. The compliance with the board related recommendations of the UK Code of Corporate Governance is expected to minimise the agency problems and to enhance the performance of organisations. Agency relationship is an agreement under which the principal appoints the agent in order to perform certain services. As a part of agency relationship, principal renders certain decision-making power to the agent. In agency relationship, problem arises regarding how to encourage the agent to perform in the best benefits of the principal (Biswas & Bhuiyan, 2008). Since industrial revolution, large organisations have continued to bring considerable changes in financing, ownership and administration forms. New technologies are continuously modernised, demanding huge investment in the industry. In order to supply money for this huge investment, people from diverse segments of society are looming in different industries with their savings. As a consequence, many sole proprietorship businesses are turning into joint stock businesses. ...
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