4 Oct 2022


Governance and Compliance Solutions

Format: APA

Academic level: College

Paper type: Research Paper

Words: 1502

Pages: 5

Downloads: 0


The essence of any corporate is to carry out business activities that follow sound practices and regulations. These business entities must ensure that they comply with the existing regulatory frameworks to minimize organizational inefficiencies, secrecy, and sometimes, scandals that threaten the entire business environment, even at the global level (SEC, 2016) . Particularly, the financial sector must follow these regulations, enhance their corporate governance structures and comply with the Security and Exchange Commission provisions. This paper examines governance and compliance terms and their application in the business environment. The paper also discusses compliance tools and issues that corporations must utilize and face in their daily operations, respectively. 

The application of governance and compliance terms in the business environment 

Governance refers to the management approach through which company executives direct and control the operations of an organization. The executives use the available management information and hierarchical management control structures to effect governance practices in an organization (Robert Brown, 2007) . These activities ensure that the essential management information that reaches the executive team is sufficiently complete, accurate and timely. It is from this information that the management can make decisions, provide control measures, and give directions and instructions on the systematic and effective way of carrying out the operations of the organization. The essence of corporate governance is not limited to the private sector alone (Kurt et al., 2013) . It encompasses the need to address the fundamental organizational purposes and the need to avert corporate disasters, scandals, and consequential damages to the investors, staff, society and the global business community. Therefore, organizations must ensure that their governance structures protect the interest of all the stakeholders. 

It’s time to jumpstart your paper!

Delegate your assignment to our experts and they will do the rest.

Get custom essay

Compliance is the need for an enterprise to conform to the outlined requirements in the financial legal framework of a jurisdiction. An organization can achieve compliance at two levels. At the organizational or internal level, it is realized from the management processes that identify the applicable requirements as stated by the governing laws, regulations, policies, strategies, and contracts (Robert Brown, 2007) . Externally, an organization must comply with the existing provisions set by regulatory bodies and mechanisms like the Security and Exchange Commission (SEC). Through these two frameworks, the organization can assess the risk and the potential cost of non-compliance against the projected expenses to achieve compliance. Based on the assessment, it can prioritize, fund and initiate any corrective action that is considered necessary. 

The management of a financial entity must ensure that they comply with the regulations concerning governance and compliance in all aspects of the business, particularly the financial reporting aspect. Imperatively, enterprises must ensure that their financial reporting mechanisms follow the laid down procedures and standards as a critical part of compliance and good governance (SEC, 2016) . The emergence of various financial scandals that have hit the global economy, specifically the U.S. economy, is a manifestation of the initial weak legal framework and regulatory policies. After these scandals and their devastating impact on the economy and the investors, the need to cultivate governance and compliance by corporations and the private sector cannot be overemphasized (Paletta, 2010) . 

Compliance tools that organizations can use 

The Security Exchange Commission requires that corporations must conform to the existing compliance tools that emanate to several legislations. The regulation of the disclosure is a critical compliance tool that businesses must comply with as required by the Security Exchange Commission. Through this tool, the Commission ensures that investors and shareholders of a corporation have the necessary information in making sound investment decisions. However, critics assert that disclosure in the public company scenario means little and almost absent governance. According to Robert Brown (2007), even with the relevant accounting standards and their implementation, enforcement proceedings brought because of violations and additional of items to the regulatory environment, the quality and quantity of disclosures lies on the management’s commitment and involvement in the compliance process. The critical issue that the argument raises is that compliance with existing tools is not enough. It is incumbent of a corporation’s management to commit and be involved in the process of conformity for the benefit of the entire business environment and enhance investor confidence in the mitigation measures. 

