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Corporate Laws and Governance

Corporate Laws and Governance

Introduction

The business Organizational world is one of the key commercial and financial sectors that follows and uses key corporate laws and has main Corporate Governance requirements. All these regulations are solely and strictly adhered to by all the form of business organization such as Sole proprietorship, partnerships, and companies. All the rules and regulation that are formulated towards these business organizations ensures proper and critical management as well professionalism in the sector.

this report, the focus is on accounting irregularities which is rampant in companies and has ensured collapse of various company. All business organizations have different organizational structure with the finance department being the main accounting entity of the company. Unethical behaviors have enshrined many of the finance offices making them to lack honesty, accountability, and transparency. Accounting irregularities are key erroneous entries or financial statement that are not in adherence with rules and regulations that govern the business world and the accounting profession. This action is commonly done deliberately in order to gain by deceiving or defrauding. Transparency is key in any financial sectors and any unethical behaviors that sort to unsuspectedly gain mischievous benefits always lead to critical financial problems. All financial operations should always embrace professionalism. In the contemporary world financial sectors have been un ethically used to manipulate financial recordings to gain advantage over others.

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Main Findings

Key corporate laws Patisserie Holdings was subject to

The accounting process is always envisioned to be that done in honesty, integrity, accountability, and transparency. In the business sector and all the forms of business organization that have any regulated ownership and the ownership is legally enshrined in the prevailing regulations of the corporate, the corporate laws must always be followed. The Patisserie Holdings concept determines that the financial authority and the officers given responsibilities of offering financial service to the company did not adhere to the prevailing laws.

Corporate laws govern and regulates operations in the corporate and business sector. The regulations focus on the conduct of the persons and individual in the service. As for the Patisserie Holdings the financial officers breached the law on transparency of the financial statements they issued. Such a professional misconduct and unethical behaviors breeds accounting irregularities that make the profession unique.

Similarly, corporate laws regulate the way all stakeholders including the employers should carry on with their specified duties. In this regard as well the Patisserie Holdings finance department threw outside the window the rule or law on honest. This was intentionally to make the company seem viable in the public image in order to gain new clients or put confidence in the existing shareholders and stake holders. The company also failed in ensuring accuracy of information provided for public consumption. The absence of doing due diligence in giving financial reports makes the

Identification of the main Corporate Governance requirements

Corporate strategies should be part of the management issues that should be have their implementation and development done by professionally ethical personnel. The Patisserie Holdings had a basic requirement that the management was supposed to utilize the position of the Chief Executive Officer in overseeing the financial operations. the Chief Executive Officer in any company is regarded as the chief financial offer of the company and should be held liable for any activities in the department. The Patisserie Holdings company through the Chief Executive Officer should have ensured that there are periodic auditing and reporting of the financial statements. This could have ensured that any anomaly in the financial entries s noted early enough and countered appropriately. The finance office in this scenario could have not been allowed to operate independently but in the same spirit of cooperation that ensures value addition in all department is observed. The liability should therefore be left for the Chief Executive Officer to always ensure effective service delivery in the financial sector.

Corporates should also have legal framework in their governance that are solely tasked with ensuring that they safeguard and protect the legality of all the operations and task that are done in the company. For the case of Patisserie Holdings this legal frame woks should be utilized to ensure all the financial statements and all activities pertaining commercial transactions are done as per the laid down rules. The liability in this set up of governance should seek for responsibility in all activities that they undertake. As a financial officer the virtue of honesty should be always embrace for effective service delivery and maintaining as well as protecting the consumers of the service you provide. The legal team should be empowered to fully represent the company and advising advise all the employees on their legal, requirements, duties, and responsibilities.

The law in corporate governance modulates the outline taken by companies and regulates how the relationship between a company, investors, shareholders, directors, employees, creditors, and other stakeholders such as consumers, and the community at large should be. This implies that there should be no one man approach. In this case of Patisserie Holdings in the accounting irregularities it depicts that the financial officer acted independently without engagingly the relevant stakeholders and management. The ethical consideration in governance should be strictly adhered and no advantage should be given to any officer who acts to the contrary.

An effective and elaborate system of a prudent corporate governance, provides t and initiates the framework and strategy within which the board and management addresses and clearly stipulates their key, tasks, responsibilities, and the responsibilities of the employees. Accuracy and transparency in reporting financial statements should be the management key responsibilities and the staff in charge should be made fully aware. This is the taste for the integrity of the company employs. All graduate skills should be put in practice. This embraces the governance cooperate requirement of effective service delivery. The Patisserie Holdings should have created this ideology in their employees especially the financial sector for it not to have such anomalies in its operations. The anomalies seem to be of a personal errand that could have not considered integrity in service delivery. Such a person should have been used to such lack of transparency in all activities.

