Owing to the burden of keeping shareholders happy, the managers of these two firms manipulated company accounts to show increased returns to shareholders. According to Edward Freeman’s stakeholder theory, a company’s liability extends to stakeholders as well as shareholders. Any person or group who will be impacted by the company’s decisions is referred to as a stakeholder. Customers, staff, vendors, the environment, and competitors are among them. This theory is a key component of the CSR philosophy (Corporate Social Responsibility). Companies must understand not only the legal and economic aspects of their operation, but also the philanthropic and ethical aspects, in light of this theory.Do you want to learn more? Visit https://www.montagnalaw.com/personal-injury/learning-the-basics-of-personal-injury-law/
On the other hand, some businesses use CSR as a public relations strategy. An auditor’s job is to double-check to ensure the financial information provided to investors by businesses is accurate and reliable. He is not directly responsible for corporate governance, but he does keep track of the knowledge aspects of the system. External and internal auditors are both possible. A cost audit is carried out in order to obtain reliable cost and revenue data from which decisions can be made.
Corporate legal services can provide useful insight into how organisations can conduct and execute audit functions. Cost audits are a valuable source of analytical data that the board of directors will use to oversee the company’s operations. Account statements, as well as all other materials relating to a company’s financial status, cash flow, and activities, must be audited by auditors. They must use auditing software to review financial statements and other business documents. Auditing groups, executives, secretaries, the management board, and other such parties are important players in a company’s corporate governance. The board of directors’ responsibilities, on the other hand, are far wider than those of the auditor.
It must prioritise the protection of key stakeholders’ interests, such as shareholders, consumers, staff, suppliers, and society. It establishes the company’s strategic goals, as well as leading and supervising its management.