Corporations must comply with the need to report on a routine basis to the Security Exchange Commission (Skeel, 2010) . The tool requires business organizations to ensure that when submitting their financial reporting, the relevant accounting standards regarding critical aspects like disclosures are followed and implemented as reflected in their reports. For instance, the Sarbanes-Oxley Act (SOX) is an essential tool that requires the management of an organization to develop and allow access to their internal controls in their financial disclosure. Essentially, this tool allows the SEC to assess the process and the role of certain individuals in the financial reporting process within an organization. Effectively, organizations must comply with SOX Act as governance tool that requires full disclosure of critical financial issues emanating from the enterprise (Anders, 2016) . The compliance to this tool allows the SEC to reduce the potential financial risk that shareholders and investors may suffer. The recent corporate scandals have demonstrated that manipulation of the existing legal provisions and tools have provided a leeway for companies to escape the governance scrutiny placed by the commission and the tools like the SOX Act. 

Another significant is the Dodd-Frank Act that was passed in 2010. The Act is comprehensive legislation that regulates the financial industry with the overall implication of protecting the consumers and investors. The intention of the legislation is to ensure that another financial scandal’s occurrence is minimized or checked. Effectively, financial sector organizations must comply with this tool as a standard of governance and compliance (Skeel, 2010). While the provisions of the Act are lengthy and complicated, the legal tool establishes new governance agencies like the Financial Stability Oversight Commission and the Liquidation Authority that monitors and assess the performance of an organization that may be considered as huge liabilities to the economy if they fail. The collapse of such organization may have a profound impact on the U.S. and subsequently the global economy (Paletta, 2010) . The need for financial governance and compliance is essential for the development of regulatory frameworks that can enhance oversight role of the federal agencies and reduce the risk to consumers and investors. 

Compliance Issues 

As outlined by several legislations and provisions, organizations have to contend with several issues on a daily basis geared at compliance and governance as required by the statutory bodies and agencies. Effective organizational internal structures are critical to dealing with these issues in the operations of a company. These entities need to ensure that their financial reporting complies with the legal provisions and as such; they deal with financial issues about reporting and making disclosures to the public and the authorities (Papazafeiropoulou & Spanaki, 2015) . Secondly, they need to conform to the rating standards in their accounting procedures in a bid to ensure that there is no secrecy in the accounting reporting. For instance, derivatives are required to ensure that their investors know some of the perils that they may encounter in the choice of the investment they have made. Effectively, they must avail this information to the investors and the Security Exchange Commission. The organizations need to ensure that their board of directors is selected and meet all the requirements as outlined in the various aspects of legal provisions and statutes (Said & Mellett, 2013) . The boards must not violate or breach these provisions. 

The violations and breaches experienced by these corporations in their operations is a manifestation of the challenges they face as they seek to comply their business practices and the legal provisions. Therefore, these organizations must deal with federal securities laws, foreign corrupt practice provisions, and corporate compliance programs that are consistent with the federal guideline. Additionally, they must have a sound code of ethics and minimize conflicts of interest and formulate a corporate social responsibility framework that defines the ethical and moral commitments of the organization. 

Business entities must ensure that they follow these rules and regulatory mechanisms in their accounting and financial reporting with the aim of complying and ensuring that the best business practices are an internal obligation of their operations (Papazafeiropoulou & Spanaki, 2015) . However, it suffices to note that organizations must not only comply to the rules but also deal with fraudulent transactions and management secrecies that have occasioned global financial crises, for instance in 2008 (Skeel, 2010) . The Great Recession was an opportunity for these organizations to formulate internal compliance measures and incorporate them with the regulatory frameworks that have been set by the various state and federal agencies like the Security Exchange Commission, AICPA, and other authoritative agencies. 


The need for compliance and governance in the business environment cannot be overstated. Organizations need to ensure that they formulate best practices in their operations and comply with the legal provisions and the Acts in their financial reporting, accounting practices, and governance structures, especially in their internal processes that will ensure that they have complied with all the relevant laws. Additionally, the business environment can only serve all the players when there is a level playground with the overall goal being the protection of shareholders, investors, and economy. 