The Patisserie Holdings should have as well followed the provision of regular financial statements to both the stakeholders and the public. The operations of the company should always put the interest of the stakeholders at heart and be able to do anything that makes the stakeholders satisfied with what their investments are enshrined to do. Transparency for the stake holders can motivate them to work in initiating activities that can maintain and uphold the financial status of the company.

The leadership role given to all directors and officers in management position should be well outlined and their ethical obligations given to them and ensure they are followed strictly. A cooperate structure that do not uphold inclusivity is seen in the case of Patisserie Holdings where the financial director could have acted solely without any consultations. The structure could have noted and solve the issue earlier enough. The company as well should have a tendency of getting long term shareholders that could be aware of the financial operations of the company.

Additionally, making decisions should involve all the concerned personnel and embrace frequent auditing of the financial statements and utilize the modern technology in computer reliance and focus on retraining the staff in essential duties.

Three examples of how the Company failed in its ethical behavior

Ethical misconduct among the staff has made many companies to collapse across the globe. The graduate skills are rarely being utilized and the aspect of non-professionalism has its route in the personalities of the staff. For Patisserie Holdings PLC the ethical behaviors were not followed in three main circumstances. For instance, in October 2018, the company Patisserie Holdings PLC noted key accounting irregularities and from the case stated the irregularities seem never to have been handled effectively. The ethical behavior of expressing honesty in all deeds is portrayed to be missing

Transparency is a sign of solving upcoming mistakes. The aspect of transparency in Patisserie Holdings PLC is also an ethical behavior that misses its root. The prospective evidence is also seen the sense of accountability in all the statements that come with financial dealings. This embraces the aspect of ownership to the stakeholders in that in cases of any input to context that the company faces financial challenges they can be compelled to sort for solutions as its needed. The falsehood in financial statement is unethical behavior that discourages investors and stakeholders which makes them to desist from the company’s activities and lastly letting the company.

The Patisserie Holdings PLC also failed by not accepting liabilities in the erroneous financial statement they had produced. The first mistake took place in October 2018, the company could have accepted the liability and be able to solve the situation. But in the spirit of denial the company continued to even have more and severe financial difficulties. The Patisserie Holdings also went ahead into the administration in January 2019. The company as well falsely claimed to have £54m in cash, but it was alleged the company had overstated its cash position by £30m. in the spirit of denial it also failed to openly disclose overdrafts of nearly £10m and claimed its assets were worth £23m more than they were. The evidence provided by Forensic accountants subsequently suggested that Patisserie Holdings’ accounts were overstated by approximately £94m. These sense of company’s deniability makes the company to suffer and lastly collapse.

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Conclusion

In conclusion the key corporate laws and Corporate Governance regulations the Company should have complied with includes but not limited to having a leadership structure that gives power to the Chief Executive officer TO BE the chief financial officer, having an all people approach especially in making decisions concerning the company, having frequent auditing of the financial books, frequent financial statement reporting and retraining the staff on ethical issues that embrace integrity.

Patisserie Holdings PLC complied with frequent dissemination of financial statements but to its case the statements were false. The continuous provision of false statements could have made the trust of the stakeholders and the shareholders as well as the consumers to depreciate. In this scenario the number of investors could go down and making the financial strength of the company to collapse. The company avoided the basic guidance of the law and governance and in the scenarios of continuous financial misstatement the company ended up collapsing. The main reason why the scandal escalated is the absence of ethical behaviors among the financial officers. This coupled with dishonesty, and lack of proper accountability in the provision of services and all other information that was being delivered to the public.

References

Gerged, A.M., 2021. Factors affecting corporate environmental disclosure in emerging markets: The role of corporate governance structures. Business Strategy and the Environment, 30(1), pp.609-629.

Ghosh, A., Economic analysis of corporate laws.

Harjoto, M.A., 2017. Corporate social responsibility and corporate fraud. Social Responsibility Journal.

Levine, R., Lin, C., Wei, L. and Xie, W., 2020. Competition Laws and Corporate Innovation (No. w27253). National Bureau of Economic Research.

Rahmawati, N. and Kassim, A.A.M., 2020. Fraud Triangle Theory and Accounting Irregularities. Selangor Business Review, 5(1), pp.55-64.

Solomon, J., 2020. Corporate governance and accountability. John Wiley & Sons.

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