Discuss a corporate governance function(s) and a mechanism(s) and evaluate

the role of corporate governance in discharging accountabilities. Example;

executive remuneration, the role of accountants and auditors, and employee
ownership.

Introduction

In every company that is established, there are goals, missions, and/or

organisational objectives that are intended to facilitate improvements in the
performances of the staff and the survival of the organisation. These goals, missions,
and/or organisational objectives therefore form the principles on which decisions are
made by the management teams of these organisations. However, the kinds of
structures that an organisation puts in place in an effort to accomplish the objectives
that it has established are what really contribute to the success of the company's
aims and objectives. In addition, it is well knowledge that the term "corporate
governance" refers to the techniques, systems of practises, guiding concepts, and
procedures that are used in the governance of corporations. As a result, the
responsibilities of the members of the staff, including those of the other participants,
as well as their rights are accurately reflected by the organisation and are allocated
in an ideal manner by it. This system ensures that everyone in an organisation
follows acceptable and clear decision-making processes, which represents and sees
to it that the interests of all stakeholders, managers, employees, suppliers,
customers, and of course all other individuals working within the organisation are
protected. From what has been discussed up until now, it is clear that good
corporate governance in the business world is very necessary. This is so because it
serves to protect not just the interests of the firm but also those of the investors. It is
therefore important to investigate the many different mechanisms of corporate
governance and the many different functions that it performs within an organisation.
This will allow for a better understanding of its roles and how it can be used to
maintain both trust and mutual benefits within an organisation.

This research will investigate the roles and methods of corporate governance, as
well as its role in the discharge of accountabilities, using Nigeria as the case study
country. It will do so against the background of the aforementioned circumstances.
The functions of corporate governance will be discussed in this research once the
procedures of corporate governance have been covered. In addition to this, it will
investigate the functions of corporate governance as a tool for discharging
responsibilities, with CEO compensation, the role of accountants and auditors, and
employee ownership all being taken into consideration. In addition to providing a
conclusion, this research will also conduct a review of the relevant literature in an
attempt to give a more in-depth comprehension of the subject matter.

Corporate governance may be characterised as an effective internal control system,

as well as effective internal monitoring and controls of power or government from
inside, according to Rossouw, et aldefinition. .'s (Rossouw, et al., 2002). Throughout
the years, this definition has been recognised as the one that has been broadly
adopted by the most organisations and nations. It highlights corporate governance
as a tool for ensuring the stability of financial markets, encouraging investment, and
expanding the economy. In addition, when asked "what is corporate governance,"
James Chen provided the following explanation: "Corporate governance is a system
that takes into consideration the rules, methods, and practises by which a
corporation is directed and managed." [Citation needed] (Chen 2021). He went on to
say that good corporate governance entails balancing the interests of a company's
many stakeholders, such as the company's top management executives,
shareholders, suppliers, investors, consumers, and consequently the whole
corporate community (Chen 2021). Therefore, the most important factor in
determining how a company's corporate governance is handled is the company's
board of directors.

The end result of poor corporate governance is that it casts doubt on the operations
of a firm as well as its overall profitability (Chen 2021). As a result, the necessity for
good corporate governance has become even more vital; this is especially the case
in the wake of several instances of theft of cash by firm management, which in the
vast majority of cases result in the companies going bankrupt (Adegbite, 2012).
Accountability, openness, fairness, and responsibility must always be the
fundamental guiding principles of corporate governance because of this reason.
Going a step further, the next section of this book will examine how these concepts
might be attained and preserved inside businesses.

Review of the Published Material

The ability of corporate governance to assist organisations in setting objectives and

effectively managing risks is perhaps the single most significant function it provides.
There is no doubt that effective risk management in business is one of the most
important factors in ensuring the survival of a firm. According to a study conducted
by the OECD in 2014, despite the fact that taking risks may be one of the
fundamental driving forces behind business and entrepreneurship, the price of risk
management failures is typically underestimated. This is true whether the failure
occurs on the outside or the inside of the company, as well as in terms of the amount
of time needed to manage and correct the situation. Therefore, good corporate
governance should ensure that risks are well understood, effectively managed, and
appropriately reported when necessary (OECD 2014).

Therefore, it is the responsibility of the board of directors of a company to organise

the company's objectives, rules, and processes in such a manner that they
contribute to the achievement of the company's near-term and long-term investment
goals while also serving to mitigate risk (Lister 2017). The development of
investment strategies is another one of those administrators' primary responsibilities.
These investment strategies need to be conceived with the intention of ensuring the
continued expansion of the firm over the long term and generating a return on
investment that is profitable. The board of directors has to carefully assess the
pricing of each investment opportunity while at the same time making a decision
about the potential problems that may arise in order to effectively manage the risk
that is associated with each investment opportunity. Because of this, the firm has the
capacity to anticipate prospective problems and devise solutions to prevent such
problems (Lister 2017).

