Governance Regulations Among Australia, South Africa, and United Kingdom
Business conditions and regulatory initiatives have resulted in a variety of codes and regulations to meet the needs of local capital markets[i]. For instance, in the United States, several major corporate and accounting scandals such as those perpetrated by Enron, WorldCom, Tyco International, and Adelphia communications resulted in the enactment of laws and rules to restore and maintain confidence in the financial markets. Other nations experienced similar situations and enacted rules and regulations to promote consumers and investors’ confidence in the financial market. This paper examined the major events that led to the enactment of corporate governance regulations in Australia, South Africa, and the United Kingdom (UK). And analyzed the similarities and differences among the regulations, and opined on the most comprehensive regulation.
Impetus for the Promulgation of the Regulations
Australia’s Principles of Good Governance and Best Practices
Poor corporate practices and governance resulted in the enactment of Australia’s Principles of Good Governance and Best Practices. In 2001, the National Australia Bank, the largest financial service institution on the Australian Stock Exchange (ASX), reported an operating loss of AUD 4.1 billion (US$ 4.1 billion). This huge loss emanated from poor corporate governance and reckless risk taking by the bank’s management. Thus, in 2003, the Principles of Good Corporate Governance and Best Practice was promulgated to avert future occurrence and enhance corporate governance. Further studies indicated that the loss was mainly due to the lack of auditors’ independence and ineffective risk management practices. This scandal displayed an operating environment characterized by lax oversight, poor risk management, and weak internal control.
The United Kingdom’s Combined Code on Corporate Governance
Major corporate abuse and failures triggered the enactment of the Combined Code on Corporate Governance (2008). Apart from
Impetus for the Promulgation of the Regulations
Australia’s Principles of Good Governance and Best Practices
Poor corporate practices and governance resulted in the enactment of Australia’s Principles of Good Governance and Best Practices. In 2001, the National Australia Bank, the largest financial service institution on the Australian Stock Exchange (ASX), reported an operating loss of AUD 4.1 billion (US$ 4.1 billion). This huge loss emanated from poor corporate governance and reckless risk taking by the bank’s management. Thus, in 2003, the Principles of Good Corporate Governance and Best Practice was promulgated to avert future occurrence and enhance corporate governance. Further studies indicated that the loss was mainly due to the lack of auditors’ independence and ineffective risk management practices. This scandal displayed an operating environment characterized by lax oversight, poor risk management, and weak internal control.
The United Kingdom’s Combined Code on Corporate Governance
Major corporate abuse and failures triggered the enactment of the Combined Code on Corporate Governance (2008). Apart from
References: [ii] Yang, L. 2006. Corporate Scandals and Corporate Governance Agenda. US-China Law Review. Vol.3.75. 3 Institute of Directors in Southern Africa. 2002. Executive Summary of the King Report 2002. [iii] Profile 's Financial Markets Directory. 2001. Profile 's Financial Markets Directory. http://www.fmd.co.za/data/M00034/M00034.htm (access on February 14, 2011) [iv] Randall K [v] Kurt F. Redding. 2007. Internal auditing: assurance & consulting services. The Institute of Internal Auditors. Altamonte Springs, FL. [vi] ASX Corporate Governance Council. 2007. Corporate Governance Codes and Principles – Australia. http://www.ecgi.org/codes/documents/corp_governance_principles_asx_2007.pdf.(access on February 14, 2011) [vii] Fleming, Grant [viii] The UK Approach to Corporate Governance (2006). http://www.frc.org.uk/documents/pagemanager/frc/FRC%20The%20Uk%20Approach%20to%20Corporate%20Governance%20final.pdf (access on February 10, 2011) 10 Financial Reporting Council