Search results
1 – 10 of over 4000Muhammad Saleem Korejo, Ramalinggam Rajamanickam and Muhamad Helmi Md. Said
Money laundering (ML) is one of the greatest challenges, the global community faces today. Corporate entities such as financial institutions (FIs) are most susceptible to…
Abstract
Purpose
Money laundering (ML) is one of the greatest challenges, the global community faces today. Corporate entities such as financial institutions (FIs) are most susceptible to facilitate and launder money. The paper raises the following question: Who is to bear the burden of liability? Either a corporation or an individual, thus this paper examines liability issues in a corporate setting particularly financial institutions, which arise from regulatory noncompliance or failure to oversight in the context of ML.
Design/methodology/approach
The study is legal doctrinal mainly based on case laws, legislation and research articles.
Findings
Firstly, this study provides how the concept of liability in a corporate setting in UK and USA has drifted from its traditional “duty to care” standard to a new “duty to oversight” and “Responsible Corporate Officer” concepts resulting a shift in corporate to individual liability. Secondly, in the context of anti-ML violations in FIs, imposition of corporate or personal liability solely may not effectively deter ML and may create conflicts between management and shareholders.
Practical implications
The paper can be a source to explore the issue of ML liability for regulatory noncompliance based on UK, USA and Pakistan law.
Originality/value
This paper demonstrates that the imposition of either corporate or personal liability may create dilemma either for shareholders or management; however, a “combine or collective liability” approach carries potential to retard ML activities in FIs and balancing the harm-penalties incurred upon a corporation while addressing shareholders concerns.
Details
Keywords
Siti Rochmah Ika and Nazli A. Mohd Ghazali
The purpose of this paper is to examine the association between audit committee effectiveness and timeliness of reporting. Specifically, the paper investigates whether there is…
Abstract
Purpose
The purpose of this paper is to examine the association between audit committee effectiveness and timeliness of reporting. Specifically, the paper investigates whether there is any relationship between effectiveness of an audit committee and submission of audited financial statements to the Indonesian Stock Exchange (IDX).
Design/methodology/approach
Audit committee effectiveness is measured by an index based on the framework developed by DeZoort et al. Timeliness of reporting is defined as the number of days that elapses between a company's financial year‐end and the day on which its audited financial statement is received by the IDX. The sample comprises 211 non‐financial Indonesian listed companies. Multivariate regression analysis was performed to analyse the relationship between audit committee effectiveness and timeliness of reporting.
Findings
The findings show that timeliness of reporting is associated with audit committee effectiveness. This result suggests that audit committee effectiveness is likely to reduce the financial reporting lead time, i.e. the time taken by companies to publicly release audited financial statements to the stock exchange.
Research limitations/implications
The audit committee effectiveness index employed in this study was based on DeZoort et al.'s framework. There could be other aspects of audit committee effectiveness such as the organizational context or multiple‐directorship which had not been addressed in the present study. Thus, future research may consider and examine these other aspects in developing a more comprehensive index.
Practical implications
The findings suggest that audit committee effectiveness is a significant factor ensuring timely submission of audited financial statements. Thus, companies perhaps can re‐look into how to further improve audit committee effectiveness in order to enhance timeliness of financial reporting.
Originality/value
Unlike the majority of prior studies which investigated the association between the presence/absence of audit committee and timeliness of reporting, this study is one of few which examined the relationship between effectiveness of audit committee and timeliness of reporting in an emerging country.
Details
Keywords
The purpose of this paper is to describe and analyze the accounting standards reforms that have moved the accounting profession away from rules‐based towards principles‐based…
Abstract
Purpose
The purpose of this paper is to describe and analyze the accounting standards reforms that have moved the accounting profession away from rules‐based towards principles‐based accounting practice and financial reporting, and to explore the implications for boards of directors of fair value estimates of the unknowable contaminating financial statements with financial misstatements.
Design/methodology/approach
The paper critically reviews the internationally accepted accounting, auditing and financial reporting standards with respect to fair value accounting and relates them to directors' fiduciary duties – the duties of care, of oversight, and of obedience.
Findings
The search for relevance in financial accounting raises daunting challenges for boards of directors tasked with fairly presenting the financial condition of a reporting business entity.
Research limitations/implications
The accounting profession has long been epistemologically conservative, judging reliability to be more important than relevance in the compiling of financial statements. With the fair value reforms, relevance has achieved ascendency over reliability. This necessitates an increase in the need for more research in the epistemology and ethics of accounting.
Practical implications
Boards of directors need to be well‐informed about, and fully engaged with, the assessment of the level of risk of material misstatement associated with the fair value accounting estimates, and with the adequacy of the related mandatory explanatory disclosures.
Originality/value
This paper's originality is grounded in its exploration of the epistemology of accounting in the light of the adoption of fair value conventions in the internationally accepted accounting, auditing and financial reporting standards and its drawing out of the implications this has for corporate governance.
