Corporate governance is simply a system by which the business is directed and controlled, providing a structure through which company objectives are set; establishing a means of attaining those objectives and the monitoring and control of performance.
The key behind governance is simply to force compliance and control, the scope and depth of governance will vary dependant on the size of the company.
Governance assists with the protection of assets, and ensures transparent, timely and accurate financial reporting. Both of these key issues are as relative to small business as they are to a large company. In fact, it could be argued that these issues are more important to a small company, – as a large company has an ability to cope with a breach; while a small company, typically has very little scope to handle an unexpected loss of any assets including cashflow. Nor does a small company cope easily with malfeasance of any kind, including false financial reporting.
By implementing good governance and strategies, there may be an opportunity to create value for all stakeholders (including employees) at the same time, making the business stronger in the long term. Also, the demonstration of adequate governance gives added assurance to suppliers of finance to the business, demonstrating there is a system of control in place for efficient management.
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