Performance of the Australian Stock Exchange - 1375 Words

Performance of the Australian Stock Exchange (Research Paper Sample) Content: BUSINESS REPORT ON AUSTRALIAN STOCK EXCHANGE (ASX)By (Name)Presented to (Tutors Name)Course:Institution:Date: Table of Contents TOC \o "1-3" \h \z \u  HYPERLINK \l "_Toc292629455"
Executive Summary 3 HYPERLINK \l "_Toc292629456"
Introduction:  PAGEREF _Toc292629456 \h
4 HYPERLINK \l "_Toc292629457"
Discussion: 4Principles and Recommendations Developed 5 HYPERLINK \l "_Toc292629458"
Practical Applications: 7Internal Control Procedures 8Recommendations 8 HYPERLINK \l "_Toc292629459"
Conclusion: 9 HYPERLINK \l "_Toc292629460"
Reference List: 10Executive SummaryFundamental to any corporate governance requirements is the need to work with the laid down principles which will help in guiding the process of effective governance. The report has shown the various principles which are; the laying down of solid foundations for the management and its oversight, adding of value to the board structure, promotion of ethical and responsible decision mak ing, safeguarding of integrity in the reporting of financial statements, making timely and balanced disclosures, respecting the rights of the shareholders, recognition of risk and managing it and finally fair remuneration and doing it responsibly. There is also a review on the internal control procedures and whether the company has complied with the rules made. Finally are some recommendations to the company on the principles presented. IntroductionThis business report aims at looking at the review of corporate governance requirements and to determine their relevance to the Australian Stock Exchange (ASX), as the company of choice. It also covers the corporate governance principles and their recommendations towards the said company, and determines what practical applications these requirements have on the company. Finally, it will look at the internal control procedures in place and determine whether compliance with corporate governance requirements has been met.DiscussionCorporate governance refers to the set of rules or policies and laws which dictate a company (Crawford 2007). Corporate governance is multi-faced as it involves relationships with stakeholders both internally and externally. The internal stakeholders may include; the company employees, the executive managers and the board of directors. The external stakeholders include; the shareholders who are the owners of the company, the debtors, the creditors, suppliers and the company customers. The main players in corporate governance are the government agencies, the stock exchanges, company executives and other stakeholders ( HYPERLINK "http://en.wikipedia.org/wiki/Stijn_claessens" \o "Stijn claessens" Claessens,  Djankov Lang 2000). In corporate governance, there are a number of principles that are quite common, these include; integrity and ethical behavior, disclosure and transparency, rights and equitable treatment of shareholders, interests of other stake holders and role and responsibilities of the board.The company of choice is the Australian Stock Exchange, commonly referred or abbreviated as ASX. The company has developed some corporate governance principles, which have been renewed over some period and are being implemented so as to realize good governance (ASX 2010). In the year 2002, the ASX came up with a council whose purpose was to develop recommendations which would be a reflection of good practice in the international stage. The council was made up of representatives from various sectors of the Australian business community. Several principles and recommendations were developed as a result. Principles and Recommendations DevelopedLaying solid foundations of the managementThis states that companies are usually required to reveal the roles and responsibilities of the executive or otherwise the companys management and its board of directors (Geoff De Lacy and Anne De Lacy 2004). This is to be done transparently so as to protect the companys integrity in the rep orting of their financial statements (Meisel 2004). The stock exchange involves a lot of money exchange, and a management that is transparent is required so as to reflect the companys integrity. The ASX should then have a management that is transparent in its duties. Structuring of the board to add value to itHere companies are required to have a board that is effective and that comprises qualified members who are committed in discharging their duties and responsibilities. The ASX requires such members in its board, as the stock exchange market is highly volatile and requires experience in dealing with fast changing trades.Promotion of ethical and ensuring responsible decision makingThis involves formulating a code of conduct with rational decision making. The ASX needs to promote ethical and responsible decision making as; slight mishaps would result in the creation of massive losses in the market. Thus, there is need by the company to implement this principle.Safeguarding of integ rity in financial reportingThe company has the need to develop an independent mechanism to review their financial statements to ensure integrity in their reporting (Shleifer Vishny 1997). The ASX needs the services of an independent body to review their financial statements so that there is no chance of compromise for the reports. Making timely and balanced disclosures of all mattersCompanies are required to disclose all material matters in time and in a balanced manner to ensure that there is accountability from the senior executives. The ASX should implement this principle in regards to their information disclosure, to ensure that it is timely and in a balanced manner.The respect portrayed to the shareholdersThe shareholders rights, as stated in this principle should be exercised and effectively facilitated, to ensure that there is good communication between them and the executive management. The ASX should ensure that their employees are treated fairly by respecting their rights , which should be well portrayed in the annual general meetings with their shareholders.The recognition and management of riskAccording to this principle, companies should establish strong systems of risk oversight and their residual management, without forgetting the internal control measures of the company (Sun 2009). The ASX should design and implement this kind of system to ensure that the business has minimal risks and is effective in its operation.Responsible and