Report on Corporate Governance and not-for-profit entities.
Prepared for Mr Ted Smith
Prepared by Beatrice
The purpose of this report is to gain insight and a deeper understanding of the different aspects involving corporate governance, not-for-profit and for-profit organisations and ways in which corporate governance apply to NFP organisations.
Corporate governance defined
In recent years there has been a strong emphasis placed on organisations and its corporate governance, with improvements being coordinated at a global level.
Corporate governance can be defined as the process by which a company is ‘directed or controlled managed and administered’. It affects the ways in which companies develop their objectives, how risk is monitored and assessed, and how performance optimisation of the company is achieved.
Australia has developed acceptable standards of governance that are expected to be followed by organisations, to ensure that there is an effective framework for accountability of directors to owners. In other words, to ensure goals and decisions made by management are aligned with those of the shareholders, with the aim of protecting investors.
Good governance practices are implemented with the intention of improving perception, reputation and prosperity of an entity.
Consequently, investors’ auditors and accountants are aware of a continuing need to promote good corporate governance. The scandal such as the Centro case has resulted in the need for constant reform.
Centro Case
In June 2011 the Federal Court of Australia found that the executives and directors
of the Centro group breached their duties by approving financial statements for 2006-07, indicating the company had no short-term debt, when in reality it required to repay billions of dollars debt within 12 months. Subsequently, it was claimed by the ASIC that the board failed to provide minimum standard of care expected. Furthermore, A$200 million in compensations was sought by...