CINDY

Goodmorning everyone, we are going to present about emerging issues in corporate

governance.
INTRODUCTION (slide 1)
When it comes to running a company, changes are unavoidable. As a result, in order to stay
in operation, businesses must have good corporate governance. Governance itself is a set of
rules, practices and company control processes that involve balancing the interests of both
internal and external stakeholders. Companies with strong and proper corporate governance
have a significant impact on the company's health or continuing operations. However, every
system or thing in the company must have certain weaknesses. It is the same with corporate
governance, where a variety of problems can emerge over time. Investor confidence,
corporate governance reporting, social, environmental & ethical performance, challenges
facing directors and so on are indeed a few of the issues.
BODY (slide 2 )
Corporate governance refers to the structures of laws, procedures, and processes that regulate
companies, as well as the allocation of rights and responsibilities among all members within
the organization. The objective of corporate governance is to create an environment of trust,
transparency, and accountability that is also crucial for long-term investment, financial
stability, and business ethics, as well as supporting stronger development and inclusive
corporate communities. However, the implementation of corporate governance might bring
up several issues which will be further discussed below.
DISHE
INVESTOR CONFIDENCE (slide 3)
Investor’s trust in global capital market is a crucial driver of economic growth, global
competition, and financial stability. Following a rash of financial scandals in the late 1990s
and early 2000s, IFAC formed the Task Force on Rebuilding Public Confidence in Financial
Reporting to investigate the triggers, determinants, and consequences of the global loss of
public confidence in financial reporting, as well as ways to recover financial report
credibility. The task force's report has been issued, and it shows that the lack of confidence in
financial reporting is a serious global issue that needs to be addressed by all corporate
governance players, including boards of directors, executives, auditors, and regulatory
bodies. The task force made the following recommendations for restoring investor confidence
in financial reports that have either been adopted or are in the process of being implemented
in accordance with IFRS and corporate codes of ethics.
CORPORATE GOVERNANCE REPORTING (slide 4)
Corporate governance reporting involves evaluating the organization's corporate governance
and presenting the information to interested parties. To measure, testify to, and report on the
efficacy of corporate governance, corporate governance principles should be established.
Corporate governance reporting transforms one-dimensional financial reporting into
multidimensional bottom lines, requiring disclosure of the company's commitment to
transparency to its stakeholders through various levels of governance: economic, social,
environmental, and ethical performance. Companies around the world are focusing on their
multidimensional bottom line success related to their economic, ethical, environmental,
governance, and social practices, according to the concept of accountability. While the
primary objective and aim of accountability reporting will remain an economic concern in the
near future in order to build long-term shareholder capital, social, environmental, and ethical
performance of companies will make headway.

SOCIAL, ENVIRONMENTAL, AND ETHICS PERFORMANCE (slide 5)

Baca slide aja
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Slide 6 :
A healthy environment is a necessary factor for community well-being, business growth, and
a prosperous and productive economy, according to Goldman Sachs, a leading global
financial institution, which plays a positive role in addressing environmental challenges. The
environmental policy system at Goldman Sachs is structured to resolve environmental issues
and encourage policy initiatives with a strong emphasis on providing real alternatives to
environmental issues. Goldman Sachs' environmental initiatives include:
Public organizations would follow a code of ethics for key executive officers as a result of
new reforms. The following issues are addressed by the existing codes of conduct and ethics
programs:

1. Conflicts of interest between the corporation and its staff are avoided and resolved
2. Compliance to all legislation, codes, regulations, guidelines, and procedures that
apply
3. Focus on client service to improve the company's integrity
4. Appropriate use of classified documents
5. Encourage whistle-blowers to expose dishonesty and wrongdoings

CHALLENGES FACING DIRECTOR (SLIDE 7)

