1. How does IT serve as a benefit and tool for the overall objectives of corporate governance?

IT can play an important role in corporate governance as a tool to improve the efficiency and effectiveness
of corporate governance. IT is an essential component of corporate governance as an effective means of
delivering timely and accurate information for planning, monitoring, and reporting purposes. The
effectiveness of all corporate governance functions depends on the quality of support received from the IT
function. The IT function enables other corporate governance functions to operate in real-time, online
processes facilitating simultaneous decision making, continuous monitoring, instantaneous assessment
electronic reporting, and continuous auditing.

2. Discuss the impact that the Internet, globalization, and regulations are having on corporate
governance reforms.

The Internet has allowed many different people, groups, and organizations to exchange information
regarding corporations and their business practices. This makes users of information more informed to
make better decisions. The emergence of the Internet has also had an impact on corporate financial
information dissemination via Web sites. Globalization has aided in the convergence of corporate
governance and financial reporting standards worldwide, ushering in related governance reforms.
Regulations impact the structure of governance within countries and their organizations, leading to corporate
governance reforms related to those changes.

3. How have modern video conferencing and other methods of telecommunications impacted the
corporate governance of public companies?
Modern video conferencing, or “Web cam” technology, enables companies to conduct their meetings
electronically without requiring everyone to be physically present. This allows individuals, both inside and
outside of organizations, to more effectively communicate with each other regarding many issues (including
corporate governance matters).

4. Explain the role of the governing board in an NPO.

The governing board is directly responsible and ultimately accountable for the organization’s affairs and, in
large NPOs, provides more of an oversight function rather than the managerial function of directly making
decisions. In small NPOs, the governing board may perform both managerial and oversight functions.

5 What are the different types of NPOs, and the primary purpose ?

There are a variety of NPOs created for philanthropic purposes.

State and Local Governments
State and local governments have received more attention in the era of increased security on financial
reporting. Like their counterparts in public companies, state and local governmental entities are improving
their stewardship and the effectiveness of their governance and financial reporting oversight functions.
Health Care Organizations
The emerging corporate governance reforms are affecting the formation, structure, role, accountability, and
responsibility of health care organizations. The improved oversight functions of health care are in the areas
of stewardship, managerial and financial reporting, and risk assessment functions.
Colleges and Universities
Institutions of higher education have evolved from first being funded by the state government, then being
supported by the state, and now being only assisted by the state. This means that the majority of colleges and
universities are generating a greater portion of their annual budget through tuition and fundraising. In this
era of an increasingly self-supporting environment, the stewardship of the board of trustees, or its
equivalent, becomes more important to improving governance. Academic research shows that colleges and
universities in the United States are experiencing substantial demands for stronger stewardship and
accountability that could be achieved through the use of vigilant audit committees.
Charitable Organizations
Recent financial and ethical scandals of charitable organizations underscore the important role that
organized governance can play to increase stewardship and improve the managerial function, financial
reporting, and ethical oversight functions.

The primary purpose of NPOs is to serve the public rather than earn profit. (to serve public, achieve
philanthropic purposes)

6. Explain the three major fiduciary duties of the board of directors.

Directors and trustees of NPOs have three major fiduciary duties:

1. Duty of obedience, which requires directors and trustees to carry out their assigned responsibilities in
accordance with the organization's rules, standards, and procedures as specified in its articles of
incorporation, bylaws, and mission statements
2. Duty of care, which requires directors and trustees to exercise due care, diligence, and skill that an
ordinary, prudent person would exercise under similar circumstances
3. Duty of loyalty, which requires directors and trustees to carry out their activities in pursuing the best
interests of the organization by avoiding self-dealing and self-serving activities

7. Explain the types of board systems worldwide.

The three commonly used board systems are:

a. Unitary board system where the board of directors and management are the same (e.g., Singapore board
system).
b. Two-tier board system where there are two boards, supervisory and management, and the supervisory
board has oversight over the management board. The European two-tiered model of corporate governance
consists of an executive board and a supervisory board. The executive board is composed of senior
executives and inside directors, and is primarily responsible for managing the company. The supervisory
board, however, is typically composed of outside directors who represent shareholders, employers, and
lenders, and, appoints and oversees the activities of the executive board.
c. Oversight board system where the board of directors appoints management and oversees its activities
(United States).

