accountable to the Board, the Board is accountable to the stakeholders. So, these accountabilities compel the company to carry out its actions versatilely. Also, Telstra’s reviewing and monitoring make sure that all employees behave under ethical standards when it comes to the workplace. That keeps the company away from any legal troubles. So, these recommendations promote ethics in business. Recommendations include a) establishing a clear and documented relationship between rules and responsibilities of the Board and the stakeholders.
Telstra fulfills this recommendation by developing the Board charter. b) Clarifying the role of the Chairman. Telstra clearly states in their corporate governance guidelines that the Chairman of the Board is a nonexecutive independent director. c) Implementing an authority matrix. The company details out which executive is in charge of which responsibilities (Steger, Ulrich, and Wolfgang Amann). d) Addressing Transparency issues. As we have discussed in the previous assessments, Telstra is very careful about making their transparency apparent.
Each document and statements are reviewed by the CEO and his team and then sent of final reviewing and approval to the board. This method ensures transparency in the company (Steger, Ulrich, and Wolfgang Amann). e) Establishing risk committee. This the area where Telstra falls short. Because in Telstra, the board acts as the risk committee. The risk committee should be an independent council and its members should show excellence in functioning under pressure and providing solutions based on creativity and innovation (Sheikh, Saleem).
The Board of Directors needs to approve for an independent risk committee, and the members of the committee should be chosen from the organization. The committee should be accountable to the Board, and the Board should have the power to approve any decision taken by the committee. This allows solutions to come faster during times of crisis. The responsibilities of the risk committee should include internal controls, risk management, external and internal audits, and financial statements. These recommendations are very crucial for any organization.
Corporate governance was solely developed to assess risks before they happen, and help and organization avoid a major crisis. It very important for any big company to follow these recommendations and full fill the requirements of corporate governance within their organization. Telstra has a very solid governance system and it fulfills almost all their requirements. But new procedures which are stated above should be implemented in proper ways for the company to grow in the future. ASSESSMENT FOUR Directors have many major responsibilities.
They need to carry these duties out in accordance with the best interest of the company. One of the many jobs of a director is to provide adequate disclosure to financial reporting. Financial reports are the company’s cash flow, gross profit, sales, trade etc. statements. These reports are very important in maintaining the company’s transparency. The Directors have the responsibility to review these reports. They need to make sure that these reports are conveying updated and accurate information. After reviewing, the Director has to approve it in order for the firm to release it to external sources (Xin, Wei).
These reports are made by acquiring different data from different sources. So, reviewing these reports and providing a suitable disclosure is very important for any company. Adherence to ethical values applies for all the employees in the workplace including the executive and non-executive members, and the directors. The professional code of ethics teaches employees about how to function in the workplace. These codes include placing professional integrity and client interest above self-interest, acting with integrity, respect and competence, and developing and maintaining professional skills (Xin, Wei).
An employee must understand the value of professionalism and integrity of the marketplace, duties to the client and the board, abilities to analyze and provide recommendations. It is important for the employees to follow these codes of ethics, as they are very important in maintaining a company’s work environment. Employees should know how to maintain their workplace (Xin, Wei). This also goes for the executive and board members. Ethical standards should follow from the top of the chain to the bottom. Maintaining ethical standards keep the company out of legal delegations.
It the Boards keys responsibility to review and monitor to ensure that the employees are following the professional code of ethics. As we have discussed in previous assessments, corporate governance was solely designed to help companies in avoiding serious risks and crisis. Its purpose is to maintain the organization’s overall management system (Steger, Ulrich, and Wolfgang Amann). Corporate governance is the same as the governance of a state. It guidelines the operating the chain of the company and their major responsibilities.
The curial components of corporate governance include stakeholder’s participation, independent board of directors, clarifying executive roles, implementing authority matrix, ensuring workplace diversity, addressing transparency issues, respecting culture challenges and conducting proper reviews and monitoring. For any company, global or national, tax reporting is a very important task that has to be carried out versatilely and in time. It is important for big companies to keep track of their income and provide tax reports based on that in order to evade any legal crisis. Wrong or faulty ATO reports can cause the company billions.
