Corporate Governance Evaluation of David Jones Ltd, Billabong International Ltd, Ten Ltd and Energy World Corporation Ltd

5767 Words Aug 7th, 2011 24 Pages
FINS3626 Group Assignment
Evaluation of BBG, DJS, TEN, EWC
Executive Summary
Phenomenal growth of interest in corporate governance has emerged in recent years. The body of literature on the subject has grown markedly in response to successive waves of large corporate failures. Furthermore, there have been numerous attempts to define what constitutes ‘good corporate governance’ and to provide guidelines in order to enhance the quality of corporate governance.

It must, however, be acknowledged that while everyone advocates and wants corporations to maintain ‘good corporate governance’, measuring the quality of corporate governance structures of the Australian companies has been, at best, very difficult.

The major contribution of
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Here, measures which ensure the independence and competence of an audit committee would help to maintain the confidence of all stakeholders and ensure that balance and integrity is found in the company’s financial statements.
1. Has the company established an audit committee? This would help ensure that key responsibilities such as ensuring external auditor independence are fulfilled.
2. Does the audit committee comprise of only independent directors? This would help prevent any conflict of interest which may jeopardise the integrity of financial reporting.
3. Are all members of the audit committee financially literate and is there at least one member who is a financial expert? Without financial literacy, management and oversight of financial reporting will be ineffective if members do not know what they are monitoring. Thus it is reasonable to require that a member should have, at some point in their career, been an accountant or a controller or someone who has been a financial executive or someone with significant business experience.
4. Has the audit committee adopted a formal written charter that is approved by the full board and that sets out the scope of the committee's responsibilities? Having a formal charter aligns the interest of the audit committee with those of the company, which allows for effective…

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