Corporate governance is the mechanism with the processes and relations which controls and governs an organization or corporation. There are some structures that can govern the roles of different personnel inside of the firm. These roles might include the rights and responsibilities of the participants. The participants might include a board of directors, managers, shareholders, creditors, regulators, auditors, and any of the other stakeholders. There are some procedures and rules that are used in the decision making when it comes to the corporate affairs.
The governance is all of the processes when the objectives of the corporation are set. Therefore, they are pursued under the context of the social market environment and the regulations. The mechanisms will include the monitoring of all of the actions and decisions that are made by the people who are involved in the process. When there is a renewed interest in the governance especially the matters of accountability due to the increased level of the failure in a larger corporation. The failure happens because of mismanagement and the corporate scandals that are related to the public and political interests of the regulations to the corporate governance (Monks, 2004).
Accountants are going to play a very crucial role in the corporate governance since the accountant will act like a link to all of the management. The main role of the accountant is to manage accounts so they measure, disclosure, and provide some assurance about the financial reports of the company, which is going to help everyone who is involved in the company. Their role is very different when compared to the chief financial officer. The main role of the chief financial officer is to manage the financial risks of the corporation, financial planning, and record keeping. I will need to keep track of the company’s expenditures and the analysis of the income.
In order to have a good corporate governance, the management and the employees should have a good connection with each other. The accountant will be the link between the executive and non-executive directors. The stakeholders, policyholders, employees, community, and supplies will need a good accountability of the funds and the way that the project will be done. Therefore, there should be a proper balance between them and other components of the project (Monks, 2004). Making sure that the accounting tools is governing properly is very important. The manager of the company will need to check things often to keep things on the right track while the corporation is being governed. The accountant will have a bigger role in the well-being of the company and its improvement or downfall.
The information will be passed from the accountant to the other leaders to give the overall standing of the company. This means that the information will be research very well since the company will depend on it. The higher management will need to make decisions about the corporation based on the information that comes from the accountants (Clubb, 2005). Accountants play a practical role so the accurate and honest accounting of the corporation will help the company make important decisions about the investment, operations, and growth. The corporate decision makers have new plans so they can take corrective measures immediately. The information from the accountant will help the manager to expand on the plans that will bring good results to the corporation and it will be successful.
The information that comes from the accountant will need to be consider of the public. The firm will be accountable to the community and the public at large. The good accounting will help in being able to meet the obligation like paying their taxes. It is well-known that the public can make decisions on whether or not they should invest in the corporation or not. The accounting reports will make this decision for them. The investors are going to rely on the proper accounting reports because they want to make sure that the corporation is not involved in any illegal practices.
The corporation is also going to be accountable to the shareholders. Therefore, it will be the duty of the accountant to give a more detailed financial information in the report. This will allow the shareholders to make more informed and right decisions. For example, the shareholder might feel that the money is being wasted so they might want to withdraw their investments and demand a new policy through their voting. A good accountant will bring a lot more profits into the corporation (Clubb, 2005).
The accounting process is always to going to aid in the corporation’s long term plans, but the process will also help with the short term plans. The information will need to be well planned so that it allows the company leaders to manage money and make important financial decisions. They should have a clear vision on the amount of cash that is available to be used by the managers and how long the money can be used. The decisions that concern the equipment, suppliers, and the labor depend on the information from the accountant. The corporation will be able to manage the lines of credit and allow them to take stock of the short term financial resources based on the information from the accountant. This helps to make sure that there is no unnecessary debt borrowed by the corporation (Clubb, 2005).
It is very important that the accountant knows his role very well so that he does not fail the organization. Some of these roles include uniting all of the functions of the corporation. They need to realize that all of the eyes of the company are going to be looking at them. One single mistake by the accountant might fail the organization and when the accountant does everything correctly, it will raise the profits from the corporation.
References:
Clubb, C. (2005). The Blackwell encyclopedia of management. Blackwell Publishing: Malden, Massachusetts.
Monks, R., & Minow, N. (2004). Corporate governance (3rd ed.). Blackwell Publishing: Malden, Massachusetts.