8. What factors help shape the corporate governance structure of MNC

The parent-subsidiary corporate governance structure is shaped by both the host and home countries' legal,
political, cultural, and regulatory systems; the business practices and historical patterns of countries; the
global capital, labor, and managerial markets; global institutional investors; and the boards of directors.
Other influential factors are the international strategy of MNCs and the subsidiary's industry, size, and
relative importance to the entire system of MNCs. Particularly, when the subsidiary is wholly owned by the
parent company and is managed automatically (independently) by a management who has little if any
ownership interest in the
Internet has also had an impact on corporate financial information dissemination via Web sites.
Globalization has aided in the convergence of corporate governance and financial reporting standards
worldwide, ushering in related governance reforms. Regulations impact the structure of governance within
countries and their organizations, leading to corporate governance reforms related to those changes. MNC or
the subsidiary, then the effectiveness of parent-subsidiary corporate governance becomes more crucial in
monitoring and controlling managerial actions of the subsidiary.

9. Compare and contrast rules-based versus principles-based approaches of corporate governance

The rules-based approach to corporate governance is where corporate governance reforms and listing
standards are very rigid and applicable to all listed companies, detailing requirements for compliance and
prescribed to a set of rules. On the other hand, the principles-based approach is where corporate governance
principles establish benchmarks and norms for good governance practices but companies establish their own
corporate governance rules tailored to their circumstances with adequate flexibility to set their own rules.
The principles-based approach may create more room for manipulation and even noncompliance with
minimum standards.

10. Identify and discuss the key emerging corporate governance issues

 Global market and investor confidence

 The corporate governance structure including shareholder democracy and director independence.
 Internal controls and risk management including Section 404 compliance.
 Financial reporting including convergence in standards and stock option expensing, pension liability
recognition, electronic financial reporting, and financial reporting disclosure.
 Audit function including an integrated audit approach, liability caps, and auditing for fraud.

11. The framework of corporate governance reporting and assurance is suggested by the Global
Reporting Initiatives (GRI). Describe the GRI guidelines for corporate governance reporting.

GRI guidelines consist of five components: (1) the introduction which describes the motivation for and
benefits of sustainability reporting; (2) part two which provides basic information regarding the nature of
the guidelines, their documentation, design, and reporting expectations; (3) part three consisting of
reporting principles which describe the principle of sustainability performance; (4) part four consisting of
reporting content, providing detailed information about the content of a GRI report; and (5) the final part
consisting of glossary and annexes, giving background information about the GRI and supplemental
information pertaining to the preparation of GRI reports and assurance provided on such reports.

12. Explain the application of convergence in financial reporting

The SEC's staff general observations concerning the application of IFRS are

1. The vast majority of companies asserted compliance with a jurisdictional version of IFRS.
2. The majority asserted compliance with IFRS as published by the IASB.
3. The independent auditor's opinion on the company's compliance with the jurisdictional version of IFRS
was used by the company without opining on the company's compliance with IFRS as published by the
IASB.
4. There are numerous variations in the language used by companies and their auditors in describing IFRS as
applied in the financial statements. This requires more consistent and uniform language asserting
compliance with IFRS as published by the IASB.
5. A number of different income statement formats were used by companies in the same jurisdiction and
even in the same industries. Some inconsistencies include captions and subtotals, lack of proper explanation
of the accounting policies used, and inadequate disclosures of determination and calculation of voluntary per
share measures and their reconciliation to those measures in the income statement.
6. Some companies inappropriately characterized items as cash equivalents or misclassified cash flow items
as investing rather than operating cash flows in the statement of cash flow.
7. There were inconsistent accounting treatments for particular transactions concerning mergers,
recapitalizations, reorganizations, acquisitions, and minority interests.
8. Financial statements had inappropriate and inadequate notes.
9. Accounting for insurance contracts varied substantially.
10. There was inadequate disclosure and information on important financial reporting issues, including
revenue recognition, intangible assets and goodwill, asset impairments, leases, contingent liabilities,
financial instruments, and derivatives.