Corporate Governance Principles

Question: What are the principles of Corporate Governance? Explain. Answer: The organizations are facing challenges in the business environment and the function of social responsibility means to facilitate and support the goal of the society. It is important for the organizations to apply the sustainable principles in the business. Woolworth is the supermarket chain in Australia and operates more than 965 stores all across the country and having more than 112,000 staff in distribution centers, stores and supporting the offices in order to provide the customers with quality services, convenience and value (Woolworths Online, 2016). The company understands the needs of the consumer and looking for simple, new ways to shop. The company has more than 3,500 stores all across New Zealand and Australia that span liquor, food, home improvement, hotel and general merchandise. The core business of the company is to provide financial and retail services to middle and upper income groups. The company main focus is to provide quality products to their customers and focus ing on policies, development and educate opportunities, recognition and reward programs, providing balanced work life and career opportunities (Elliott and Elliott, 2008). Main context Corporate Governance Set Solid foundations for management and oversight The corporate governance of Woolworth is to enhance the value of the shareholder and protecting the funds of the shareholders. The company is committed to ensure that the practices and policies is implemented in critical areas of remuneration reporting, financial reporting and meeting the high levels of compliance and disclosure. The organization requires that all the senior executive, employees and directors should act responsibly and ethically all the times (Epstein and Lee, 2011). Woolworth is governed by the board of directors and is elected by the shareholders of the company. Construction the board to add value It is the responsibility of the board to create value and implementing strategies to meet the goals within the framework. The board of director has established committees in order to exercise its responsibility for the corporate governance and the activities of the company. The committees are Nomination Committee, compliance, risk management and audit committee (Fifield and Power, 2011). Promote ethical and responsible decision-making The board committee includes the key responsibilities, roles, membership and composition that are provided in the statement. The main role of the board is to serve and represent the interest of the shareholders. The structure of the board includes majority of non executive directors and providing necessary depth of experience and knowledge to meet the objectives and responsibilities of the board. The board recognizes different skills, experience and backgrounds represented among the directors which are important to ensure the effective governance and decision making (Holton, 2012). The code of conduct is applied to all senior executives, employees and directors and setting out other things. It confirms the standards of integrity, fair dealing and honesty with all the employees and enhancing interaction with suppliers, community, customers and competitors. The code of conduct and the range of activities and programs all across of the organization designed to encourage and promote the accountability and responsibility for the individuals for unethical and reporting practices (Kieso, Weygandt and Warfield, 2011). The board has established the committee for sustainability in order to monitor the actions of management and decisions in achieving the goals of the company. The culture and diverse is essential for the success of the company. Audit Risk Committee Make timely and balance disclosure The audit, risk management and compliance committee play an important role to provide assistance and advice to board in relation to governance framework of the organization which includes internal control systems and risk management, compliance systems and policies, accounting practices and policies, external and internal audit functions as well as financial reporting of the company (Kieso et al., 2010). The responsibilities of the committee are as follows: Evaluating the effectiveness and independence of the external auditors Setting principles to recommend the use of external auditors for the non audit services Considering the external auditors to appoint at annual general meeting Approving the charter of internal audit and reviewing the compliance Reviewing of terms of activities and reference of the subsidiary organization and the joint venture committees of audit Approving the plans of internal audit Approving the engagement of terms and remuneration of external auditor Recognize and management risk The risk management committee performs the functions in order to assist the board to oversee the system of the risk management of the company. The review of the effectiveness of the initiatives and policies will help to determine the materials risks of the company (Kimmel, Weygandt and Kieso, 2007). Reviewing the disclosures in corporate governance in relation to management and recognition of the material business risk is the main role of the risk management and also the effectiveness and adequacy of operating, accounting and administrative controls use by the company. The risk management department reviews the material risk which includes exposure of the fraud of the organization (Sharma, 2010). The role of risk management committee is to review the adequacy of the provision for compensation of the workers, general insurance and public liability. The monitor of the changes expected for the business and economic environment. Corporate social responsibility Corporate social responsibility is one of the most important strategies that have been adopted by the company. With the implementation of the CSR, the company had been able to create goodwill in the society. With the help of the CSR it has been possible to create a positive sense in the society (Spiceland, Sepe and Nelson, 2011). The different ventures that they have been applied by Woolworths have been able to bring about a global recognition of the company. The different CSR attempts that have been done by the company are as follows- Being an employer of more than 198000 employees, the company provides great security and opportunity to the employees. The attempt helps to bring about confidence in