Tax reports are government allegations. So, meeting the deadlines of submitting these reports should never be taken lightly (Steger, Ulrich, and Wolfgang Amann). It is the responsibility of the CEO to make sure that the ATO reports are presented in front of the Board in time for approval, and the directors have to carefully review the reports for possible errors. It is not only their professional duty but it is also their ethical responsibility. That is why adherence to ATO reporting deadline is crucial. Segregation of Duties is an internal control management process that is designed to prevent fraud and error in any task.
This method takes a single task that can be performed by a single individual and breaks it down into multiple smaller tasks so that, no single person is completely in charge of the tasks. These methods are used in administrative areas of the workplace where fraud and error are major risks. For example, in terms of payroll management, segregation of duties would be to have one individual signing checks and one individual responsible for accounting. This method improves the security of the business (Steger, Ulrich, and Wolfgang Amann).
But breaking down tasks can also negatively influence the company by reducing efficiency, increasing cost and employee requirements. So, it is best for any company to apply SOD to only the most critical and vulnerable elements of the business. In general, stakeholders are those who invest into the organisation and are affected by the actions of the corporation (Sheikh, Saleem). Stakeholders can be internal or external. Internal stakeholders are those who invest from within the organisation and external stakeholders are those outside the corporation who show interest into the organisation.
External stakeholders are mostly funders and investors. Involvement of these stakeholders in a vital part of any company. Stakeholders’ evolvement brings clarification to certain points. Also, the investors need to trust the company. That is why it is crucial for the companies to involve their stakeholders in major decision making. For example, when assessing risks a company needs to consult its stakeholders to discuss with them about the risks of the business and how to face challenges. An audit is a business term that refers to inspecting and monitoring certain accounts of any business.
An audit can be both internal and external. An internal audit focuses on certain business practices and if these practices are assisting the corporation to manage its risks and fulfill its business objectives (Sheikh, Saleem). Internal audit also focuses on the matter that if the organisational business strategies are able to cover financial and operational matters. External audit is all about the legitimacy of the annual accounts and if it was prepared within the legal requirements. Internal auditors are employed by the organisation itself. They require a strong background in accounting.
External auditors are accountants that are registered under outside firms (Steger, Ulrich, and Wolfgang Amann). The main agenda of internal audit is to assess risks and business objectives, where the goal of an external audit is to make sure that annual reports of the business are not being misstated (Steger, Ulrich, and Wolfgang Amann). Internal auditors report to the internal governance, such as the CEO or project managers, where the external auditors report the shareholders or incorporated parties. These are the main differences between internal and external audit.
An internal control structure or system is a set of policies and recommendations generally small businesses implement within their organisation in order to ensure the achievement of its business goals. Generally, there are five key components of an internal control structure, and they are Control environment, Risk assessment, Control activities, Information and communication, and Monitoring. The control environment is the management and the governance structure of the oganisation. Risk assessment focuses on how the management team should calculate risks and find solutions.
The control activities are all the policies and procedures that are developed in order to guide the management to carry out its tasks precisely (Steger, Ulrich, and Wolfgang Amann). Information and communication include reporting and keeping proper records of all data and making them easily accessible for the Board (Steger, Ulrich, and Wolfgang Amann). Monitoring is inspecting the effectiveness of the policies and making sure that all tasks are being carried out properly to meet business objectives (Steger, Ulrich, and Wolfgang Amann).
CONCLUSION Corporate governance is one most important policies in any modern-day organization. In global companies like Telstra, it very important to implement the requirements of the corporate governance carefully so that the company is able to function properly by assessing risks and achieving their business goals. Corporate governance is not only the specification of the chain of command, but it is also a guideline of how employees and executives should carry out their roles and responsibilities.
