CHAPTER 1
GOVERNANCE – process whereby elements
in society wield power authority influence
TRUE- “it compromises all the process of
Governing”
Governance can be used in the ff.
a. National Governance
b. Local Governance
c. Corporate Governance
d. International Governance
8 basic characteristics of Good Governance
1. PARTICIPATION- by both men and
women ; key cornerstone of good
governance
2. Rule of Law- fair and legal framework
requires full protection of human rights
3. Transparency- information is freely
available and directly accessible
4. Responsiveness- institutions and
process try to serve the needs within
reasonable timeframe
5. Consensus Oriented- required
meditation of the different interest in
society
6. Equity and Inclusiveness- ensures
that all its members feels that have a
stake; have opportunities to improve or
maintain their well being
7. Effectiveness and Efficiency- produce
result that meets the needs of society; it
covers the sustainable use of natural
resources and protection of environment
8. Accountability- key requirement of
good governance; whom varies
depending in whether decision or action
taken are internal or external
FALSE-“Transparency and Accountability are
synonymous”
TRUE- “Responsiveness usually results to
effectiveness and efficiency”
CORPORATE GOVERNACE- system of rules
and practices and process by which business
corporation are directed and controlled;
balancing the interest of a company
Corporate Governance Stricture- distribution
of rights and responsibilities among different
participants
Purpose of Corporate Governance- is to
facilitate effective entrepreneurial and prudent
management long term success of the
company
4 Objective of Corporate Governance
1. Fair and Equitable Treatment of
Shareholders- all deserve equitable
safeguard by a good governance
structure in any organization
2. Self- Assessment – assess their
behavior and actions
3. Increase Shareholders Wealth- seen
to have higher valuation attached to
their share by businessman
4. Transparency and Full Disclosure-
higher degree of transparency
3 Effective Corporate Governance
1. Transparency and Full Disclosure
2. Accountability
3. Corporate Control
CHAPTER 2
FALSE/No- “Small Business Enterprise do
not need Good Governance”
 Good governance is important not only
the large listed public companies but to
small medium business
 They apply it because of 2 reason
o To maximize the income on
limited resources
 o To steer the company to become
more efficient and effective
Specific Activity of BOD
FALSE/No- “Does Good Governance Require
a. Overall Operation
Absolute Rules that must be adopted by all
b. Performance
organization?”
c. Compliance and Legal Conformance
 Good governance is based on principal
Broad Role of Non- Executive or
underpinned by consensus
Independent Director- the same of the broad
Essence of Any System of Corporate role of the BOD
Governance- is to follow the board and
Broad Role of Management- operation and
management freedom to steer their
accountability; manage the organization
organization forward and to exercise that
effectively; provide accurate and timely reports
freedom.
Broad Role Audit Committees of the BOD-
Board of Director Derive its Authority- from
provide internal and external audit function and
shareholders who elect the member during
the process of preparing the annual financial
annual meeting
statements
Board of Director Accountable – to all
Broad Role of Regulators- BOA set
stakeholder of the company; shareholders,
accounting and auditing standards while SEC
regulators, external auditors, creditors, and
ensure the accuracy timeliness and fairness of
society in general
public reporting of financial information
The Shareholders want Accountability on:
Broad Role of External Auditors- perform
a. Financial Performance audits of company financial statement to
b. Financial Transparency ensure that the statement are free of material
c. Stewardship misstatement
d. Quality of Internal Control
Broad Role of Internal Auditors- perform of
e. Proper composition of the Board and the
the compliance of the company policies and
Nature of the Activities
laws
Management Responsibility in Financial
Reporting
PUBLIC CORPORATION
1. Choose Accounting Principles
2. Implement System of Internal Control Board of Director
3. Ensure the FS contains accurate and Delegate
complete disclosure Executive
Management
SHAREHOLDERS/
Broad Role of Shareholders- elect the BOD OWNER
Operational
approves major initiatives from the board
Management
Responsibilities
Broad Role of Board of Director- serves as
Internal Auditors
the major representation of the shareholders;
manage account character and proper
accountability
 Stakeholders
Shareholders/
Owners
External Auditors
Regulators
Society and Others
CHAPTER 3
SECURITIES AND EXCHANGE
COMMISSION- approved the Code of
Corporate Governance for publicly listed
