The paper "Four Main Objectives of a Corporate Activity" is an outstanding example of a finance and accounting assignment. The first objective is profit maximization. You find out that most corporations want to get profits. Therefore, they will look into ways in which they can increase their revenues and reduce their expenditure. The second objective is maximizing shareholders wealth. Shareholders are the majority owners of a company and their wealth depends on the dividends they receive. Therefore, the company ensures it makes a wise decision and especially in financing and investment decisions.
The cost of capital is used when making such decisions by the management regarding investments and finances. The other main objective is to practice corporate social responsibility. Social responsibility means giving back to the community since without the existence of the community, and then the corporation cannot operate. It entails participation in environmental upgrading, improving social amenities, provision of health, sporting and educational facilities. Finally, we have the objective of customer satisfaction. Customer satisfaction entails meeting customer’ s needs and wants. Therefore, the corporation will carry on several activities such as conducting market research to ascertain on what customers need or customer survey to ascertain on the perception of its customers regarding its products.
Customer satisfaction leads to a corporation attaining and sustaining a competitive advantage. Q2. Steps in corporate governance and internal control procedures The many scandals such as WorldCom and Enron raised questions regarding corporate governance and internal controls of corporations (lee, 308). Putting steps in place ensures good corporate governance practices and a sound internal control system in companies (Marnet, 223). The first step is to establish an effective board of directors who have the primary responsibility of running a company.
The board of directors should have a balanced number of non-executive and executive directors. A committee should establish the remuneration and the appointment of the board and this should be done in a formal way. The board should be paid well such that their remuneration is enough to attract the right caliber of directors. The internal control procedures should be designed to ensure that all directors are rewarded according to their individual performance. The other step is implementing an internal audit function.
An internal audit function helps to ensure that the management carries out business activities in an orderly and efficient manner. The management sets up the internal audit function and they are responsible for appointing the internal auditor who then directly reports to them. There is a need to establish an internal audit committee, which should comprise of non-executive directors. The function of the audit committee is to ensure the integrity of financial statements and review internal controls. The committee also approves engagement terms and remuneration of external auditors and reviews the effectiveness of the internal audit function. Q3.
Four company policies that have an impact on corporate objectives and internal control objectives There should be a compliance system for the board of directors, executive officers and all employees. Establishing a corporate ethics committee is the only way of implementing such a policy. There can be a system placed to ensure that the board of directors executes business objectives effectively. This is possible through conducting regular board meetings. A risk management policy is common in many businesses today. The main purpose of this system is to mitigate and reduce risk.
Risk management entails risk identification, assessment, reduction, avoidance and transfer. A system of ensuring that appropriate financial reporting is executed. This is achieved by establishing an internal audit committee and an internal audit function.
Hughes, will (PhD); Hughes, Will; Hildebrandt, Patricia and Greenwood, David. Procurement in the construction industry: Impact and cost of alternative. Taylor and Francis, 2006. Pg 127
Lee, Thomas. Financial reporting and corporate governance. Wiley publishers, 2007, Pg 308
Marnet, Oliver. Behavior and rationality in corporate governance. Routledge,2008, Pg 223