the employees. The security and the opportunity that the company provides to its employees provide a mental and moral support to the employees (Stittle and Wearing, 2008). Being a client of thousands of suppliers, it was the aim of the company to be collaborative, fair and focused on mutual benefit. So the company was able to create goodwill among the companies that are associated with the company. Being an investment for 441000 shareholders the company offers a long term and sustainable value creation. This helps to retain the shareholders and create a positive influence among the shareholders (Warren, Reeve and Fess, 2005). There are different social works done by the company in the attempt to generate a good reputation in the society. The positive feedback that has been generated help to continue great feedback among the social people. The trucks owned by the company are non-polluting in nature. As a result the trucks that are being used are environment friendly in nature. With the help of the CSR ventures the company is able to create great reputation among the people of the world. So it is evident that Woolworths is maintaining an efficient CSR strategy to gain goodwill among the people (Winters, 2008). Ethics compliance The company of Woolworths believes in gaining the trust of the customers. This is done by acting responsibility and doing the proper thing for the people. Not just the customers but the company also maintains a good relation with the suppliers as well. The company is dedicated towards upholding the human rights (Wolf, 2008). The ethical sourcing policy revolves around comprehensive criteria of anti-corruption, fair and safe working conditions labor rights and environmental compliance. Woolworths is a participant of the United Nations Global Compact and the Ethical Sourcing Policy revolves around comprehensive parameters of human rights, anti-corruption and environment. The ethical sourcing policy respects and associates all related conventions of the international labor organization and the principles of the United Nations universal declaration of human rights (Zopounidis, 2008). The strategy aims to communicate a clear set of requirements for the suppliers and work with them to enha nce the working conditions for the workers and to protect the corporate reputation as well as trust in the brands. It is expected that suppliers respect and fulfill with the criteria that is set out in the policy and they will continue to work with the assistance of the suppliers that demonstrate continual improvement. Environment Policy Woolworth positively influences the chain of retail supply in order to reduce the carbon foot print and sustainability. The company is the leaders to make the trucks, stores and other facilities less energy and greener. The targets of the company are to reduce the carbon emissions from the stores by 40 percent by 2015 that means the emissions would be same in the year 2015. The current progress of the company is to reduce the carbon emissions (Zopounidis, 2008). The company has implemented innovative technologies in existing and new stores in key areas of air conditioning and lightening and refrigeration. The organization depends on logistic networks to transport groceries and food to the customers all around the country. The target of the company is to reduce 25 percent in the carbon emissions delivered by the company (Elliott and Elliott, 2008). As retailer providing fresh food is the aim of the company and making sure that the producers and farmers are using the water and the stor es also uses the water efficiently. Woolworth is the largest recyclers of the materials in the country and diverting more than 262,000 tomes of materials from the landfill. Woolworths Conflicts The conflicts within the Woolworths Company come to the sight when investigating the annual report of the company. The board identifies its accountability to ensure that there are apt policies in place to control the confidentiality of price sensitive data as well as ensure that the person do not benefitted by the inside information (Epstein and Lee, 2011). In order to mange this , the firm has inside traders as well as price sensitive data policies in term of are more restricted compared to the requisite by the JSE listing needs. The conflict of the interest policies need the senior management for declaring details of their firms interest as well as confirmation that they are in compliance with the needs of the conflict of the interest policy (Holton, 2012). Conclusion The Woolworths Company provides great effort to the sustainability of the company. The company provides great emphasis on developing effective CSR Strategies in order to mitigate the environmental, social, and legal issues, that help in making the company environmental friendly, social friendly as well as legally Compliance Company. The conflicts of the company can be minimized by the effective management strategies that help in minimizing theissues of the company. References Cinnamon, R., Helweg-Larsen, B. and Cinnamon, P. (2010).How to understand business finance. London: Kogan Page. Elliott, B. and Elliott, J. (2008).Financial accounting and reporting. Harlow: Financial Times Prentice Hall. Epstein, M. and Lee, J. (2011).Advances in management accounting. Bingley, UK: Emerald. Fifield, S. and Power, D. (2011).Managerial finance. [Bradford, UK]: Emerald. Holton, R. (2012).Global finance. Abingdon, Oxon: Routledge. Kieso, D., Weygandt, J. and Warfield, T. (2011).Intermediate accounting. Hoboken, NJ: John Wiley Sons. Kieso, D., Weygandt, J., Warfield, T. and Kieso, D. (2010).Intermediate accounting. Hoboken, N.J.: Wiley. Kimmel, P., Weygandt, J. and Kieso, D. (2007).Financial accounting. Hoboken, NJ: John Wiley. Sharma, N. (2010).Business finance. Jaipur, India: ABD Publishers. Spiceland, J., Sepe, J. and Nelson, M. (2011).Intermediate accounting. New York: McGraw-Hill Irwin. Stittle, J. and Wearing, B. (2008).Financial accounting. Los Angeles: SAGE Publications. Warren, C., Reeve, J. and Fess, P. (2005).Financial managerial accounting. Mason, Ohio: Thomson/South-Western. Winters, D. (2008).Managerial finance. [Bradford, England]: Emerald. Wolf, M. (2008).Fixing global finance. Baltimore, Md.: Johns Hopkins University Press. Woolworths Online. (2016).Woolworths Supermarket - Buy Groceries Online. [online] Available at: https://www.woolworths.com.au/ [Accessed 26 May 2016]. Zopounidis, C. (2008).Managerial finance. [Bradford, England]: Emerald.