Details
Keywords
John E. Sorkin, Abigail Pickering Bomba, Steven Epstein, Jessica Forbes, Peter S. Golden, Philip Richter, Robert C. Schwenkel, David Shine, Arthur Fleischer and Gail Weinstein
To provide an overview of the guidance for proxy firms and investment advisers included in the Staff Legal Bulletin released this year by the Securities and Exchange Commission…
Abstract
Purpose
To provide an overview of the guidance for proxy firms and investment advisers included in the Staff Legal Bulletin released this year by the Securities and Exchange Commission (SEC) after its four-year comprehensive review of the proxy system.
Design/methodology/approach
Discusses briefly the context in which the SEC’s review was conducted; the general themes of the guidance provided; the most notable aspects of the guidance; and the matters that were expected to be, but were not, addressed by the SEC.
Findings
The guidance does not go as far in regulating proxy advisory firms as many had anticipated it would. The key obligations specified in the guidance are imposed on the investment advisers who engage the proxy firms. The responsibilities, policies and procedures mandated do not change the fundamental paradigm that has supported the influence of proxy firms – that is, investment advisers continue to be permitted to fulfill their duty to vote client shares in a “conflict-free manner” by voting based on the recommendations of independent third parties, and continue to be exempted from the rules that generally apply to persons who solicit votes or make proxy recommendations.
Practical implications
The SEC staff states in the Bulletin that it expects that proxy firms and investment advisers will conform to the obligations imposed in the Bulletin “promptly, but in any event in advance of [the 2015] proxy season.”
Originality/value
Practical guidance from experienced M&A lawyers.
Details
Keywords
Noor Adwa Sulaiman and Fatimah Mat Yasin
This study aims to examine the structural power wielded by the audit committee (AC) and the various bases of its power, whilst also exploring the behavioural tactics used by the…
Abstract
Purpose
This study aims to examine the structural power wielded by the audit committee (AC) and the various bases of its power, whilst also exploring the behavioural tactics used by the AC to leverage its power in the oversight of the external audit.
Design/methodology/approach
Empirical evidence was drawn from semi-structured interviews with external auditors and AC members in Malaysia.
Findings
The AC’s structural power is derived from its formal and network position in the organisation. The AC possesses three forms of organisational-based power (legitimate, coercive and informational) resultant from its formal position, and these combine with the AC’s personal power (will and expert). The AC uses its personal power base to develop trusting relationships and to promote the exchange of information with other key corporate governance actors in the network position. Furthermore, the AC applies at least four behavioural tactics (assertiveness, ingratiation, rationality and coalition formation) to exercise its bases of power.
Originality/value
This study attempts to describe the AC’s structural sources of power, its organisational and personal power bases, and the behavioural tactics it uses when exerting its power.
Details
Keywords
Highlights the role played by the Securities and Exchange Commission(SEC), the New York Stock Exchange (NYSE), the American Institute ofCertified Public Accountants (AICPA), The…
Abstract
Highlights the role played by the Securities and Exchange Commission (SEC), the New York Stock Exchange (NYSE), the American Institute of Certified Public Accountants (AICPA), The Institute of Internal Auditors (IIA), the Treadway Commission, and other professional organizations in furthering the establishment of audit committees in the USA. In the international arena, the UK Cadbury Committee, the Australian Borsch Committee, and the Canadian Macdonald Commission have influenced the widespread use of corporate audit committees in their respective countries. The guidelines on audit committees set by the IIA, AICPA, SEC, and the Treadway Commission have had a tremendous impact worldwide. Cultural differences may, however, limit the formation and effectiveness of audit committees globally even though auditing is a relatively homogeneous profession. The Institute of Internal Auditors, as an international professional association, may wish to consider the cultural dimensions of corporate governance in formulating professional internal auditing standards dealing with the structure and functions of audit committees internationally.
Details
Keywords
Michael Clark and Charles E. Harrell
This paper aims to familiarize readers about the nature and extent of the risks that listed companies and their boards of directors face by not addressing their attention to…
Abstract
Purpose
This paper aims to familiarize readers about the nature and extent of the risks that listed companies and their boards of directors face by not addressing their attention to insuring the cyber-security of their operations and not disclosing cyber-episodes and their impact on operations as suggested by the SEC's Division of Corporate Finance.
Design/methodology/approach
This article provides an overview of recent developments that led the SEC's Division of Corporate Finance to issue a non-binding guidance on cyber-security, along with an analysis of the importance of cyber-security in today's marketplace, those business sectors that already must comply with statutory and regulatory duties to safeguard private information, the applicable duties of directors under Delaware law, and an overview of the enforcement activities against companies that have experienced data breaches, as well as a discussion of private class actions that have sought damages claimed to have resulted from the negligence of companies and their boards to fulfill their duties to protect such information from being stolen due to inadequate systems and protective measures.
Findings
The SEC Division of Corporate Finance's voluntary disclosure guidance concerning cyber-security offers various, non-binding reasons for listed companies to report about cyber-events that may be material to a business operation or profitability. Listed companies and their boards face enforcement and private litigation risks in the event of a cyber-incident because of the heightened interest in cyber-security, the considerable costs likely incurred as a result of a cyber-event, and the duties they owe to exercise appropriate oversight in the face of known risks.
