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The Serbians-Solely Act Essay

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Serbians-Solely mandates that the corporate officers and senior executives take personal responsibility for the validity of their company’s financial statements. These officers are required to certify and sign the financial statements once every quarter. The act has made both accountants and chief executives personally liable for the information they report. Roles of the Board of Directors and Chief Executive Officer In a public company the roles of the board of directors and chief executive officer is very important to the success of the company.

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Every board must be Independent, well-informed decision-making, including on executive enumeration, so that it is the best interests of a company and its shareholders. Board members therefore require a mix of skills, knowledge and experience. While ultimately it is up to shareholders to elect the most suitable board candidates to represent their interests, the board plays the pivotal role in endorsing candidates and managing director performance.

Many boards establish remuneration committees to reduce the potential for conflicts of interest in setting executive remuneration and more effectively utilize board members with specialist skills and knowledge.

The board off public company must have at least three directors. Generally, companies specify in their constitution a minimum and maximum number of board members. Directors have a range of legal duties that are set out in the Corporations Act.

They are required to exercise their powers in the best interests of the company, to take reasonable steps to comply with financial recording and reporting requirements, and to disclose any material personal interests or significant information. A key role of the board is to appoint the CEO and determine remuneration packages for directors and the executive team. CEO Strategy A key role of a Coo’s is to communicate a vision and to guide strategic planning.

Those who have successfully implemented strategic plans have often reported that involving teams at all levels in strategic planning helps to build a shared vision, and increases each individual’s motivation to see plans succeed. A great strategy would be to use a SOOT analysis to first determine the strengths, core capabilities, weaknesses and vulnerabilities. This should be the first strategy, because identifying the gap in the market can often be threatening. In some organizations it is not considered safe to admit to weakness; but an honest appraisal can make the difference between success and failure.

Next, would o be review the external environment regarding development and growth. Assessing all this information can help the company finalize their strategy for forecasting and implementing their future plans (Charleston, 2013). The Financial Reporting Act 1993 is what financial reporting strategy are based on. This involves developing and implementing strategies for the issue of accounting and auditing & assurance standards in order to provide a framework for a company’s overall direction in the setting of standards.

It includes developing and implementing a strategy for tiers of financial reporting in accordance with he requirement of the Act. A good reporting strategy would be to determine the difference between market value to book value of equity can be explained by the former strategy being based on future expectations held by investors while the latter is formulated on historical data which has already impacted by the company.

Finance theory explains a firm’s market value of equity is the result of investors perceiving three variables: managerial actions, economic environment, and political climate affecting a company’s overall risk and future cash flows. While book value of equity is formulated by identifying residual interest left to dockworkers after deducting liabilities which is largely attributed to the past (Whalen, Baskingћ & Bradshaw, , 2011). Corporate Management The company is responsible to make sure everyone is assured that the company is financially stable.

Making sure that the investors have a sense of assurance with the company’s internal controls and sound investments can bring more stable investors. The various stakeholders of a company have become increasingly reliant upon digital information. This includes financial reports, which are generated from numerous electronic transactions and are recorded in various ledgers. The auditors are expected to audit these financial reports and provide assurances that the information found within these reports has not been compromised, whether intentionally or unintentionally.

However, the task of providing the required assurances has become difficult with the fading of the traditional audit trail. Evidence of this is found in the lapses in corporate governance and the recent corporate scandals. The risks covered by the audit are adequately designed and operating effectively, that is positive assurance that has high value to the board and to management stakeholders. But when the audit report only provides a list of control weaknesses, even if the significance of those weaknesses is rated, that is called negative assurance. The financial reports are hard evidence to assure the investors.

Since the SOX financial reporting has become very important and more reliable. Within the report the management section is also very important factor for investors to gain assurance, so management shouldn’t take this lightly when completing. Consequences to a biblically traded company When financial reporting isn’t done correctly there are many consequences that can occur. The reasons for inaccurate financial reporting are varied. A small but dangerous minority of companies actively intends to defraud investors. Other companies may release information that is misleading but technically conforms to legal standards.

The rise of stock-option compensation has increased the incentives for companies to misreport key information. Companies have increased their reliance on pro formal earnings and similar techniques, which can include hypothetical transactions. Then again, many companies just find it difficult to present financial information that complies with fuzzy and evolving accounting standards. The way to minimize the consequence is for the impasses to be transparent. Letting it all out is the best way to assure investors and shareholders that the company has nothing to hide and their information is considered reliable.

When less information is revealed it means less certainty. When financial statements are not transparent, investors can never be sure about a company’s real fundamentals and true risk. It’s difficult, if not impossible, to evaluate a company’s investment performance if its investments are funneled through holding companies, hiding from view. Lack of transparency may also obscure the company’s debt level. If a company hides its debt, investors can’t estimate their exposure to bankruptcy risk.

Also the lack of transparency can mean nasty surprises to come (McClure, 2013). Requirements of the Serbians-Solely Act do believe that the requirements outlined in the SOX are adequate enough to ensure integrity. As a result of SOX, top management must individually certify the accuracy of financial information. In addition, penalties for fraudulent financial activity are much more severe. Also, SOX increased the independence of the outside auditors who review the accuracy of corporate financial statements, and increased the oversight role of boards of directors.

The reporting requirements outlined by the Serbians-Solely Act now provide credible coverage for stakeholders and potential investors. The creation of the PEPCO was the best possible change that the SOX could have made. The PEPCO ended years of self- regulation by public companies. This group enforces the laws and makes sure everyone in the profession is in compliance with all regulations. The establishment of audit committees and corporate governance helps eliminate management making decisions that can affect the company.

The audit committee’s purpose is to: Required audit committees, independent f management, for all listed companies Required the independent audit committee, rather than management, to be directly responsible for the appointment, compensation and oversight of the external auditor Required disclosure of whether at least one “financial expert” is on the audit committee It may feel uneasy to be audited or reviewed by another person in the same profession, but this will make everyone better and more accountable for their financial reporting.

Cite this The Serbians-Solely Act Essay

The Serbians-Solely Act Essay. (2018, May 06). Retrieved from https://graduateway.com/the-serbians-solely-act-essay/

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