12-02-2004, 04:34 AM
YES, the explaination of Carporate Governance is good enough as mentioned above by PRACS, but i would like to say further more that WHAT are the basic need to be implemented of Carporate Governance(CG),and what are the overall structure of CG.
NEED OF IMPLEMENTING CG
The concept of CG was introduced in late 1980s in UK. & USA. The basic objective of CG is the tranparency of Management(Board Of Director)and reduction of irregularities like fraud, misapropriation of assets,falsification of documents and records, etc. Before the requirement of CG
1 The directors often used to borrow a LOAN in any financial institution, say 15% interest, and then transferred it to his own FIRM at least interest cost,say 8%.
2 They used to select their remuneration package himself which was often much enough to abilities,skills & services .
3 they used to plaey a Line management role himself e.g they used to hire FINANCE MANAGER, MARKETING MANAGER etc. which is not suitable for that specific job.
Hence, for the sake of creditors, shareholders and other stakeholders the requirement of CG was established to reduce as such irregularities.
OVERALL STRUCTURE OF CG
For the purpose of making effective and efficient structure, it was said that every public listed company establish an AUDIT COMMITTEE,SUPERVISORY BOARD & in order to make an efficient internal control system and assessing the level of risk the organization must also establish INTERNAL AUDIT DEPPT. Now SUP. BOARD include major investor, representative of employee etc.(becuase his beneficial interest is more include due to his shareholding) major decision is overseen by it. Similarly an audit committe include Non-Executive director and Committee's basic job include to see independence, co-ordination of external auditor, control work of internal auditor, assessing the risk of organizaion,effieicent conduct of internal control system,authorization of large or unusual transaction etc. Internal audit functions is also overseen by Audit committee
ASIF ALI
NEED OF IMPLEMENTING CG
The concept of CG was introduced in late 1980s in UK. & USA. The basic objective of CG is the tranparency of Management(Board Of Director)and reduction of irregularities like fraud, misapropriation of assets,falsification of documents and records, etc. Before the requirement of CG
1 The directors often used to borrow a LOAN in any financial institution, say 15% interest, and then transferred it to his own FIRM at least interest cost,say 8%.
2 They used to select their remuneration package himself which was often much enough to abilities,skills & services .
3 they used to plaey a Line management role himself e.g they used to hire FINANCE MANAGER, MARKETING MANAGER etc. which is not suitable for that specific job.
Hence, for the sake of creditors, shareholders and other stakeholders the requirement of CG was established to reduce as such irregularities.
OVERALL STRUCTURE OF CG
For the purpose of making effective and efficient structure, it was said that every public listed company establish an AUDIT COMMITTEE,SUPERVISORY BOARD & in order to make an efficient internal control system and assessing the level of risk the organization must also establish INTERNAL AUDIT DEPPT. Now SUP. BOARD include major investor, representative of employee etc.(becuase his beneficial interest is more include due to his shareholding) major decision is overseen by it. Similarly an audit committe include Non-Executive director and Committee's basic job include to see independence, co-ordination of external auditor, control work of internal auditor, assessing the risk of organizaion,effieicent conduct of internal control system,authorization of large or unusual transaction etc. Internal audit functions is also overseen by Audit committee
ASIF ALI
