Introduction :
While there are numerous rules and regulations governing corporations, true excellence in corporate governance is the ability to instill a culture that encourages responsible decision-making and protection of the corporation’s interest in an environment that creates confidence among stakeholders.
As a government or private sector entity operating in India, especially Bangalore, working closely with a corporate governance consultant will provide the much needed support to strengthen your financial, operational, and compliance processes and internal control systems.
It is not enough to focus on good corporate governance only at start up. Rapid organizational growth brings with it a need for the organization to instill effective and efficient systems and processes to achieve corporate goals while guarding against unnecessary exposure.
Pavan Kumar & Co is a Chartered Accountant firm based in Bangalore, which is committed to providing quality services in the field of accounting, auditing, taxation, GST and various advisory services.
What is Ethical Corporate Governance?
There are laws and regulations that mandate how a corporation must be run. However, for efficient corporate governance, there must be an attitude to run the corporation with integrity, transparency and accountability.
There are several aspects of corporate governance. These may include among others:
- Sound financial management;
- Effective and efficient systems of internal control;
- Proper business and financial decisions;
- Appropriate records management;
- Regulatory compliance;
- Conflict of interest situations;
- Effectiveness and accountability of the board and management;
- Maintenance of accurate books of account;
- Risk management;
- Protection and upholding the interest of stakeholders.
The above aspects may vary from one organization to another, depending on the line of business and the nature of regulatory control, if any, governing the organization.
Importance of Transparency
There must be a system that provides the board and stakeholders an opportunity to understand key business and financial decisions of the organization.
Adequate processes show potential issues with finances, procedures and operations.
Accurate financial records give investors and other users a basis to make financial decisions and evaluate financial performance of the entity.
Ethical Accounting strengthens Financial Confidence
Ethical accounting is the process of maintaining financial records in an accurate and honest manner and strictly abiding by the accounting and legal requirements.
Fraudulent activities like the above mentioned practices should strictly be avoided by an organization.
All organizations should adopt practices and procedures that focus on the integrity of its accounting and book keeping records to ensure the generation of financial statements of the entity that are true, correct and fair.
Understanding Board Requirements in India
Compliance with the mandatory requirements of the boards of directors of Indian companies is part of the corporate governance framework.
Requirements vary with the type of company and may include among others, holding of board and committee meetings, adoption of board resolutions, preparation and maintenance of records and reports, and financial statements.
It is not prudent on the part of a company to use standard or template checklists to determine compliance with the requirements. Factors that affect compliance by the entity may include the company’s business, among others. A professional should be in the best position to advise on these.
Which Companies Are In Need of Corporate Governance?
A range of companies, including newly established businesses, can benefit from a well-developed system of financial controls, compliance and internal processes.
- expansion of enterprises
The expansion of businesses leads to an increase in the number and complexity of financial transactions, employees, and departments. This sometimes makes it difficult to maintain accountability.
- Management Teams
Senior management may require assistance to understand and exercise appropriate financial controls. Also, management may require help to understand the requisite aspects of payroll, TDS, and reporting.
- Non-Resident Indians
Non-Resident Indians of Indian origin may require help to understand the applicable financial reporting and compliance framework in India.
- Importance of Good Record Keeping
Good record keeping forms part of good governance.
Depending on the nature and size of the business, a wide variety of records may need to be kept.
These may include bank statements, invoices and bills, GST records, records relating to income and other taxes, TDS records, payroll records, audit records, minutes of board and other meetings, contracts and agreements, financial statements, and records required to be filed with regulatory authorities.
A Framework for Improving Corporate Transparency
To improve the transparency of a business, a number of related activities may need to be carried out simultaneously, including improving accounting and record keeping systems, aligning and clarifying the control functions of management and other personnel, and ensuring that compliance with legal requirements is systematic and controlled.
- Review and Improve
There should be a continuous process of review of a company’s policies to help detect new risks and enhance existing systems.
Common Corporate Governance Mistakes to Avoid
Treating Compliance as a Year-End Activity
Compliance should not be considered at the last minute. It should be monitored throughout the year.
Poor Documentation
Adequate documentation should be provided to support a business transaction.
Ignoring Reconciliations
It is important to explain the reason for any difference that is noted when a business record is reconciled with a bank statement or other records.
Mixing Personal and Business Finances
Business and personal transactions should be kept separate.
Relying Entirely on Informal Processes
As the business expands and new employees are recruited, formal systems and procedures should be put in place.
Delaying Professional Advice
It is prudent to obtain professional advice well in advance of when compliance with a requirement becomes necessary.
How a Corporate Transparency CA Can Help
CA’s are trained to understand various financial aspects of the business. With their knowledge of the procedures and systems of accountancy, reporting, audit, documentation and compliance, they are able to render services in these areas.
Other Services
- Business registration
- Tax and GST litigation
- Financial advisory services
- Compliance review
Professional services do not relieve the responsibility of the management. The service providers should assist the management to grasp the legal obligations and help strengthen the systems in place.
There are many benefits of acquiring a qualified Chartered Accountant (CA) for your business. Here are a few examples. A qualified CA can help businesses-
Increase accuracy in financial reporting.
Identify financial and legal documents/reports required to remain compliant.
Enhance understanding of financial information.
Facilitate making informed decisions for the business.
Free the business owners from stressful administrative tasks.
There are many firms offering professional CA services. Here are a few reasons why you should consider Pavan Kumar & Co.
The firm was founded in 1985.
The firm provides a wide range of financial and legal services including but not limited to accounting, audit, bookkeeping, tax services, payroll, GST, legal, and business services.
The firm offers services to individuals and businesses and is based in Bangalore. The firm serves customers in Seshadripuram, Bangalore, and is known for its accuracy, fairness, and honesty.
A professional CA can assist you in understanding your obligations and responsibilities towards your clients and the society in general.
Frequently Asked Questions
- What does a consultant on corporate governance do?
A consultant on corporate governance assesses and improves a client organization’s financial, administrative and management controls and related processes, including reporting and documentation.
- What is the importance of ethical accounting?
Ethical accounting plays an important role in ensuring management maintains adequate financial controls and integrity, and in reporting true and fair financial information.
- What does Board compliance mean?
Board compliance means observing the terms, provisions and requirements of corporate governance relating to the board of directors of the organization. These may vary from case to case.
- Can a small/medium enterprise also use the concepts of corporate governance?
Yes. Small and medium enterprises can develop and implement corporate governance and control processes to address accounting, documentation, approval and compliance requirements as they grow and expand their business.
- Should businesses seek a CA’s assistance for governance and compliance issues?
Seeking a practicing Chartered Accountant is appropriate for assistance in accounting and/or taxation, audit, GST and TDS, and other related finance and compliance matters. Scope and nature of services would depend on the specific requirements of the client and the prevailing laws.
Pavan Kumar & Co.
Sannidhi, 26, RK Street, Jai Bheema Nagar, Seshadripuram, Bengaluru, Karnataka – 560020
Call: +91 9844081653
Email: capavankumars@gmail.com
Our team at Pavan Kumar & Co. is passionate about providing a host of tax-related services including GST, payroll, accounting, auditing and other consulting services.
Conclusion
Good corporate governance and transparency, if incorporated in the day to day business operations, would facilitate business sustainability. Regular and time bound compliance to various laws helps a business evolve adequate and effective financial processes, controls and procedures.
A consultant practicing in Bangalore can help in review of accounting and compliance processes.
However, effective governance and processes in a business is a reflection of the management’s will and commitment to integrity, honesty and ethical business practices.
This post has been created by our team of professional writers. Disclaimer: This content is created by our staff writer and is intended for editorial purposes only.