One more of the functions of corporate governance is to ensure that there is

appropriate accountability between the board of directors and, concurrently, a check
and balance mechanism among the greater management structure of the
organisation. As a consequence of this, various business operations and activities
will be carried out in the appropriate manner (Lister 2017). In addition to promoting
responsibility, this method has the additional advantage of facilitating improved lines
of communication within the management structure and more adaptability with
regard to the modification of the company's primary objectives and long-term vision
(Lister 2017).

Another essential part of good corporate governance is making certain that there is
complete openness on the rules and regulations that the government imposes on
corporations (Lister 2017). For instance, there should be a huge variety of needed
processes, which may involve periodic financial reporting, employee relationship
management, the management of potentially hazardous products, and so on. It's
possible that the firm might suffer adverse effects if it doesn't have enough of them
(Lister 2017).

The following are examples of corporate governance mechanisms:

Structures of corporate governance must have a mix of different processes, in

addition to controls and rules that help the business advance, in order to fulfil the
requirements of the board of administrators and ensure that the structure is effective.
Internal Mechanisms, External Mechanisms, and Independent Audit are the three
subcategories that make up these mechanisms.

Internal Mechanisms: The internal mechanisms are what are accountable for the
inner control systems that are used by any organisation. They are responsible for
keeping an eye on how the organisation is doing in relation to its objectives and
goals, ensuring that it stays on track and providing course adjustments as necessary
(Davoren 2021). In addition, they serve the internal goals of the firm, as well as the
objectives of its stakeholders, workers, owners, and managers. The organisation of
the board of administrators into levels of responsibility, the control and creation of
corporate policy, independent internal audits, monitoring of management, and a
great deal more are all examples of internal management processes (Davoren
2021). Other types of internal mechanisms of control include the board of directors,
the concentration of ownership, corporate reporting, and interactions with various
stakeholders (Davoren 2021).
Controls that are located outside of an organisation are referred to as having an
external mechanism, which is another name for this kind of control. The goals of
organisations such as the government, banks and other financial institutions, tax
authorities, and labour unions are the primary focus of their attention. External
mechanisms are put in place for the purpose of ensuring proper debt management
and legal compliance. These requirements, which are often imposed by external
stakeholders in the form of union contracts and/or regulatory standards, give rise to
the need for these mechanisms (Davoren 2021).

In order to fulfil one's responsibilities, the role of corporate governance is as follows:

Within the context of the topic of corporate governance, the term "accountability" is
one that is used rather often. This is due to the fact that in the aftermath of corporate
crimes and thefts committed by board members of corporate organisations, there
has been an ongoing issue over whether or not the board of stakeholders is
appropriately responsible (Keay and Loughrey, 2015). Therefore, it is the
responsibility of the policymakers in government to provide a method by which
stakeholders may be held responsible to the general public. In addition,
strengthening the board of directors' accountability to the company's many
stakeholder groups is one of the primary focuses of good corporate governance
(Keay and Loughrey, 2015).

The significance of accountability in corporate governance cannot be overstated.

This is due to the fact that the structure of a business organisation is designed in
such a way that the board of administrators is given a wide range of power and
discretion, which allows them to make decisions and devise strategies. When one
has this type of decisive authority, there is a great deal that can be done to bring
about any kind of change in an organisation. A further benefit of accountability is that
it protects against the risk of agents abdicating their responsibilities or using their
authority to further their own agendas rather than that of their employers (Harlow and
Rawlings, 2007). As a result, it is essential to implement a structure that requires the
board of directors to be responsible and accountable to the shareholders as well as
the broader public. Because of this, accountability is a tool that should not be
overlooked.
It is now necessary to have a conversation about how corporate governance can be
used to achieve accountability in areas such as executive compensation, the role of
accountants and audits, and employee ownership of the company.

The importance of recognising at this juncture that the level of CEO salary is
significantly influenced favourably by the level of overall business success cannot be
overstated (Rehman, 2021). In addition, according to what we have discovered so
far about the munition effect, the dominant shareholders will try to appropriate the
interests of the minority shareholders and then look for ways to take advantage of
those interests by taking undue advantages of the powers they hold. Take, for
example, the practise of accepting excessive remuneration and, as a result,
appropriating the shares held by the company's minority shareholders (Rehman,
2021). Corporate governance steps in to prevent situations like this one from
occurring.

