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ETHICS REVIEW - ETHICS REVIEW Stakeholder Influence An...

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ETHICS REVIEW Stakeholder Influence: An Overview of Corporate Governance The Business Roundtable (BR): Who is the Business Roundtable? The business roundtable is recognized as an authoritative voice on matters affecting American business corporations and, as such, has a keen interest in corporate governance. The BR is an association of CEOs of leading corporations who are committed to advocating public policies that foster growth in the U.S. economy, a dynamic global economy, and a productive and well trained U.S. workforce. Business Roundtable Guiding Principles: 1) Select a CEO 2) Operate corporation in effective and ethical manner to produce wealth for shareholders 3) Produce fair and sound financial statements 4) Engage an independent accounting firm to audit these statements 5) Play a leadership role in shaping the governance of the corporation 6) Adopt and oversee the implementation of compensation policies and establish goals to govern performance based compensation 7) Respond appropriately to shareholder concerns 8) Deal with employees, customers, suppliers and other constituents in a fair and equitable manner General Responsibilities of the Board of Directors (BOD) and General Management: The general responsibilities of the BOD include: 1) Delegating responsibilities and duties to the CEO 2) Selecting the CEO and how much he gets paid 3) Bring to the table their knowledge and experience 4) Keep an err of “constructive skepticism” 5) Provide an oversight function by keeping a staff of qualified auditors and accountants and expert advisors -Planning for management development -Understanding, reviewing, and monitoring the implementation of the corporations strategic plans -Understanding and approving annual operating budgets -Focusing on the integrity and clarity of the corporations financial statements -Advising management on significant issues facing the corporation
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CEO and Senior Management Responsibilities include: 1) Operating the corporation 2) Strategic planning 3) Annual operating plans and budgets 4) Selecting qualified management 5) Identifying and managing risk 6) Accurate and transparent financial reporting and disclosures. BR and ethical operation of a business - a pronouncement: “The CEO and senior management are responsible for operating the corporation in an ethical manner. They should never put individual, personal interests before those of the corporation or its shareholders.” Structure and operations of the BOD and the role of committees and BOD Organization: Audit Committee : Committee of at least three independent directors responsible for supervising the corporations relationship with its outside auditor. Responsible for: 1) Retaining auditor and approving in advance the terms of the annual audit engagement 2) Overseeing the independence of the outside auditor 3) Overseeing corporate financial reporting process 4) Be familiar with corporations system of internal controls 5) Oversee compliance with legal and ethical standards Corporate Governance Committee
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