The paper "Governance in a Globalising World" is a perfect example of a business assignment. The board of directors has a fiduciary responsibility of care to their company that constitutes of different components. Directors are not involved in company operations but individually and collectively have an obligation for the strategic direction and regulation/control of the company. This is part of the wider concept of corporate governance that encompasses accountability, authority, leadership, stewardship, direction, and control. Based on this there is increased concern on the responsibilities directors have in terms of the financial position of a company.
One of the main examples is the case of Murray Goulburn’ s board of directors that was accused of breaching its continuous disclosure responsibilities by not informing the market earlier that the company would not achieve its profit estimates (Danckert, 2016). In this case, the board of directors should be held responsible for the company’ s financial position in terms of not meeting profit forecasts. The board of directors has a dual mandate including an advisory and oversight obligation. The advisory obligation requires the directors to consult with company management concerning strategic and operating direction.
Again, the oversight obligation requires directors to monitor the performance of the firm while reducing costs and mitigating exposure to risks (Cheffins, 2015, p. 718). According to OECD, (2004), an effective board of directors fulfils both mandates and is thus accountable to the company and its shareholders. Directors are charged with developing different committees to achieve their dual mandates. The audit committee is of great importance in ensuring the financial transactions and performance can be monitored and controlled. Therefore, the board of directors has an obligation to ensure that all rules and regulations are followed in financial reporting as well as disclosure.
This requires the board to have adequate knowledge of financial and accounting issues.
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