Question

The Importance of Corporate Governance from managerial accounting perspective [CG] and Corporate Social Responsibility initiatives by the firms in Oman [CSR]. Select three profitable businesses in Oman which apply Corporate Social Responsibility and explain what the activities that are provide by those businesses and how important they are from managerial accounting perspective.

Answer 1

Corporate Governance :

Corporate governance is most often viewed as both the structure and the relationships which determine corporate direction and performance.

“Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The corporate governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society” (Sir Adrian Cadbury in ‘Global Corporate Governance Forum’, World Bank, 2000)

Corporate governance is the structure of rules, practices, and processes used to direct and manage a company.

Importance of Corporate Governance :

- To create Transperancy, accountability and disclosure..

- To get easy finance from institutions.

- To reduce risks of scamms and scandals.

- To establish trust of shareholders, investors, customers and other interested parties.

- To enhance the valutation of entity.

Various CSR Initiatives performed by the entities in Oman :

- Social Infrastructure Developement

- Public Services

- Socio Economic Developement Project

- Social & Enviornmental Expenditures

- Projects support for students, teachers, municipalities and societies

- Supporting Oman Economic Development

- Handicapped Children Activities

- Summer Camp at Majees - Sports & Culture club

- Support Construction of Investment Building, Al Wafa Center – Sohar

- Women’s day Celebration

- Against Child, forced and compulsory labor

- Sponsoring Education

- Livelihood for underprivileged women

Activities for CSR are mainly categorised in to following :

- Philanthropic donations to charity

- Service to Community

- Enhancing employee welfare

- Promoting religious conduct

Following are 3 entities in Oman performing CSR activities :

1. Vale in Oman

one of the world’s largest mining companies in iron ore, nickel and pellets production operating in around 30 countries across 5 continents. Attracted by the Sultanate’s strategical location outside the Strait of Hurmuz, Vale invested around $ 2 billion in its pelletizing plant with a nominal capacity of 9 million ton of pellets per annum connected with a distribution center with 40 million ton of handling capacity.

Activities of Entity :

- Mining

- Logistics

- Energy

- Steel making

Various CSR activities performed by Vale

- Handicapped Children Activities

- Social infrastructure Development

- Public Services

- Health & Safety participation

2. ORPIC :

OQ is a global integrated energy company with roots in Oman. It emerged in late 2019 upon the successful integration of nine legacy companies, united to form a stronger, more efficient, and consolidated entity.

At present, OQ is a $28Bn company operating in 13 countries across the globe. We cover the entire value chain in the hydrocarbon sector from exploration and production, to marketing and distribution of end-user products. Our fuels and chemicals are sold in over 60 countries worldwide. We also partner with local and international companies in the hydrocarbon sector to increase value for the shareholders and reap greater benefits for the communities.

Activities of Entity :

- Polymers

- Chemicals

- Petroleum Products

Various CSR activities performed by ORPIC :

- Women’s day Celebration

- "World Environment Day" - beach Cleaning Campaign

- Sponsoring Education

- Protecting Environmen

- Omani Welfare

3. Sohar Power

ohar Power Company SAOG owns and operates the largest power generation and water desalination plant in the Sultanate of Oman.

SPC was incorporated in 2004 after award of the Sohar IWPP project in a competitive tender. The Company has built and owns the 585MW electricity generation and 33MIGD seawater desalination plant in Sohar. The plant is located in the Sohar Industrial Port Area in the Al Batinah region of the Sultanate. The site is strategically located in an industrial hub, near the main gas transmission system and electricity grid network.

Sohar Power was able to contribute to local projects intended for the local communities and the people of the Sultanate of Oman, through financial contributions

Various CSR activities performed by SOHAR Power :

- Sponsoring Education

- Health & Safety Protection

- Protecting Enviornment

- Support Soort, Art and Culture Activities