Discuss about the Corporate Governance, Ethics and CSR.
It is widely known that management plays a significant role in shaping of an organizations future, as well as the optimum utilization of resources including the efficacy of management. Since, organizations are managed by policies, systems and guidelines. They tend to act as dynamic instruments, hence the need of them being reviewed from time to time so as to gauge the efficacy in the organization. Sometimes, it could be taken that the reviews undertaken review the said policy being sound and effectively put in place. But, as time progresses there tend to emerge wrong practices and there tends to be reasons for the problems occurring hence the need of this steps being taken forthwith. Reviews done by (Fort, 2004) show that problems have occurred in spite the existence of policies which means that policies at times need amending of modification for the best interest of the firm. Therefore, for there to be efficacy in organizations system there is the need of there being a concrete ethical codes and governance. As we will see in the case provided, there we will see Andrea an accountant who is told to act unethically by reducing profits in the financial books so that they could be indicated in 2018 and 2019 financial books.
According to Ha?Yry, (2007), he perceives that an organization is a group of more than two people ten of thousand that work tirelessly to ensure that they have achieved a common goal or set of goals. Therefore, this shows that organizations are made up of integrated parts that work on accomplishing shared goals. Hence, through ethics business stakeholders are able to make the company resilient, as governance maintains high ethical standards in business activities which includes the collaboration of power, management of risk and enablement of business continuity and growth (Granville & Dine, 2013). Drawing from our case company Cocoa, as of 2015 the firm seems to have an effective ethical code and governance which is expected to extend to 2016 and 2017. With prediction by economist that there will be economic slowdown and subsequent fall in business as of 2018 and 2019 Max the general managers tend to indulge Andrea into unethical conducts. Globally, CEOs are expected to act with utmost integrity and transparency, but in our case the acts Max is requesting Andrea to undertake tends to be a violation of characteristics of good ethical governance. In this case, we will analyze some of the characters that Max is trying to affect in terms of corporate governance.
First, there is the issue of accountability. Accountability can be both an end in itself - addressing prominence based qualities - and a strategies towards the change of more capable and convincing affiliations. Managers and open employees are given enormous power through the laws and headings they realize, resources they control and the affiliations they regulate. Duty is a key way to deal with assurance that this power is used appropriately and as a piece of comprehension with individuals by and large interest (Berleur & Goujon, 2007). Duty requires clarity about who is dependable to whom for what and that administration representatives, affiliations and officials are viewed as in charge of their decisions and execution. Hence, this shows that Andrea undertaking thoughts brought about by Max affects the accountability process in ethical governance. Therefore, it is recommended that Andrea shouldn’t consider Max thoughts as it would affect accountability to the shareholders developed reports.
Transparency tends to be an imperative piece of good organization, and clear fundamental authority is essential for the private portion to settle on composed decisions and endeavors (Holzinger et al, 2007). Obligation and the lead of law require openness and incredible information so bigger measures of association, outside investigators and the general populace can affirm execution and consistence to law (Widdows, 2013). Hence, if Andrea decides to use another method apart from the straight line depreciation method to manipulate data. He tends to affect the transparency of the shareholders financial data. Thus, this tend to affect the decisions by shareholders during the 2018 and 2019 adverse economic conditions as stated by economist. Taking of such actions by Andrea tends to impede efficiency in an organizations decision making process.
Reliability and predictability
The rule of law suggests the institutional approach of setting, decoding and executing laws and various orientation (Said et al, 2014). It surmises that choices taken by government must be set up in law and that private firms and people are shielded from subjective choices. Consistency requires association that is free from distortionary motivations - through corruption, nepotism, support or catch by thin private intrigue packs; ensures property and individual rights; and completes some kind of institutionalized investment funds (Sunder Rajan, 2012). This gives a level of immovable quality and consistency that is key for firms and people to take fantastic choices. Drawing analysis from our case firm, Cocoa, undertaking of Max idea by Andrea tends to affect the degree of stability in a firm. Andrea actions based on Max thoughts of manipulating data tends to affect the reliability and predictability of Cocoa. Therefore, this shows that Andrea shouldn’t consider the unethical codes that Max is persuading him to undertake.
