While laws, rules and regulations are necessary in any society, to protect the interests of shareholders and other stakeholders, in the ultimate analysis, corporate governance is about commitment to values. It is making a distinction between personal and corporate funds in the management of a company; it is about acceptance by the management of the inalienable right of shareholders as true owners and of their role as trustees on behalf of the shareholders.
Role of Chartered Accountants
Although the role of Chartered Accountants in corporate governance is generally understood in the capacity as an auditor, according to me, Chartered Accountant can play a significant role in practicing good corporate governance, as compared to an ordinary person in his different capacities like –
(i) as shareholder or stakeholder of a company
(ii) as an employee or part of management team of the company
(iii) as a member of the board of directors or any of its sub-committees
(iv) as a promoter
(v) as a auditor – internal or external
Disclosure & Transparency
OECD Principals of corporate governance state one of the principles on disclosure and transparency . It states that ” the corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation , including the financial situation , performance, ownership , and governance of the company.
Responsibility and Accountability
Responsibility and accountability go together. Corporate managements are today accountable not to themselves (in terms of monetary measurement of performance), not to the promoters (in terms of reward on returns) and not to shareholder (in terms of dividend yields) alone. Corporate governance has shifted the focus to a broader beneficiary category known as stakeholders which also includes employees and ex-employees, vendors, business partners, customers, clients, regulators, society etc.
A sincere discharge of true accountability towards stakeholders would lead to achieve corporate wealth maximization, investors confidence, corporate image building and enhanced market-capitalisation. This can be achieved with clear and transparent management system and integral philosophy of maximizing wealth. Wider participation of stakeholder hold the key. That is were corporate democracy comes into play.