Assess The Difference Between Regulatory Compliance And Decision Making

In this situation, the manager will try to increase profits as much as possible, meaning they may: • Select accounting methods that maximise profit instead of ones that better reflect the firm’s current position such as using a different depreciation method, accelerating revenue recognition or changing the level of depreciation. Try to manipulate accounting figures. Adopting a short-term focus instead of a long-term one. In this perspective, PAT is siding towards regulation. The Agency Costs of Equity One part of residual agency problems is the agency cost of equity. This is because managers’ shirking (they become less productive because they see no need to work for no extra pay) and conflicts with outside equity interests reduce the value of the firm. To minimise this, monitoring and bonding costs are required to implement measures to minimise its detrimental effect on the value of the firm. It must be noted that no firm will completely eliminate this as costs will increase exponentially as one tries to eradicate more and more. Thus, there is an optimal trade-off point between monitoring costs and agency costs. This is where the marginal monitoring and bonding cost equals the marginal shirk. The Agency Costs of Debt Much like the agency cost of equity, there is also one from debt. This is due to the fact that managers will always try to shift wealth from debt to equity holders. Managers have their stake in the firm’s equity and

Usually in corporations there is a clear distinction between the people who take critical decision – Board of Directors – and the people who actually execute the decisions – management. In FBM, many managers were also part of the Board. This arises conflicts of interest. This should be avoided.

Conflicts are realities of life and can be defined as a “situation of competition in which the parties involved are quite aware of the incompatibility of future condition whereby each party wishes to occupy a position that is incompatible with the wishes of the other” (Olu & Adesubomi, 2013, p. 2). They have no boundaries. They occur whether we like it or not, especially when there is disagreement and misunderstanding which stands as major key characteristics of human relationships. The relationship could be domestic, national, or international (Spiroska, 2014). Furthermore, conflicts happen when people are incompatible. In the organizational setting, conflict could arise due to failure of the employer, not honoring certain agreed bargaining. Henry (2009) indicated that if the workers’ right and prerogative is not appropriated rightly, it could cause conflict; such workers’

Organizational level Asis encouraging its employees respond for any irregularities. However, it looks like the employees still don’t know to whom they have to consult or contact to report on violations in the

Just as an example, I was recently working with an insurance company comprising of a remote and independent team. They all have their own lists and they do their own marketing efforts as insurance agents. There is no consistency from the organization and because of that, CASL compliance becomes very challenging. That is a big issue – not having that consistent framework across the organization.

There are many theories abound as to why there is a necessity for regulatory oversight especially within a democratic society the most prevalent of these is the need for this type of administrative adjudication is the nature of people themselves, meaning people being as they are like nice things and like a lot of negative universal aspects tend to be motivated more by simple want than need. This is also a telling sign when those that are caught generally say that they did what they did in the commission of their crimes because they simply wanted the “American Dream” and the process in which these people arrived at committing these crimes and violations was because “ends justified the means” of course this is Machiavellian thinking or so it

In 1946 Congress enacted the Administrative Procedure Act (APA) to provide minimum standards for federal agencies (Szypszak, 2011). Szypszak (2011) further states that the APA addressed the fundamental aspects of agency rulemaking and adjudication. APA authorizes two basic forms of administrative action: rulemaking and adjudication.

Regulation is an important way to enforce ethic and accountability of business. Through the unit, we can see there are some argument against regulatory. Under the free market approach, even without regulation there are private economic-based incentives for the business to provide credible info to outside parties, to avoid an increase in cost of operations. When there is a free market, the theory of market for managers and market for corporate takeovers assume managers’ previous performance will impact on how much remuneration they command in future, or whether they would be replaced by an existing management team, they will be encouraged to adopt strategies to maximise the value of their organization. The assumption is based on the agency theory, which focuses on the self-interest motivation. However, self-interest may create lots of issues as we discussed earlier, holds that regulation

23.1 The Compliance Committee in concert, will monitor the fulfilment of the Program, and must be propose and its case, made the necessary modifications to the Company Administration Counsel, for those cases that inefficiencies have been detected, or any legislative changes that have come into

There are three internal and one external governance mechanisms used for owners to govern managers to ensure they comply with their responsibility to satisfy stakeholders and shareholder’s needs. First, ownership concentration is stated as the number of large-block shareholders and the total percentage of the shares they own (Hitt, Ireland, Hoskisson, 2017, p. 317). Second, the board of directors which are elected by the shareholders. Their primary duty is to act in the owner’s best interest and to monitor and control the businesses top-level managers (Hitt, Ireland, Hoskisson, 2017, p. 319). Third, is the

| * Remuneration could compromise David’s professional judgement. * Pressure and threat posed from CFO could lead to unduly influences on David’s judgement.

Where an undertaking is unable to control the actions of its individuals, corporation sanctions fail as the entire undertaking is seen as responsible for anticompetitive behaviour, when in truth this is not the case - individual responsibility needs addressed. There needs to be a move away from this idea, and a focus more on the specific actions of individuals. Individual sanctions are tailored to challenge and deter individual behaviour, rather than the company as a whole. In 2010, an Office of Fair Trading (OFT) study found individuals were more likely to be compliant where there was a threat of individual punishment, directed at them rather than the entity, for involvement in anticompetitive conduct. Corporate sanctions are rarely sufficiently high to act as competent deterrents, instead they need complemented by sanctions against individuals, rather than used in isolation. The introduction of individual sanctions, alongside fines rather than in place of them, is evidence in the UK of Parliamentary desire to increase the severity of sanctions as fines are not seen as being an effective enough

The principals (the shareholders) have to find ways of ensuring that their agents (the managers) act in their interests.

The concept of “independence” has become very important in corporate governance. The meaning of independence has been defined in detail by regulations. These rules have become viewed as “best practice” in MTSB. For example, MTSB must have an audit committee consisting of at least three directors, all of whom are independent. Executive compensation and director nominations must be approved by either a committee of independent directors or a majority of the independent directors serving on the board. The independent directors must have regularly scheduled executive sessions at which only independent directors are present.

“I believe there is likely to be more regulation going forward because of unavoidable governance failings. This has always been the approach and is likely to continue. SOX clearly does not work regarding ACs but it is still enforced. The EU are looking to the UK suggesting they should be doing more, and that things are a bit soft currently. I do not believe that regulations are meaningful, they are often too simple do not take into account contribution to boards. FRC stance of encourage best practice seems logical. There are suggestions that AC members should have formal qualifications – more failures makes this more likely to be brought in.”