The United States and the European Union (EU) have engaged in a long-standing and acrimonious trade dispute over the EU’s decision to ban hormone-treated meat. Despite an ongoing series of dispute settlement proceedings and decisions by the World Trade Organization (WTO), there is continued disagreement between the United States and the EU on a range of legal and procedural issues, as well as the scientific evidence and consensus concerning the safety of hormone-treated beef.

1. Internal
Corporate Governance, Business
Ethics, Risk Management and
Internal Control

2. Course Objective
ACTG 28A Governance, Business Ethics, Risk
Management & Internal Control
This course is designed to inform and stimulate thinking on issues of good corporate governance, ethics and social responsibility
encountered in business. The material covered is intended to prepare students to recognize and manage ethical and social
responsibility issues as they arise and to help them formulate their own standards of integrity and professionalism. The overall
course objectives are to increase awareness of the ethical dimension of business conduct, to develop analytical skills for identifying,
resolving, and deciding about ethical and social responsibility issues in business. The course likewise covers identification and
assessment of business risks and devising ways to mitigate them. Focus is also given on understanding a business firm’s internal
control and how it could provide reasonable assurance of achieving objectives related to reliable financial reporting, efficiency and
effectiveness of operations and compliance with applicable laws and regulations.
Main Topics- Midterm Course Requirements Reference book
• Corporate Governance
• Business Ethics
• Risk Management
• Internal Control
Main Topics- Final
• Activities/Assignment
• Quizzes
• Long Test
• Midterm/Final exam
• Projects
• Corporate Governance,
Business Ethics, Risk
Management & Internal
Control by Cabrera
• 2021~2022 Edition

3. Internal
Course Outline
Schedule, Topic
Week 1 Introduction and overview of school's vision, mission, goals and objectives. Course
specific guidelines
Week 2 Introduction to Corporate Governance, Responsibilities and Accountabilities
Week3 SEC Code of Corporate Governance
Week 4,5 Introduction to ethics
Week 5,6,7 Ethical Dilemma, Advocacy Against corruption
Week 9 or 10 Midterm Examination
Week 11~12 Risk Management
Week 13 Internal Control
Week 14 Fraud & Error
Week 15, 16 Internal Control Affecting Asset, Liabilities, and Equity
Week 18 Final examination

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Page 4
Corporate Governance

5. 5
Internal
Learning Objectives
1. Define the Corporate Governance
2. Understand the characteristic of good
governance
3. Explain the meaning , purpose and
objectives of corporate governance
4. Know an describe the principles of
effective corporate governance
5. Explain the relevance of the good
governance
6. Identify the parties involved in Corporate
governance and responsibilities

6. 6
Internal
“Corporation
• An artificial being created by operation of law, having the
right of succession and the powers, attributes and
properties expressly authorize by law or incidents to its
existence. ( Revised Corporation Code 2019)
• Is a legal entity that is separate and distinct from its
owners . It enjoy most of the rights and responsibilities that
individual posses. (Investopedia)
• The corporate structure- shareholders( owners), board
of directors, the management ( CEO,COO, CFO)

7. Internal
Words Associated
to Governance
control
authority
government stewardship
power
administration
rule Jurisdiction

8. Internal
“Governance defined as
• The act or process of governing or
overseeing the control and direction of
something . “ by Meriam Webster”
• Refers to the process whereby elements
in society wield power, authority, and
influence and enact policies and decisions
concerning public life and social
upliftment.
• Process of decision-making and the
process by which decisions is
implemented through the exercise of
power or authority by leaders of the
country and organization.

9. Internal
Characteristic of a
Good Governance
Participation
Rule of Law
Transparency
Responsiveness
Consensus
Oriented
Equity and
Inclusiveness
Effectiveness and
Efficiency
Accountability

10. Internal
❑ Participation
❑ Rule of law
By both men and women should
have voice in decision making. It
can be either direct or through
legitimate institutions or
representative.
Legal framework should be fair and
enforced impartially
❑ Transparency
Built on the free flow of information.
Process and information’s are
directly accessible to those
concerned with them and enough
information is provided to
understand and monitor
Processes and institutions produce
results that meet the needs while
making the best of resources
❑ Consensus Oriented
Good governance mediates differing
interest to reach a broad consensus on
what is the best interest of the group
❑ Equity &
Inclusiveness
All men and women have opportunities
to improve or maintain their well being
❑ Effectiveness &
Efficiency
❑ Responsiveness
Institution and processes try to
serve the needs of all stakeholders
within the reasonable time
❑ Accountability
Liability to explain the results of
one's decision taken in the interest
of others
Decision-makers in government,
private sectors, and civil society
are accountable to the public and
to their institutional stakeholders.