Boards' responsibilities are broadening to include both advisory and oversight roles. Boards
must oversee management strategies, decisions, activities, and results in order to protect the
interests of all stakeholders, including shareholders, as part of their oversight position.
Director Accountability and Personal Liability
Recent corporate governance regulations have fallen short of effectively addressing director
responsibility and transparency, when only a few directors have paid out of pocket over
violations of fiduciary obligations, and shareholder class action claims are often dismissed
before going to trial. Companies normally pay settlements, but shareholders ultimately incur
the risks of director lawsuits, which dilutes the value of their shares.
Separation of The Chairperson of The Board and CEO Roles
In certain nations, there are no laws, procedures, or guidelines requiring the distinction of the
CEO's and the board's functions.. The differentiation of the roles where the CEO will control
the nomination of independent directors and the CEO has the opportunity and tendency to
dominate board leadership and procedure is recommended by best practices. When there is a
CEO duality, the lead director should be in charge of the board's management and operations.
Director Compensation and Stock Ownership
Companies have supplemented cash rewards for their directors with shares, stock options,
and restricted stock, and have incorporated director pay into their corporate governance
system, so director compensation has lately gotten a lot of coverage. Recent developments
also encouraged outside directors to take a more involved role in the company's operations,
including strategic decision-making and monitoring roles. Best practices suggest that director
pay arrangements include both cash and restricted shares, and directors acquire a significant
stake in the company's common stock over time. Since directors are also driven by other
considerations, equity ownership rewards and other financial incentives have proved to be
unsuccessful in aligning directors' preferences with shareholder interests. Fear of
unfavourable effects, can be a more effective way to improve director diligence in carrying
out their fiduciary duties.
SHEPOK
FINANCIAL REPORTING CHALLENGES SLIDE 8
Financial Restatement
Financial restatements are common when material misstatements in previously released
financial statements are discovered, whether due to mistakes or fraud. Section 404 appears to
be working well in decreasing the number of financial restatements and thereby improving
financial reporting efficiency, as shown by the significant decrease in the number of
restatements by major public corporations.
Enhanced Business Reporting
To increase the consistency, accountability, and fairness of financial reporting, enhanced
business reporting (EBR) is proposed as an alternative. EBR focuses on both financial and
non-financial details about current and future KPIs.
Stock Options Accounting
Stock options have been used to provide long-term incentive measures for executives,
officers, and key employees as part of compensation plans. Accounting for the recognition
and pricing of stock options has been contentious, and policymakers, regulators, and norm
setters have recently increased their scrutiny. Black-Scholes and indexing of similar publicly
traded firms are two pricing models widely used to determine the real value of a stock option.
Present pricing models, on the other hand, are being chastised for not accurately calculating
the value of stock options.
Companies may issue discounted so-called "in-the-money" options without shareholder
approval or adequate disclosure, which has also resulted in federal internal investigation
investigations, late disclosures, financial restatements, internal violations, and shareholder
lawsuits. Option backdating's negative consequences, as well as the potential for executives
to benefit at the expense of investors, may have a negative impact on shareholder capital.
Anti-fraud program and Practices
Antifraud initiatives that focus on fraud awareness and education in the workplace,
whistleblowing policies and procedures that encourage and protect workers to disclose
suspicious activity, proper internal control procedures designed to deter and detect fraud, and
surprise audits can also help to minimize fraud.
Antifraud systems should be developed and managed to discourage, prevent, and detect all
forms and sizes of fraud, from financial information misrepresentation to asset
misappropriation and employee fraud.
The Use of Derivatives Speculation
Derivatives have been used to mitigate the risk of interest rate and currency volatility.
Companies with a governance system that gives managers more leverage and limits
shareholder rights, as well as those with better derivative internal controls, are more likely to
use derivatives for profit rather than speculation.
MIBO
EMERGING AUDITING ISSUES (HALAMAN 9)
The requirement that public accounting companies make their financial statements available
to the public allows the general public to make an informed judgement about their viability.
Thus, there may be several emerging auditing issues that may come from this reason:
Auditor Independence
Auditor independence has been addressed in many respects by SOX and SEC
regulations. The PCAOB also gave its approval to a proposal addressing auditor
independence in the provision of tax services. The AICPA published Ethics Interpretation
101-15, Financial Relationships, in October 2005. This interpretation explains how auditors
in their client's company define "direct" and "indirect" financial interests, as well as the types
of financial interests that are considered direct or indirect.
Auditor Changes
Despite the fact that existing corporate governance reforms do not entail audit firm rotation, it
appears that audit committees are seriously contemplating circumstances that warrant audit
firm rotation. The post-SOX pattern in audit firm rotation does not support the notion that
changing auditors lowers audit efficiency.
Engagement Letter
A member of the audit committee is not required to sign the engagement letter and
management has the authority to sign the letter. The chairperson of the company's audit
committee, or a designated member of the committee, should review, authorize, or sign the
engagement letter, according to best practices.
Audit Failure
According to a study of high-profile financial scandals, they were caused by shortcomings in
business, financial reporting, and auditing functions. Management may engage in financial
statement fraud if opportunities arise, and auditors may be pressured not to disclose
uncovered fraud by gamesmanship schemes, increasing the risk of both reporting and audit
failures.
Integrated Audit
An integrated audit includes both an ICFR and a financial statement audit. In its new AS No.
5, the PCAOB offers auditors a collection of guidelines for improving their audit methods,
practices, processes, and preparation while performing an integrated audit.
Concentration of and Competition in Public Accounting Firms
While there is no evidence that accounting firm consolidation has a negative effect, more
concentration of auditing firms will be detrimental to the profession's healthy competition.
Regulators and standard-setters should allow public corporations to use public accounting
firms other than the Big Four (e.g., the Second Big Six) for audit and allowable non-audit
services, resulting in increased audit efficiency and lower audit costs.
Confirmations
Confirmations provide audit proof for a variety of management assertions, such as valuation,
allocation, existence, completeness, rights, and even the absence of certain conditions.
Accounts receivable confirmation is required by current auditing standards. To ensure the
credibility and reliability of the process and reduce the risk of receiving inaccurate or
collusive information, auditors should maintain control over confirmations. Auditors can
check the source and content of electronic media used during the confirmation process.
Auditors may use service providers to do this.
Audit Report
Investors may request that auditors express their thoughts on the company's overall financial
health and future prospects. In a more customized audit report, auditors should express their
opinions on both financial and nonfinancial data.
Auditor Liability
Large multinational public accounting firms are doing brisk business, with sales increasing
by double digits in the post-SOX period. However, auditing companies continue to face a
number of difficulties The nature and scope of auditor problems, the probability of failures,
the repercussions of such failures, and the implementation of contingency plans in the event
of failures are all part of the viability problem. Nonetheless, shareholders should vote
annually on the independent auditor's ratification, and any auditor limited liability conditions
and terms should be disclosed in proxy statements to shareholders
CINDY
RECOMMENDATION (halaman 10)
Several approaches can be implemented in order to mitigate these issues and to provide a
better corporate governance:

- Improving quality of financial reporting in several aspects such as:

1. Increasing growing focus on the investor viewpoint.
2. Standardizing the method of developing and applying accounting standards
3. Advancing the creation of more consistent, principles-based accounting standards
4. Creating a disciplined system to allow for more professional judgment to be used
5. Taking action to align US GAAP with the International Financial Reporting Standards
(IFRS)
- The usage of continuous audit with the help of XBRL
The Internet has had a huge effect on the activities and financial statements of
businesses. As more businesses adopt the XBRL format, the financial reporting process is
shifting toward electronic financial reporting. Investors can get online, real-time access to
their company's financial reports thanks to the XBRL format.

CONCLUSION (halaman 10)

The governance, financial reporting, and auditing practices of public corporations have all
improved as a result of corporate governance reforms. Nevertheless, a number of issues exist,
including director independence and liability, CEO duality, executive compensation,
shareholder democracy (including majority voting, advisory votes on executive pay, and
access to proxy materials), and CEO retention as well as succession. The need for more
forward-looking corporate reporting concentrating on both financial and nonfinancial KPOs
in the fields of economic, governance, ethical, social, and environmental activities,
convergence of accounting and auditing standards, financial restatements, auditor
independence and liability, electronic financial reporting, continuous auditing, and integrated
audit of financial statement as well as internal control are just a few of the financial reporting
and auditing challenges.

That’s all about our presentation thankyou