Technical and Managerial Competence
Specific and managerial wellness of business employees is a prominent component of good organization. There may be to lesser degree a basic than it used to be, as access to preparing has upgraded, yet quick changes require consistent change of aptitudes (Idowu et al, 2015). Based on our case study, the plans by the manager Max tend to affect the technical and managerial competence of the firm. When technical and managerial competence becomes compromised, it means that Cocoa will be working under the prestige of downfall. Hence, this means that Andrea should critically think of the consequences of the actions that he would be undertaking.
The above discussion tends to effectively discuss on the characteristics of good ethics governance. Therefore, this characteristics tend to sufficiently analyze our case study.
Based on the above discussion there is need of Max understanding that he is the firm’s ethics officer. Ethics Officer is simply portraying him or her as the boss whose standard obligation lies in finishing a legitimate code of definitive ethics. More certainly it can be pointed out that the Ethics Officer is some person who guarantees the affiliation is doing its best to satisfy accomplices (each one of those inside and remotely related to the firm, for instance, specialists, shareholders, clients, suppliers, the area amass likewise, the overall population in general). As can be seen, this is 'an extensive measure of work' for a singular person. Considering this by Max could refrain Andrea from undertaking the initial thoughts that he had advocated since it would be a violation of his duty as the ethics officer (he is the manager).
The focus here is on providing Andrea the best solution to the situation that he is facing using the AASB116 reports. Therefore, they include:
It is mandatory according to the AASB116 standards that there should be effective application of an organizations accounting for property, plants as well as the equipment’s expect when there is another standards that permits a different accounting treatment. Hence, this means that through the consideration of this standard he is required by law to effectively use the correct accounting method set by the firm which is straight line method of depreciation to calculate the firm’s profits. As a result, Andrea should not undertake the ideas Max develops because ethically and in consideration of the AASB116 standards developing the correct tends to prevent other uncertain events.
The AASB116 recommends that there should be independence when it comes to development of financial records. Therefore, Andrea should understand that as an accountant being independent involves not following others people’s opinions or ideas in regards to reporting of financial data. For years we have witnessed many firms fall as a result financial data being influenced by the CEO. A good example is Enron Company in the US which fell as a result of no independency among the auditing and accounting teams. Their results were influenced by the CEO to show that the firm is profitable and attract more investors whereas that wasn’t the case (Lo?Tter, 2011). Later, the people responsible in the accounting scam were held liable of their acts. Therefore, taking the case of Cocoa, Andrea should understand that the decisions made by him in regards to drafting the final financial information for the shareholders should be transparent in regards to how the business is operating. Hence, if he considers undertaking the unethical codes suggested by Max, if there develops any form of uncertainty and the business collapses. He will be held responsible because of the manipulation of accounting data since he failed to act independently as an accountant.
The AASB116 law requires that there be transparency in the accounting process. To expound on this when there is transparency, it means that there is good corporate governance and ethics. Drawing from our case analysis, if Andrea decides to take Max thoughts he is somehow promoting unethical acts which shouldn’t be accepted in firms. Therefore, if Andrea decides to stick with the organizational plan where there is accountable financial data he will be promoting some good ethical codes such as; truthfulness where employees to the firm will focus on being honest to the organizational dealings, integrity where there isn’t any form of fraud in the organizations systems and effective decision making based on the financial information that has been provided (Simpson & Taylor, 2013). Thus, this ensures that the firm shareholders are aware of the firms progress and in rise of any uncertainties they can effectively now on how to tackle the situation based on information provided by Andrea.
In conclusion, the act of being ethical and having an effective governance tends to set high standards in a firm as well as clear and honest business report. Therefore, for all these to happen the management needs to be honest no matter what the financial information show. Hence, this tends promote a culture where employee hold a strong standards of themselves, reduction of potential scandals and even holding individuals responsible of their actions (Salmela & Mayer, 2009). But, in our case study the manager Max seems to have ill motives in regards to manipulation of financial data to protect his good reputation. Therefore, this paper effectively revolves around the issue of ethics and governance in regards to how effective Andrea should make his decisions as the head accountant for the firm. Hence, this paper provides an effective analysis of ethics and corporate governance in terms of ethics and governance about Cocoa Company. There is also the recommendations on the steps Andrea should take in regards to AASB116 standards. In general, the paper effectively analyzes the issue in Cocoa firm based on ethics and corporate governance.
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