companies during November 10, 2016
SEC MC No. 19, Series of 2016- it has the
goal to help the company develop and sustain
an ethical corporate culture and keep abreast
with recent developments in corporate
governance
Silent Provision- is to establish a code of
business conduct and submit a new manual on
Corporate Governance that would “provide
standards for professional and ethical behavior
as well as articulate acceptable and
unacceptable conduct and practices”
Selecting the External audit firm- audit
committee activities and responsibilities
READ MORE ABOUT CHAPTER 3 O
Why is there a need for a corporation to
maintain a comprehensive and cost-
efficient communication channels to
shareholders and other?
 This is for disseminating relevant
information to its intended users. And
channels is crucial for informed decision
making by investors stakeholders and
other internal user
What is the objective of the company in
having a, strong and effective internal
control system?
 To ensure the integrity, transparency
and proper governance in the conduct of
its affair, taking into account its size risk
profile and complexity of operation
What is the purpose of having an
independent internal audit function in
publicly listed corporation?
 Its provides an independent and
objective assurance and consulting
services designed to add value and
improve the company operation
 It is use to monitor and guide the
implementation of company policies.
Give at least four responsibilities of Chief
Auditor Executive
 Provides an independent risk based
assurance service to the Board
 Perform regular and special audits as
contained in the annual audit plan
 Performs compliance audit and advisory
services related to the governance and
control
 Monitors and evaluates governance
process
Activities of Risk Management Department
 Defining risk management strategy
 Identifying and analyzing key risk
exposure relating to economic
environmental social and governance
(EESG)
 Evaluating and categorizing each
identified risk
 Establishing a risk register with clearly
defined prioritized and residual risk
 Developing a risk mitigation plan
 Communicating and Reporting
significant risk exposures
 Monitoring and evaluating the
effectiveness of the organization risk
management processes
To what may shareholders rights relate?
 Pre-emptive Rights
 Dividend Policies
 Right to propose the holding of meeting
 Right to nominate candidates to the
BOD
 Nomination Process
 Voting procedures that would govern the
annual and special shareholders
meeting
How may participation of employee in
corporate governance be encouraged?
 By making the result of the votes taken
during the most recent annual or special
shareholders meeting publicly available
the next meeting
CHAPTER 5
ETHICS- as a set of moral principles or values
that governs the action, and decision of an
individual or group while personal ethics- vary
from individual to individual at any point in time
Characteristics and Values Associated with
Ethical Behavior
a. Integrity- be principled, honorable,
upright, courageous and act on
conviction; do not be twofaced or
unscrupuluos
b. Honesty- be truthful, sincere, forthright,
straightforward, frank; do not cheat
steal, lie
c. Trustworthiness and Promise
Keeping- be worthy of trust keep
promises , full commitments; do not
interpret agreements in unreasonably
technical or legalistic manner
d. Loyalty(fidelity) and Confidentiality-
be faithful and loyal to family, friends,
employers, client and country; do not
use or disclose information learned in
confidence
e. Fairness and openness- be fair and
open minded, be willing to admit error ;
do not overreach or take advantage of
others mistake
f. Caring for Others- be caring, kind and
compassionate; share , be giving
g. Respect for Other- demonstrate for
human dignity, privacy and the right to
self-determination
h. Responsible Citizenship- obey just
law
i. Pursuit of Excellence- meeting your
personal and professional
responsibilities
j. Accountability- be accountable, accept
responsibility for decision for the
foreseeable consequences
“Ethical behavior is necessary because for
a society to function in an orderly manner”
Why do people act unethically?

 The person ethical standards are

different from those of society as a
whole
 The person chooses to act selfishly

Personal Ethics

 Basic justice, fairness

 Respect for the right of others
 Concern for the right of others
 Concern for the wellbeing on welfare of
others
 Benevolence, trustworthiness honesty
 Compliance with the law

Professional Ethics

 Integrity, impartiality, objectivity

 Professional competence
 Confidentiality
 Professional behavior
 Avoidance of potential or apparent
conflict of interest

Business ethics

 Fair competition
 Global as well as domestic justice
 Social responsibility
 Concern for environment