11. Internal
“Let us watch the video “ The top 10 Biggest
Corporate Scandals” by WatchMojo.com

12. Internal
What can you say about
the companies featured
in the video all have
common?

13. Internal
What can you say about
the companies featured
in the video all have
common?
High profile corporate
collapses
Available Annual
report and FS seemed
fine
Adverse effect in many
people- shareholders,
employees, suppliers, &
economic itself
Fraud & Deception
Tone of the Top

14. Internal
• Why have such collapses
occurred?
• What might be done to
prevent such collapses
happening again?

15. Internal
Why Governance
Matters?
Corporate Governance Definitions
The Philippine Securities and Exchange Commission in its revised code of
corporate governance 2009, defines governance
“ as the framework of rules, systems, and process in the corporation that
governs the performance by the Board of Directors and Management of
their respective duties and responsibilities to the stockholders.
SEC Memo Circular No 24 , Series 2019, in its Code of Corporate
Governance for Publicly Listed Companies & Registered Issuers, defines
governance as:
“ the system of stewardship and control to guide organizations in fulfilling
their long term economic, moral , legal, and social obligations towards their
stakeholders”
The International Standards for the Professional Practice of International
Auditing Standards define as:
“ The combination of process and structures implemented by the board to
inform, direct , manage and monitor activities of the organization toward
the achievement of its objectives. “

16. Internal
Why Governance
Matters?
Governance Definitions
System
Board of Directors
Objectives
Stakeholders
Company’s
Obligations
Four P’S
People
Purpose
Process
Performance
Management

17. Internal
Why Governance
Matters?
The definition of corporate governance can be broken down into three parts:
It is intended to fulfill long-term
obligations ( economic, moral, legal,
social) of the company
It benefits the stakeholders
It is a system of stewardship and
control of corporate entities

18. Internal
Why Governance
Matters?
Concept of “ Stewardship and Control
During financial crisis, companies
that implemented effective
governance survived.
Corporate governance works like a “
captain of the ship who must navigate
the ship to safer water in the midst of
a bad weather?
Oversight or monitoring of corporate
performance and operating results.
This is performed by the board of
directors

19. Internal
Why Governance
Matters?
Fulfillment of Long-Term Obligations
Providing sufficient returns to
shareholders such as dividends and
earnings.
To fulfill its long term economic,
moral, legal and social obligations to
its stakeholders.
Payment of appropriate compensation
to its employees.( moral obligations)
Legal obligations include able to
comply with legal requirements and
contractual obligations
Corporate social responsibility,
operating that enhance society and
the environment

20. Internal
Why Governance
Matters?
Benefits the Stakeholders
Corporation exists not only for the benefits of
the stockholders
It also exist for the benefits of the other
stakeholders.
Stakeholder Theory

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Internal
Difference Between Governance and Management
versus
Management Governance
Take charge of the day- to day
operations of the business
Deals with “ running the business
Managers will carry out projects
intended to provide the company
with steady revenue and cash
flows stream.
Ensuring the business is being
run properly.
Oversight and governance role
is being performed by the
board of directors together with
various board committee
The board sets the direction of
the organization

22. 22
Internal
Why is Corporate Governance is Needed?
Shareholders
Objectives
Ownership
Board of
Directors
Objectives
Control
• Corporate Governance does is to seek to try and ensure that directors
behave in such a way as to ensure that shareholders objectives are met.
• Enhance the shareholder’s value and protect the interest of its shareholders
by improving the corporate performance and accountability in creating long
term shared value

23. 23
Internal
Objectives of Corporate Governance
Fair & Equitable
Treatment of
Shareholders
Self-
Assessment
Increase
Shareholder’s
Wealth
Transparency
and Disclosure
▪ Fair treatment of
all shareholders
▪ Enables to assess their
behavior and actions
before scrutinized
agencies
▪ Protect the long term
interest of the
shareholders
▪ Encouraging full
disclosure of transactions
in the company
▪ OECD states that the purpose of corporate governance is to maximize the organization’s long- term success , creating
sustainable value for its shareholders and stakeholders.