Anders, S. B. (2016). Governance, Risk Management, and Compliance: OCEG and the Network. The CPA Journal , Vol. 86, No . 3, pp.64. 

Clatworthy, M. A., & Peel, M. J. (2013). The impact of voluntary audit and governance characteristics on accounting errors in private companies. Journal of Accounting and public policy , Vol. 32 , No.3, pp.1-25, London, UK: Elsevier 

Kurt, F. R., Paul J. S., Urton L. A., Michael J. H., Sridhar R., Mark, S. and, Cris, R. (2013), "Internal Auditing: Assurance & Advisory Services 

McBarnet, D. (2005). After Enron: Corporate governance, creative compliance and the uses of Corporate Social Responsibility. Governing the Corporation: Regulation and Corporate 

Governance in an Age of Scandal and Global Markets. Chichester, England, John Wiley . Paletta, D. (2010) . It Has A Name: The Dodd/Frank Act" . The Wall Street Journal . Accessed on 13 th April 2016. 

Papazafeiropoulou, A., & Spanaki, K. (2015). Understanding governance, risk and compliance information systems (GRC IS): The experts view. Information Systems Frontiers , pp.1-13. 

Robert Brown Jr, J. (2007). Corporate Governance, the Securities and the Exchange Commission, and the Limits of Disclosure. Catholic University Law Review, Vol.57, No. 3. 

Said, M. E., & Mellett, H. (2013). Competition, corporate governance, ownership structure and risk reporting. Managerial Auditing Journal , Vol. 28 , No.9, pp.838-865. 

Security Exchange Commission (SEC). Securities Laws, Rules and Regulations for Securities and Exchange. Accessed on 14 th April 2016 from https://www.sec.gov/about/laws/secrulesregs.htm 

Skeel, D. (2010). The New Financial Deal: Understanding the Dodd-Frank Act and Its (Unintended) Consequences. Hoboken, NJ: John Wiley & Sons 

Cite this page

Select style:


StudyBounty. (2023, September 14). Governance and Compliance Solutions.


Related essays

We post free essay examples for college on a regular basis. Stay in the know!

Texas Roadhouse: The Best Steakhouse in Town

Running Head: TEXAS ROADHOUSE 1 Texas Roadhouse Prospective analysis is often used to determine specific challenges within systems used in operating different organizations. Thereafter, the leadership of that...

Words: 282

Pages: 1

Views: 93

The Benefits of an Accounting Analysis Strategy

Running head: AT & T FINANCE ANALLYSIS 1 AT & T Financial Analysis Accounting Analysis strategy and Disclosure Quality Accounting strategy is brought about by management flexibility where they can use...

Words: 1458

Pages: 6

Views: 81

Employee Benefits: Fringe Benefits

_De Minimis Fringe Benefits _ _Why are De Minimis Fringe Benefits excluded under Internal Revenue Code section 132(a)(4)? _ De minimis fringe benefits are excluded under Internal Revenue Code section 132(a)(4)...

Words: 1748

Pages: 8

Views: 196

Standard Costs and Variance Analysis

As the business firms embark on production, the stakeholders have to plan the cost of offering the services sufficiently. Therefore, firms have to come up with a standard cost and cumulatively a budget, which they...

Words: 1103

Pages: 4

Views: 179

The Best Boat Marinas in the United Kingdom

I. Analyzing Information Needs The types of information that Molly Mackenzie Boat Marina requires in its business operations and decision making include basic customer information, information about the rates,...

Words: 627

Pages: 4

Views: 97

Spies v. United States: The Supreme Court's Landmark Ruling on Espionage

This is a case which dealt with the issue of income tax evasion. The case determined that for income tax evasion to be found to have transpired, one must willfully disregard their duty to pay tax and engage in ways...

Words: 277

Pages: 1

Views: 120


Running out of time?

Entrust your assignment to proficient writers and receive TOP-quality paper before the deadline is over.