Originality/value
The paper provides practical explanation of developing issues by experienced corporate and litigation lawyers.
Details
Keywords
Ahmed Atef Oussii, Mohamed Faker Klibi and Insaf Ouertani
The purpose of this paper is to analyze the perception held by attendees about the role and the effectiveness of their audit committees.
Abstract
Purpose
The purpose of this paper is to analyze the perception held by attendees about the role and the effectiveness of their audit committees.
Design/methodology/approach
The investigation was conducted via a qualitative methodology through the content analysis of interviews conducted with 33 attendees of audit committee meetings of Tunisian listed companies.
Findings
The findings reveal that audit committees do not have the means to achieve the objectives that they have been given by the legal texts, which are likely to characterize their work as “ceremonial” or “symbolic.” This paper also found that the most significant effects of the audit committee chair’s role come through informal meetings and conversations.
Practical implications
The paper’s findings have policy implications for regulators. Findings from this research may allow regulators to assess whether the audit committee activities in Tunisian companies meet their expectations.
Originality/value
This paper tries to fill a gap in the extant literature and provides meaningful information on activities performed by audit committees and the extent to which they are perceived effective in the eyes of attendees of audit-committee meetings. This study is one of the few field investigations that have analyzed audit committees’ effectiveness in emerging markets through interviews with attendees involved in audit-committee processes.
Details
Keywords
This study aims to explore the opinions of audit committee (AC) members on the extent to which they fulfil the oversight role vested in them by the Jordanian Corporate Governance…
Abstract
Purpose
This study aims to explore the opinions of audit committee (AC) members on the extent to which they fulfil the oversight role vested in them by the Jordanian Corporate Governance Code (JCGC).
Design/methodology/approach
This study uses semi-structured interviews with 18 AC members.
Findings
The findings suggest that although ACs largely meet the JCGC’s recommendations, their substantive oversight role in practice is limited. In particular, the responses indicate that ACs suffer from a lack of real power, especially concerning the appointment (or removal) of external auditors and the evaluation of internal control. Moreover, ACs have no actual role in issues deemed important for financial reporting quality (e.g. reviewing management estimates and evaluating chief financial officer (CFOs) and internal audit executives).
Originality/value
This study provides rich insights into ACs’ oversight processes in a setting outside the Anglo-Saxon corporate governance model where knowledge is scant on the ACs’ real function. Hence, the study injects the literature with new qualitative-based evidence from a peculiar civil law country. Also, Jordan has spent time and energy trying to strengthen corporate governance practices to boost investors’ confidence. However, the interviewees’ responses indicate that the oversight role of the AC is still far from what the regulators anticipate. Therefore, the findings offer useful feedback for regulators to think more deeply about the current governance regulations. The feedback from this study can be extended to other developing countries with similar institutional environments, especially countries in the Middle East and North Africa.
Details
Keywords
Patrick Mapulanga, Dorothy Doreen Eneya and Diston Store Chiweza
The purpose of this paper was to assess the similarities and differences between the Political Parties and the Access to Information Acts in Malawi. While political parties are…
Abstract
Purpose
The purpose of this paper was to assess the similarities and differences between the Political Parties and the Access to Information Acts in Malawi. While political parties are largely funded by donations that are frequently kept as a secret, the Access to Information Act does not include political party funding among the categories of non-disclosed information.
Design/methodology/approach
This paper is based on the qualitative content analysis of the legislation in Malawi. Content analysis of the two pieces of legislation was adopted. This paper is a review of the literature and an examination of Malawi's Political Parties and Access to Information Acts. The document study was supplemented by a review of related literature on the two legislations.
Findings
The Political Parties Act prohibits the government, ministries and departments from directly or indirectly funding political parties. The Access to Information Act to ensure information generated by Malawi government ministries, departments and agencies is readily made available by the citizens when needed or requested. The Access to Information Act does not exempt political parties from disclosing their funding sources. The two acts work in tandem to promote accountability and transparency in political party funding and sources.
Research limitations/implications
This study is limited to Malawi's Political Parties and Access to Information Acts. Only the South African related acts have informed the paper. However, several acts within developing countries would have greatly aided the paper.
Practical implications
The implementation of the two pieces of legislation has implications for the balance between disclosure and non-disclosure of political party funding. Oversight functions and credible human resource capacity are needed in both political parties and government enforcement institutions.
Social implications
Oversight functions by the Administrator-General through the Registrar of Political Parties and the Malawi Human Rights Commission are key to the implementation of Malawi's Political Parties and Access to Information Acts, respectively. Proper enforcement of the oversight functions is expected to result in an open, transparent and accountable Malawian society.
Originality/value
Various players are needed in the accountability chain to protect disclosure and non-disclosure of information. Very little information is known on the powers, functions and duties of office bearers capable of enforcing legislation to keep political parties' funding clean. Little is known on how the citizens can access information regarding political parties funding.
Details