ACCA SBL Syllabus B. Governance - International Codes of CG (OECD) - Notes ^{5 / 6}

These principles are intended to ‘improve the legal, institutional and regulatory framework for corporate governance’

and....

‘to provide guidance and suggestions for stock exchanges, investors, corporations and other parties that have a role in the process of developing good corporate governance’

6 Principles relevant to the Accountant

1. There should be a clear basis for an effective corporate governance framework

   This should ensure transparency and acceptance of responsibility of all parties involved.

2. Shareholders Rights should be upheld.

   Management of the company should recognise that they are agents of the shareholders and act in their interests at all times.

3. Shareholders should be treated equitably

   All shareholders whether institutional or minority should be treated in a fair and just manner.

4. Rights of Stakeholders should be recognised

   Co-operation between the organisation and stakeholders should be encouraged.

5. Timely and accurate disclosures should be made.

   All Material matters such as the financial situation, performance, ownership and governance of the company should be disclosed.

6. Duties of the board

   The strategic guidance of the company should be ensured by the corporate governance framework. 

   The board should effectively monitor management and be accountable to the company and shareholders.

The Board and the OECD Principles

The board have responsibility under the principles to:

Review and guide corporate strategy e.g. risk policy, business plans, capital investment, mergers and acquisitions and setting performance objectives.

• Evaluate and monitor the effectiveness of corporate governance policy

• Appointment and monitoring of key executives

• Align executive and board remuneration in the long term interests of the company

• Monitor and manage the ‘agency problem’

• Taking responsibility for the accounting and financial reporting system ensuring an appropriate system of control to manage risk is in place

• Ensure appropriate disclosures and communication