fair remunerationCompanies should ensure that their remunerations are adequate and are reasonable to the level that they reflect the companys performance or results. The ASX requires coming up with a fair remuneration policy, to ensure that the workers are paid fairly and that their performance is reflected in the kind of pay they receive (Investment and Financial Services Association 2004).Practical ApplicationsThe company has complied with the operating rules of the market under the listing rules (Dignam Lowry 2006 ). The entities under the ASXs listing are usually under surveillance, which requires them to reveal any kind of information that would seem to affect the value of their securities (AICD 2007). It has also been collecting fines from those that defy the enforcement process. The timely and transparent activity by the entities in ASX has boosted investor confidence in its ability to supervise and implement the rules in the listings. There has also been a liaison committee to improve communication and transparency with the stakeholders (Claessens, Djankov Lang 2000).Other companies have also applied the rules practically to ensure that they have complied with rules (Crawford 2003). The Australian Securities and Investments Commission, which has assumed control of ASX market supervision has in the recent past banned a financial adviser for defrauding a client. The Australian Taxation Office has also been supporting and complying with the listings rule in its support of the community to ensure that they comply with payment of tax. Internal Control ProceduresThe internal control procedures have been met as the directors of the company have maintained the internal control structure. They have also successfully maintained and established accounting records for the company (Erturk 2004). The company has also formed an audit committee to audit its financial statements, which is compliance to the listing rules provided. There is also a committee to oversee that rules are being followed, this serves as a control policy to ensure that the entities do not fail to keep the rules. All these internal control measures show that the company is working in line with the corporate governance requirements (Bebchuck 2004). Other additional control policy measures can be put in place (Skau 1992), like the establishment of a remuneration committee to ensure fair remuneration among the workers, establishing a community outreach committee that will ensure the correct communication and p articipation by the external stakeholders (Clarke Dela 2006). These among other internal control procedures should be added to make it more compliant to the rules.RecommendationsOn the first principle the company should disclose the functions of the board and the process of evaluating their performance (De Lacy De Lacy 2004). On the second principle, the company needs to have an independent board of directors and establish a nomination committee to help with the selection of the directors. On the third principle, the company needs to formulate a policy containing a code of conduct (Crawford 2007). On the forth principle, the company can come up with an audit committee which will aid in review of its material statements.On the fifth principle, the... Performance of the Australian Stock Exchange - 1375 Words Performance of the Australian Stock Exchange (Research Paper Sample) Content: BUSINESS REPORT ON AUSTRALIAN STOCK EXCHANGE (ASX)By (Name)Presented to (Tutors Name)Course:Institution:Date: Table of Contents TOC \o "1-3" \h \z \u  HYPERLINK \l "_Toc292629455"
Executive Summary 3 HYPERLINK \l "_Toc292629456"
Introduction:  PAGEREF _Toc292629456 \h
4 HYPERLINK \l "_Toc292629457"
Discussion: 4Principles and Recommendations Developed 5 HYPERLINK \l "_Toc292629458"
Practical Applications: 7Internal Control Procedures 8Recommendations 8 HYPERLINK \l "_Toc292629459"
Conclusion: 9 HYPERLINK \l "_Toc292629460"
Reference List: 10Executive SummaryFundamental to any corporate governance requirements is the need to work with the laid down principles which will help in guiding the process of effective governance. The report has shown the various principles which are; the laying down of solid foundations for the management and its oversight, adding of value to the board structure, promotion of ethical and responsible decision mak ing, safeguarding of integrity in the reporting of financial statements, making timely and balanced disclosures, respecting the rights of the shareholders, recognition of risk and managing it and finally fair remuneration and doing it responsibly. There is also a review on the internal control procedures and whether the company has complied with the rules made. Finally are some recommendations to the company on the principles presented. IntroductionThis business report aims at looking at the review of corporate governance requirements and to determine their relevance to the Australian Stock Exchange (ASX), as the company of choice. It also covers the corporate governance principles and their recommendations towards the said company, and determines what practical applications these requirements have on the company. Finally, it will look at the internal control procedures in place and determine whether compliance with corporate governance requirements has been met.DiscussionCorporate governance refers to the set of rules or policies and laws which dictate a company (Crawford 2007). Corporate governance is multi-faced as it involves relationships with stakeholders both internally and externally. The internal stakeholders may include; the company employees, the executive managers and the board of directors. The external stakeholders include; the shareholders who are the owners of the company, the debtors, the creditors, suppliers and the company customers. The main players in corporate governance are the government agencies, the stock exchanges, company executives and other stakeholders ( HYPERLINK "http://en.wikipedia.org/wiki/Stijn_claessens" \o "Stijn claessens" Claessens,  Djankov Lang 2000). In corporate governance, there are a number of principles that are quite common, these include; integrity and ethical behavior, disclosure and transparency, rights and equitable treatment of shareholders, interests of other stake holders and role and responsibilities of the board.The company of choice is the Australian Stock Exchange, commonly referred or abbreviated as ASX. The company has developed some corporate governance principles, which have been renewed