L.V.

Appasaba

Corporate Governance
Corporate Governance to a large extent is a set of
mechanisms through which outside investors protect
themselves against expropriation by the insiders
Thus CG is a system by which companies are run,
and the means by which they are responsive to their
shareholders, employees, and society.
It is a system by which companies are directed and
controlled; board of directed and controlled: boards of
directors are responsible for governance of companies.

Corporate governance is also concerned with the

ethics, values, and morals of a company and its
directors.

Need of Corporate Governance

1.

Impact of Globalisation

2.

Economic Changes

3.

Changes in the Structure of Shareholding

4.

Financial Reporting and Transparency

5.

Shareholders Net Worth and Net Wealth

Clause 49 of the Listing Agreement

The companies listed on the stock exchange are required
to comply with the regulations of the SEBI which drives
its powers from the SEBI Act,1992.
The main objective of Clause 49 of the Listing Agreement
is to promote the core principle of corporate governance,
fairness, transparency, accountability and responsibility.

Mandatory Items to be Included in Clause 49 on CG

in the Annul Report of Companies.
1. A brief statement on companys philosophy on code
of governance
2. Board of Directors
3. Audit Committee
4. Remuneration Committee
5. Shareholders Committee
6. General Body Meetings
7. Disclosures
8. Means of Communication
9. General Shareholder Information

HRA
HRA is the process of identification and measuring data
about

human

resources,

and

information to interested parties

communicating

this

Features of HRA
1.

2.
3.

4.

5.

It is a system of accounting in which identification of

human resources is made.
Investment made in human resources are recorded.
Measurement of cost and value of human resources is
made.
Record is also maintained for the changes occurring in
human resources over a period of time.
Information generated about human resources is
communicated through financial statements to the
interested parties.

Need of HRA
1.

2.

3.

4.

It helps in evaluating the return on investment in human

capital
It helps in communicating the worth of human resources to
the organization and the general public.
It helps in knowing whether the human resources have
been properly utilised or not.
It provides quantitative information of human resources
which will help managers and investors in making
decisions.

Methods of HRA
1.

Historical Method

2.

Replacement Method

3.

Opportunity Cost Method

4.

Economic Valuation Method

5.

Return on Efforts Employed Method.

Advantages of HRA
1.
2.
3.
4.

5.
6.
7.

Improvement in Internal Management Decisions

Motivation of Employees for Production Purposes
Impact on Investors Decisions
Knowledge of Value of Employees on the Basis of
Training
Knowledge about Economic Value of the Personnel
Improvement in Decision Making Process
Decision about Further Recruitment

Disadvantages of HRA
1.

Non-Availability of Standards

2.

Opposition of Trade Unions

3.

Expenditure on HRA

4.

Objection about Treating Employees as Assets

5.

Uncertainty about Continuance of Employees

Forensic Accounting
Forensic Accounting definitions commonly refer to fraud,
fraud prevention, and fraud investigations as the role of
the forensic accountant.

Need of Forensic Accounting

Corporate Investigations

Litigation Support

Criminal Matters

Insurance Claims

Scope/Areas Covered by Forensic Accenting

1.
2.

3.
4.

5.

Certain engagement related to disputes.

Shareholders and partnership disputes involving detailed
analysis of numerous accounting records to quantify the
issues in dispute.
Cyber crimes like credit card frauds ATM cards etc.
Engagement involving criminal matters, involving
assessment of accounting systems and accounts
presentations where forensic accountants are hired by the
law enforcements agencies.
Employees fraud investigations involving procedures to
determine existence, nature extent of fraud and may
involve identification of the clauses.

6. Business economic losses viz contract disputes

trademark and patent infringements, losses arising
from breach of non-compete clauses, etc.
7. Cases involving medical insurance claims, medical
malpractices resulting in economic losses.

Steps in Forensic Accounting

1.

Meeting with the client

2.

Performing a conflict

3.

Carry-out preliminary investigative

4.

Developing detailed action plan

5.

Obtaining relevant evidence

6.

Perform analysis

7.

Prepare reports

8.

Chart and graphics

Window Dressing
Window dressing is the year-end practice of adjusting
portfolio weighting to meet compliance restrictions on
industry weighting and bond credit quality

Features of WD
1.

It is an act making a company look better financially than it really is.

2.

It is a technique in accounting that is used to present the financial

position of the company in a favourable light

3.

WD links to the concepts of branding, which is one of the key

concepts of marketing.

Reasons of WD
1.
2.
3.
4.
5.
6.
7.

8.

To show a stronger market position that is warranted.

To influence share prices.
To ward off takeovers bids
To encourages investors
To re-assurance lenders to finance
To hide poor management decisions
To satisfy the demands of major investors concerning the
level of return
To achieve sales or profit target, thereby ensuring that
management bonuses are paid.

Method of WD
1.

Inflation of sales

2.

Suppression of purchase costs

3.

Inflation of assets

Sustainability Reporting

A sustainability report present the organizations values

and governance model, and demonstrates the link between
its strategy and its commitment to a sustainable global
economy.

An increasing number of companies and organization want

to make their operations sustainable and contribute to
sustainable development.

Sustainability reporting can help organizations to measure,

understand
and
communicate
their
economic,
environmental, and social and governance performance.

Advantages of WD
1.

Existing shareholders take advantages of WD and sell

their shares opportunistically.

1.

There is considerable scope for WD in a companys

published accounts