Preview

Apply or Explain vs. Comply or Else (King Reports)

Good Essays
Open Document
Open Document
346 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Apply or Explain vs. Comply or Else (King Reports)
The increase/decrease in emphasis on the basic philosophical premises underlying the King III Report, as compared to the King II Report.
Apply or Explain vs. Comply or Else
The King II code only applied to certain entities and followed a rule-based based approach hence “Comply or Else” or mandatory corporate governance. “Comply or Else” refers to the companies obligation to abide by corporate governance standards. These standards are written into law and regulations and have to be obeyed. Failure to obey these standards and regulations may/will result into sanctions such as fines for the corporations, imprisonment of executive manager/director and prevention from listing or trading on the stock exchange.
The King III applies to all entities whether it be public, private sectors or non-profit sectors and regardless to the form of the establishment example a private company. This code, unlike its predecessor, is principle-based rather than rule-based in other words voluntary corporate governance. Hence “Apply or Explain”.
Advise and explanation is the theme in “Apply or Explain” – corporate governance standards are recommendations on principles and practices rather than strict rules, that companies are advised to act accordingly to. Thus companies are allowed to use own discretion on whether to apply to the recommended principles and practices however it is expected of each company to explain why it chose not to comply in for example annual reports. In order for this approach to be effective companies must have regular reports and for its stakeholders to critically scrutinise these reports for relevance and accuracy.
To conclude this section of the question, I would say that there has been in increase in the emphasis on philosophical premises from King II to King III. All companies have now been included and the theoretical part of the philosophies are being emphasised. Philosophies are only theories and cannot always be applied as rules can be applied.

You May Also Find These Documents Helpful

  • Satisfactory Essays

    1.2. Explain how legal requirements and codes of practise can inform practice in handling information…

    • 307 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    We are guided by our established standards of corporate governance and ethics. We review our systems to ensure we achieve international best practices in terms of transparency and accountability. The foundation of our approach to corporate governance is laid out in our Corporate Governance Guidelines and in the charters of our Board of Directors’ committees.…

    • 3148 Words
    • 13 Pages
    Good Essays
  • Better Essays

    Management Planning - Tyco

    • 1063 Words
    • 5 Pages

    1. Governance – Adhere to the highest standards of corporate governance by establishing processes and practices that promote and ensure integrity, compliance and accountability.…

    • 1063 Words
    • 5 Pages
    Better Essays
  • Better Essays

    ENRON Case Study

    • 1579 Words
    • 5 Pages

    The ways company is governed today have gone on for a change given the reform in audit functions and the likes. As it is with the case, effective financial reporting is the sole concern of companies. Hence, in recent development there has been a dramatic shift towards corporate governance, because the capital market mostly feeds on the effectiveness of…

    • 1579 Words
    • 5 Pages
    Better Essays
  • Good Essays

    Bus1002 Unit 2 Assignment

    • 1258 Words
    • 6 Pages

    In this piece of coursework I am going to be comparing and contrasting the Regulatory Framework and Conceptual framework which are used by UK public companies. I am also going to be going through how each of the frameworks contributes towards its companies accounts and how each is affected by the different Laws like the Companies act.…

    • 1258 Words
    • 6 Pages
    Good Essays
  • Powerful Essays

    provide an independent, true and fair opinion on the company’s and the consolidated entity’s financial report…

    • 1682 Words
    • 7 Pages
    Powerful Essays
  • Good Essays

    Hm Case Summary

    • 575 Words
    • 3 Pages

    Stringent transparency in all important matters (in particular regarding conflict of interests, third party transactions); Timely disclosure of the annual report (also in English);Reporting of non-financial risk related information…

    • 575 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Cfa Ethics Quiz

    • 1427 Words
    • 6 Pages

    True / False Questions 1. Corporate governance is the system that directs and controls business corporations. True False 2. The development of a separate corporate entity limited organizations to raising funds from individual shareholders in order to grow their operations. True False 3. Managers only are accountable to their owners. True False 4. The board of directors runs the organization on a day-to-day basis. True False 5. The term outside director can be misleading because some outside members may have direct connections to the company. True False 6. The audit committee is comprised of independent specialists who have no connection to the company. True False 7. The primary responsibility of the compensation committee is to oversee compensation packages for corporation employees. True False 8. The corporate governance committee represents a more public demonstration of the organization 's commitment to ethical business practices. True False 9. While the issue of corporate governance has reached new heights of media attention in the wake of recent corporate scandals, the topic has received increasing attention for over a century. True False 10. In contrast to the Cadbury report 's focus on internal governance, the King report included a code of corporate practices and conduct that went beyond the corporation itself. True False 11. "King II" formally recognized the need to move the stakeholder model forward and to consider a triple bottom line instead of a single bottom line of profitability. True False 12. The Cadbury report argued for a guideline of "comply or else." True False 13. A set of guidelines that require companies to abide by a set of operating standards or face stiff financial penalties refers to the "comply or explain" methodology. True False…

    • 1427 Words
    • 6 Pages
    Satisfactory Essays
  • Best Essays

    A Mix of mandatory and voluntary requirements governs corporate governance in Australia. The ASX’s Corporate Governance Code, are voluntary guidelines emphasized by an ‘if not, why…

    • 2654 Words
    • 11 Pages
    Best Essays
  • Powerful Essays

    Accounting Scandals 3

    • 10869 Words
    • 44 Pages

    Brennan N, McGrath M (2003). Financial Statement Fraud: Incidents, Methods and Motives, Working paper, University College Dublin…

    • 10869 Words
    • 44 Pages
    Powerful Essays
  • Powerful Essays

    When a financial report is prepared, those charged with governance (Board of Directors) are responsible for ensuring that the information contained within it is relevant, reliable, comparable and understandable. As well as this they must also ensure that the report is true and fair in nature which means that the reports must be faithful and have a consistent application of accounting standards or applicable framework. Management, or those charged with governance are required by Section 295(4)(c) of the Corporations Act 2001 to provide a Directors’ statement of solvency, stating that to the best of their knowledge and information, the entity does and will continue to trade as a going concern for the foreseeable future. The Accounting Standard AASB 101 Presentation of Financial Statements states that management must make an assessment as to the ability of the entity to continue trading as a going concern in the foreseeable future when preparing the financial reports and make necessary disclosures as to any conditions that may…

    • 1442 Words
    • 6 Pages
    Powerful Essays
  • Powerful Essays

    Ethics is about choice and the values that guide us and the standards we use.…

    • 1665 Words
    • 7 Pages
    Powerful Essays
  • Powerful Essays

    Most companies strive to have a high level of corporate governance. These days, it is not enough for a company to merely be profitable; it also needs to demonstrate good…

    • 6980 Words
    • 28 Pages
    Powerful Essays
  • Good Essays

    Corporate Governance deals with the manner the providers of finance guarantee themselves of getting a fair return on their investment. Corporate Governance clearly distinguishes between the owners and the managers. The managers are the deciding authority. In modern corporations, the functions/ tasks of owners and managers should be clearly defined, rather, harmonizing. Corporate Governance deals with determining ways to take effective strategic decisions. It gives ultimate authority and complete responsibility to the Board of Directors. In today’s market- oriented economy, the need for corporate governance arises. Also, efficiency as well as globalization is significant factors urging corporate governance. Corporate Governance is essential to develop added value to the stakeholders. Corporate Governance ensures transparency which ensures strong and balanced economic development. This also ensures that the interests of all shareholders (majority as well as minority shareholders) are safeguarded. It ensures that all shareholders fully exercise their rights and…

    • 1672 Words
    • 7 Pages
    Good Essays