DR.
ARVIND B TELANG
SR COLLEGE
Name:- Supriya Arvind Tarde.
Class :- M COM II , SEM III
Teacher name :- Shruti mam
Subject Name:- Advanced Auditing
CORPORATE GOVERNANCE
• Corporate governance refers to practices by which organizations are controlled, directed
and giverned. The fundamental concern of Corporate governance is to ensure the
condition whereby organizations directors and managers act in the intrest of
organisation and its stakeholders and to ensure the means by which managers are held
accountable to capital providers for the use of assets.
• A company that has Good Corporate Governance has a much higher level of confidence
amongst the shareholders associated with that company actuve and independent
directors contribute towards a positive outlook of the company in the financial market
positively influencing share prices. Corporate governance is one of the important
criteria for foreign institution investors to decide on which company to invest in.
INTRODUCTION OF CORPORATE
GOVERNANCE
• What is corporate governance? It’s is a process set up for the firms based on certain systems
and principals by which a company is governed. The guidelines provided ensure that the
company is directed and controlled in a way so as to achieve the gosls and objectives to add
value to the company and also benefit the stakeholders in the long-term.
• There is a common saying which goes like this “a company Without corporate governance
is like an aircrafts Without Control of safety mechanism”. While the captain of an aircraft is
responsible for a successful and safe flight, he is aided by numerous guidelines, safety
standards, and policies he must follow and corporate governance is an exact thing.what
rules the companies is corporate governance.
DEFINITION OF CORPORATE GOVERNANCE
• Corporate Governance is a specialised mechanism for regulating risk in corporate
activities, thereby averting corporate disasters, scandals and consequential damage or
losses to investors, staff, society and the wider world.
• Corporate Governance has also become an instrument for understanding, questioning and
refining some fundamental economic systems and philosophies, notably capitalism, free-
market/market forces economics, business ethics, corporate leadership, the
Psychological Contract, political economics and globalisation itself.
PRINCIPAL OF CORPORATE GOVERNANCE
Corporate governance is a system of rules, policies and practices that direct
how company’s board of directors manages and oversees the operations of
a company. Corporate governance includes following principles:
1. Recognition of shareholders
2. Information security
3. Transparency
4. Accountability
5. Responsibility
6. Praticipation
7. Ethical Decision-making
BENEFITS OF CORPORATE GOVERNANCE
1. Corporate governance assist the quality of decision making, develop a healthy Corporate strategy and increase
effective execution capabilities which help to improve Corporate performance.
2. Effective governance process result in enhancements of enterprise valuation hoing forward and robust processes and
controls.
3. Proper governance process develops a firewall against possible risks and bring about an effective enterprise risk
mitigation system.
4. Encourage investors to make investments also Encourage promotion of investors interest through effective disclosure
which enhance investors trust
5. Proper disclosure and sound internal control processes bring about investors confidence also results in further
investment from banks and financial institutions.
AUDIT COMMITTEE
As per section 177 of companies Act 2013 and rules 6 &
7 of companies (meeting of board and its powers)
tules,2014.
The audit committee shall Consist of a minimum of
three directors with independent directors forming a
majority
Provided that majority of members of Auditor
committee including its chairperson shall be person with
ability to read and understand the financial statement
FUNCTION
• Every Audit committee shall act in accordance with the terms of reference specified in writing by the Board
which shall, inter alia include
• The recommendation for appointment, remuneration and terms appointment of Auditor of the company
• Review and monitor the auditors independence and performance and effectiveness of audit process
• Examination of the financial statement and the auditors report thereon
• Approval or any subsequent modification of transaction of the company with related parties
• Scrutiny of inter-corporate loans and investments
• Valuation of undertaking or assets of the company wherever it is necessary
CONSTITUTION
• According to section 177 (1) of a companies act 2013 the board of directors of every
listed company and such other class or classes of companies as may be prescribed shall
constitute an Audit committee.The Central Government has now prescribed the class of
companies which shall require to constitute Audit committee.
• As per rule 6 ( commof the Board ) of the committee (meeting of board and its powers)
Rules 2014 the board of directors of every listed companies shall constitute an audit
committee and a nomination and remuneration committee of the board.
THANK YOU
