Home' Charter : 0711 Charter July Contents 28 Charter I July 2011
Business > Corporate governance
Historically, some companies have
overlooked corporate governance.
It was occasionally sidelined amid the
constant demands and pressures of daily
business. But, for many, the GFC changed
all that. Corporate governance suddenly
shot up the agenda – and it’s here to stay.
The impact of that needs to be closely
monitored so, earlier this year, the
Institute commissioned a survey of more
than 250 CFOs in Australia and Asia.
CFOs were split when asked if corporate
governance inhibited their entrepreneurial
activity. Thirty eight per cent disagreed
that greater emphasis on corporate
governance reduced their entrepreneurial
activity, 27 per cent of respondents were
reluctant to agree or disagree and 35 per
As the Institute’s executive general
manager, Lee White FCA, refected,
“Only 35 per cent of respondents
actually believed increased emphasis
on corporate governance reduced their
Businesses are giving corporate governance
more priority. How are CFOs adapting?
Story Bill Palmer FCA
WANT TO KNOW MORE?
Copies of the full report CFO Survey
2011: Corporate Governance
Performance and Insights can be
downloaded at charteredaccountants.
entrepreneurial activity. This suggests that
some of the comments from directors and
other business people about increased
governance requirements hindering their
risk-taking may be overstated.
“It may also indicate that, as a result
of the GFC, there is greater recognition
by CFOs of the fact that good risk
management contributes to, rather than
detracts, from effective risk taking.”
Primarily, the aim of the Institute’s
research was to gauge business sentiment
across fnancial reporting, the role of
audit and managing the impacts of the
GFC. Beaton Research & Consulting
were commissioned to interview CFOs
and senior fnancial decision-makers from
across Australia, Malaysia, Singapore and
When asked about the role of external
auditors within companies, results were
quite encouraging. Overall 86 per cent of
respondents agree auditors demonstrate
suffcient levels of professional scepticism.
The survey also found 66 per cent
agreed that auditors vigorously challenged
management assumptions and 57 per
cent agreed or strongly agreed that
auditors vigorously challenge management
projections. This was lower in Hong Kong
(40 per cent) and higher in Singapore
(65 per cent).
CSR NOT A PRIORITY
Overall 65 per cent of respondents
indicated their company did not report on
environmental sustainability as this, and
other corporate social responsibility (CSR)
issues, are not mandatory while some 34
per cent said it wasn’t relevant. Of those
currently not reporting on these areas,
some 54 per cent indicated they have no
intention to do so in the next year.
“When it comes to CSR reporting,
there is still a long way to go in changing
the mind-set of companies, ” says White.
“CFOs can’t ignore the fact stakeholders
are becoming increasingly aware and
concerned about environmental and social
impacts. It’s just a matter of time before
stakeholders make companies more
IN TOUGH TIMES BUSINESSES
PREFER TAX INCENTIVES
In tough economic times such as the GFC,
more than 50 per cent of all respondents
indicated increased tax incentives for
investment from government would help
their business, as opposed to controlling
interest rate rises and exchange rate
appreciation. Although, a notable minority
of about 30 per cent of respondents
in Singapore and Malaysia identifed
controlling interest rate rises as a priority.
Meanwhile, 51 per cent of respondents
had dealt with the impact of the GFC by
deferring capital expenditure with some
37 per cent also reducing staff numbers.
Reducing staff numbers was higher in
Australia at 47 per cent of respondents,
compared with Singapore, Hong Kong and
Malaysia where the level was closer to
30 per cent.
Q: To what extent do you agree that the corporate governance in your company
inhibits entrepreneurial business activity?
Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree
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