24. Internal
Why Governance
Matters?
Detailed Benefits of Good Corporate Governance
To Business
To Business
▪ Takes into account the needs
of all stakeholders
▪ Creates transparency in all
activities
▪ Lift up company’s influence
and reputation
▪ Creates and sustain corporate
social responsibility within the
organization
▪ Ensures business activities
are ethical
To Organization
▪ Employees show
commitment to work and
deliver better results
▪ Adhere to strict
compliance culture
▪ Company’s reputation in
society improves
▪ Repeat business from
customers increases
▪ Reduce conflict , fraud
and corruption
To Various Parties
Involved
▪ Stakeholders are better
informed ahead about all
important management
decisions. This leads to
the formulation of robust
strategies.
▪ Investors return on
investments is maximized
▪ Company follows fair
employment policies and
procedures
▪ Reap full benefits of global
capital market and attract long
term capital
▪ Lesser fines and
penalties

25. 25
Internal
Basic Principles of Effective Corporate Governance
& Full disclosure
• Transparency & Full
Disclosure?
• Does the board meet the
information needs of
investment communities?
• Does it safeguard integrity
in financial reporting?
• Does the board have
sound disclosures
policies and practices?
• Corporate Control
• Has the board built long
term sustainable growth in
shareholders' value for the
corporation?
• Does it create an
environment to take risk?
• Accountability
• Does the board clarify
its role and that of
management?

26. 26
Internal
Illustrative Application of the Basic Principles of Corporate Governance and
Best Practice Recommendations?
Refer to page 9-12 of your book:

27. 27
Internal
Corporate Governance Responsibilities and Accountabilities
versus
Stakeholder Shareholder
An individual or group who has
vested interest in the business but
don’t necessarily own it
May be affected , directly or
indirectly by the company’s
activities
Primary focus on the company’s
performance an good will
Has a financial interest or
partial owner of an
organization
Directly affected by the
company’s financial
performance
Relationship between
shareholders vs other
stakeholders

28. 28
Internal
Shareholders
• Provide effective oversight through election of board members
• Approval of major initiatives such as buying or selling stock, annual reports on
management compensation from the board
• Provide financial backing in return for potential dividends over the lifetime of the
company

29. 29
Internal
Board of Directors
• Major representative of stockholders to ensure that the organization is run
accordingly to the organization's charter and there is the proper accountability
• Oversee the overall operations, performance, and compliance/legal
conformance

30. 30
Internal
Non-Executive or Independent Directors
members of the board of directors who is not part of the executive team.
Typically, not engage in the day-to-day management of the organization but
involved in the policymaking and planning exercise.
• Major representative of stockholders to ensure that the organization is run
accordingly to the organization's charter and there is the proper accountability
• Understand the organization , its business , its operating environment and its
financial position.
• Assist management to keep performance objectives at the top of its agenda.

31. 31
Internal
Management
• Operations and accountability
• Manage the organization effectively, provide accurate and timely reports to
shareholders and other stakeholders.
• Ensure operational efficiency , financial reporting, quality, and compliance
applicable laws, regulations, rules and standards.

32. 32
Internal
Audit Committee of the Board of Directors
• Provide oversight of the internal and external audit function and the process of
preparing the annual financial statement as well as public reports on internal
control.
• Selecting the external audit team
• Approving any non-audit work performed by the audit firm
• Selecting and or approving the appointment of the Chief Audit Executive

33. 33
Internal
Regulators
• Board of Accountancy
• Set accounting and auditing standards dictating underlying financial
reporting and auditing concepts, set the expectations of audit quality and
accounting quality
• Securities and Exchange Commission
• Ensure the accuracy, timeliness, and fairness of public reporting of financial
and other information for public companies.

34. 34
Internal
External Auditors
• Perform audits of the company, financial statements to ensure that the
statements are free of material misstatements including misstatements that
may be due to fraud

35. 35
Internal
Internal Auditors
• Performs audit of companies for compliance with company policies and
laws, audits to evaluate the efficiency of operations and periodic evaluation
and test of controls.

36. Internal

37. 37
Internal
ANNOUCEMENT
❖ Asynchronous class next
week, Mar 5
❖ Assignment for upload today
❖ Quiz on Mar 5

38. Internal