cg relationship

Topics: Management, Corporate governance, Board of directors Pages: 2 (402 words) Published: November 15, 2014
RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND FINANCIAL REPORTING Financial reporting connected the people that involved in corporate governance such as the management including the board of directors, auditors, information distributors, analyst and shareholders. It is the bridge that communicates the company with the external parties and will be the measurement to determine the performance or outcome of the company. Financial information is the first source of independent and true, communication about the performance of company managers. This relevance makes the financial reporting as the main attraction to management influence. The integrity of financial reporting is highly dependent on the performance and conduct of those involved in the financial reporting ecosystems, particularly directors, management and auditors. In other words, the integrity of financial reporting relies on corporate governance. The Board of Directors has a primary responsibility of overseeing the firm’s financial reporting process. Those boards of directors together with management will try to produce a financial statement that shows the company achieved a recommendable profit. The independence person that reviews the corporate reporting is the auditors. They need to follow the auditing standard with competence, diligence and integrity. They suppose to give their opinion for the reported information. In communicating the corporate reporting to the user, there are information distributors who are basically the group that provides an important communication channel for financial information. They will include comments on the financial information as an added material for shareholders to make decision. Third party analyst such as the credit-rating agencies, financial analysts, investment banks, internal lawyers and external lawyers evaluate the financial statements to provide additional information. The shareholders and other stakeholders will look into the reporting to determine the...
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