over some period and are being implemented so as to realize good governance (ASX 2010). In the year 2002, the ASX came up with a council whose purpose was to develop recommendations which would be a reflection of good practice in the international stage. The council was made up of representatives from various sectors of the Australian business community. Several principles and recommendations were developed as a result. Principles and Recommendations DevelopedLaying solid foundations of the managementThis states that companies are usually required to reveal the roles and responsibilities of the executive or otherwise the companys management and its board of directors (Geoff De Lacy and Anne De Lacy 2004). This is to be done transparently so as to protect the companys integrity in the rep orting of their financial statements (Meisel 2004). The stock exchange involves a lot of money exchange, and a management that is transparent is required so as to reflect the companys integrity. The ASX should then have a management that is transparent in its duties. Structuring of the board to add value to itHere companies are required to have a board that is effective and that comprises qualified members who are committed in discharging their duties and responsibilities. The ASX requires such members in its board, as the stock exchange market is highly volatile and requires experience in dealing with fast changing trades.Promotion of ethical and ensuring responsible decision makingThis involves formulating a code of conduct with rational decision making. The ASX needs to promote ethical and responsible decision making as; slight mishaps would result in the creation of massive losses in the market. Thus, there is need by the company to implement this principle.Safeguarding of integ rity in financial reportingThe company has the need to develop an independent mechanism to review their financial statements to ensure integrity in their reporting (Shleifer Vishny 1997). The ASX needs the services of an independent body to review their financial statements so that there is no chance of compromise for the reports. Making timely and balanced disclosures of all mattersCompanies are required to disclose all material matters in time and in a balanced manner to ensure that there is accountability from the senior executives. The ASX should implement this principle in regards to their information disclosure, to ensure that it is timely and in a balanced manner.The respect portrayed to the shareholdersThe shareholders rights, as stated in this principle should be exercised and effectively facilitated, to ensure that there is good communication between them and the executive management. The ASX should ensure that their employees are treated fairly by respecting their rights , which should be well portrayed in the annual general meetings with their shareholders.The recognition and management of riskAccording to this principle, companies should establish strong systems of risk oversight and their residual management, without forgetting the internal control measures of the company (Sun 2009). The ASX should design and implement this kind of system to ensure that the business has minimal risks and is effective in its operation.Responsible and fair remunerationCompanies should ensure that their remunerations are adequate and are reasonable to the level that they reflect the companys performance or results. The ASX requires coming up with a fair remuneration policy, to ensure that the workers are paid fairly and that their performance is reflected in the kind of pay they receive (Investment and Financial Services Association 2004).Practical ApplicationsThe company has complied with the operating rules of the market under the listing rules (Dignam Lowry 2006 ). The entities under the ASXs listing are usually under surveillance, which requires them to reveal any kind of information that would seem to affect the value of their securities (AICD 2007). It has also been collecting fines from those that defy the enforcement process. The timely and transparent activity by the entities in ASX has boosted investor confidence in its ability to supervise and implement the rules in the listings. There has also been a liaison committee to improve communication and transparency with the stakeholders (Claessens, Djankov Lang 2000).Other companies have also applied the rules practically to ensure that they have complied with rules (Crawford 2003). The Australian Securities and Investments Commission, which has assumed control of ASX market supervision has in the recent past banned a financial adviser for defrauding a client. The Australian Taxation Office has also been supporting and complying with the listings rule in its support of the community to ensure that they comply with payment of tax. Internal Control ProceduresThe internal control procedures have been met as the directors of the company have maintained the internal control structure. They have also successfully maintained and established accounting records for the company (Erturk 2004). The company has also formed an audit committee to audit its financial statements, which is compliance to the listing rules provided. There is also a committee to oversee that rules are being followed, this serves as a control policy to ensure that the entities do not fail to keep the rules. All these internal control measures show that the company is working in line with the corporate governance requirements (Bebchuck 2004). Other additional control policy measures can be put in place (Skau 1992), like the establishment of a remuneration committee to ensure fair remuneration among the workers, establishing a community outreach committee that will ensure the correct communication and p articipation by the external stakeholders (Clarke Dela 2006). These among other internal control procedures should be added to make it more compliant to the rules.RecommendationsOn the first principle the company should disclose the functions of the board and the process of evaluating their performance (De Lacy De Lacy 2004). On the second principle, the company needs to have an independent board of directors and establish a nomination committee to help with the selection of the directors. On the third principle, the company needs to formulate a policy containing a code of conduct (Crawford 2007). On the forth principle, the company can come up with an audit committee which will aid in review of its material statements.On the fifth principle, the...