Accountants and audits play an important part in improving corporate governance,

which in turn reduces the number of chances for accounting fraud. One of the most
important steps that can be done is to have professional audits performed. The
organisational structure of auditing is designed in such a way that the auditor does
not have direct responsibility for corporate governance but rather serves as a check
on the data components of the governance system. This is the case because
auditing is structured in this manner (OECD 2006). Therefore, it is the responsibility
of auditors, whether they are internal or external auditors, to determine whether or
not the financial information that is provided to investors can be relied upon.
Governance of a corporation requires prompt decision making, accurate
accountability, and vigilant observation (OECD 2006). In addition, these decisions
must be based on information that is relevant and dependable in order to prevent the
organisation from veering off course. Furthermore, being responsible requires
accurate measurement, reporting, and openness. Last but not least, monitoring
requires the existence of observation systems as well as feedback in order to be
effective. It is the responsibility of auditors to ensure that each and every one of
these is successfully implemented as their primary duty (OECD 2006).

As a result, the goals of audits in an organisation can be summed up as the structure

that provides an expert opinion on the fairness with which financial statements are
presented. This includes a company's results of operations, cash flows, and financial
position (OECD 2006). To be able to provide such an opinion, the auditor has to do a
thorough examination of the financial statements as well as the records that support
them using appropriate auditing procedures (OECD 2006)

Ownership on the Part of Employees

First and foremost, the term "employee ownership" refers to any arrangement or
contract in which a company's staff members are granted the right to possess shares
in their own company as well as the permission to possess shares in their own
company and also are granted the right to the value of shares in their own company
(NCEO 2021). Employee ownership is a broad concept that can be implemented in a
variety of ways, ranging from the straightforward distribution of shares to the
establishment of intricately structured plans (NCEO 2021).

Additionally, from the point of view of corporate governance, one of the primary
benefits of employee ownership is that it provides workers with the opportunity to
profit from the growth of the company. These advantages, which typically take the
form of an increase in the value of the company's stock, are one of the primary
advantages of employee ownership (NCEO 2021). Therefore, in order to maintain
accountability in employee ownership, the majority of employee ownership
corporations have a management and corporate governance structure that operates
with a board of administrators that is elected by shareholders. This board of
administrators is responsible for monitoring the activities of the company and
appointing the Chief Executive Officer (NCEO 2021).

Study of a Case:

It has been suggested that Nigerian companies, where there is an excess of

corporate ownership, put in place corporate governance mechanisms that help
reduce board dependency and improve companies' financial performance while
striking a balance between the interests of both managers and stakeholders in a
company. Nigeria is a country in which there is an abundance of corporate
ownership (Ahmadu, et al., 2011). CEOs do not make up a significant percentage of
the total board of directors in Nigeria. This is done as a way to rein in the excesses
of the executive board, which are seen as being detrimental to the overall goals of
the company. Additionally, a high level of engagement by directors on the board of
directors can lead to their involvement in the company's finances. This involvement
is frequently not recognised when certain professional models are not adopted,
which is why the question that needs to be asked is: how does the composition of
the board of directors affect the financial performance of Nigerian companies?

We looked at Section 359 (3 and 4) of the amended Nigerian Business and Allied
Affairs Act (CAMA) 2004, which states that all companies that are registered and
operating in Nigeria are required to have an audit committee that is comprised of an
excellent combination of shareholders and directors. This allowed us to provide an
answer to your question. In addition, the Nigerian Corporate Governance Code of
2003 and 2011 stated that businesses were required to establish audit committees in
order to raise corporate governance standards. This was done to ensure that the
audit committees were immune to influence from the majority of the board of
directors (Security and Exchange Commission, 2003).

Following an examination of the mechanisms and roles of corporate governance in

the process of discharging accountabilities, as well as a consideration of the
significance of this topic in the context of the Nigerian business world, the findings of
this study lead to the conclusion that the mechanisms and roles of corporate
governance have a significant influence on the process of discharging
accountabilities in Nigerian companies. In addition, it is essential to keep in mind, in
light of the presentation that has just been given, that the composition of the board,
as well as its size, should be managed in such a way that it does not give any
particular part of the board the kind of power that makes it easy for them to pursue
their own interests to the detriment of the company. Managing the board in such a
way should be managed in such a way that it does not give any particular part of the
board the Additionally, there should be a well-functioning check and balance system
existing both in the internal and external mechanisms of the corporate governance.
Additionally, the audit committee should be composed in such a way that it is easily
monitored in order to prevent any kind of misappropriations. It is also important to
note that the structure of the board and the governing system are major issues in
corporate governance, which, if they are not properly monitored, will have a negative
impact on the performance of companies in Nigeria. This is something that should be
taken into consideration.

REFERENCE

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