Question

In: Finance

​Governance represents the means by which direction and control are applied to stewardship of the entity' assets


Governance represents the means by which direction and control are applied to stewardship of the entity' assets- tangible and intangible financial and non-financial - in the pursuit of the delivery of the primary objectives of sustainable value creation. 


Explain the principles of good governance in King II and King III and discuss how they can be used to improve the governance of municipalities.

Solutions

Expert Solution

Good corporate governance is basic to internal control. Corporate governance includes all of the means by which business are directed and control, including the rules, regulations, processes, customs, policies, procedures and institutions and laws that affect the way the business is administrated. Corporate governance spells out the rules and procedures to be followed in making decisions for the corporation. Corporate governance is the joint responsibility of the board of directors and management. Corporate governance specifies the distribution of rights and responsibilities among the various parties with conflicting priorities and concerns in an effort to mitigate the agency problem and bring about congruence between the goals of the shareholders and the goals of the agents. Incentives are needed so the agents will take actions that are consistent with shareholder benefits. The world financial crisis that began in 2008 raised again the issue of good corporate governance.

Good governance is not just a good idea for a company- it is an absolute must.Corporate governance does not exist as a set of distinct and separate processes and structures. It is interconnected with the company’s internal control and enterprise risk management.


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