Transparency

In a 1,400-1,750-word paper apply the concept of transparency to corporate compliance within the McBride organization. Additionally, evaluate at least three instances in which the relationship between the self-interests of management relate to effective corporate governance Concept of transparency to corporate compliance within McBride Financial Transparency lies at the intersection between the public’s right to know and the corporation’s right to privacy (Borgia, 2005, pg. 20). The public involves stakeholders such as employees, unions, governments, media, customers, suppliers, investors, and other financial institutions who have an interest in obtaining corporation information about management and strategy. All stakeholders want to know facts about a corporation’s financial health and structure, including whether officers and board members are acting in the interest of the shareholders, employees, customers and the public. Most media articles about certain businesses involve transparency because it discusses how corporations conduct their businesses through their accounting methods, earnings, insider trading, conflict of interest, executive compensation and the independence of their boards of directors (Borgia, 2005, pg. 21). Financial transparency is defined as, “A primary goal of the federal securities laws is to promote honest and efficient markets and informed investment decisions through full and fair disclosure. Transparency in financial reporting, that is, the extent to which financial information about a company is available and understandable to investors and other market participants, plays a fundamental role in making our markets the most efficient, liquid, and resilient in the world “ (130). Transparency is about nurturing a relationship with investors. In today’s world transparency goes beyond just allowing interested stakeholders to look inside the corporation. Transparency demands active disclosure, communicating information in a timely and convenient way as well as providing fast, easy and inexpensive feedbacks (Borgia, 2005, pg. 24). Communicating with stakeholders involves not only information regarding financial data and statistics, but understanding value driven forces that affects the success and failure of the corporation. Transparency can help avoid frauds, embezzlement and financial scandals as well as enhance efficiency (Borgia, 2005, pg. 51). Transparency and corporate compliance go hand in hand. In order to disclose accurate financial reporting, statistics and data, it involves staying in compliance. Compliance is a state of being in accordance with established guidelines, procedures, regulations, or legislation requirements. Sarbanes-Oxley Act is a compliance that was enacted in response to the Enron and WorldCom financial scandals to protect shareholders and the general public from accounting errors and fraudulent practices (Spurzem, 2006). Beltway Investments decided to invest in McBride financial because they believe in McBride’s business model and timing of their model into the marketplace. However, Beltway expects McBride to exercise the importance of corporate governance. McBride is also required to report their quarterly earnings to Beltway. McBride has the opportunity to apply the concept of transparency to corporate compliance in order to nurture their relationship with Beltway and other investors. First of all, it requires training on the part of McBride’s CEO Hugh McBride. Hugh needs to go through training to fully understand the regulations and guidelines of SOX. Hugh said to Paul, “As part of the quarterly and annual reporting process please make sure you cover the governance and Sarbanes or SOX or whatever that Enron law is” (Scenario: McBride, 2010). This statement from Hugh makes him seemed unprofessional as the CEO. All managers within McBride need to understand fully all federal and state requirements and regulations so that they can ensure that they are staying within compliance. If they fall out of compliance, their year-end fiscal reporting will not be accurate and may fall under any forms of embezzlement or fraud. McBride also does not have an accounting firm, Hugh had suggested that Paul select an accounting firm soon and he’ll approve it because their fiscal year ends in six months. Choosing someone due to last minute deadlines may result in lack of experience and expertise which can result in inaccurate reporting. Accounting is very important process that contains data that is looked at by investors since it shows how well an organization allocates their spending, budgets, and income. Inaccurate reporting can fall into all sorts of violations and non-compliance behaviors which will affect providing inadequate transparency. The independence of board of directors is a form of transparency also because it allows the public to understand what kind of tasks and obligations all members of the board of directors are responsible for. Hugh had told his board that he will handle the real work and let them reap the benefits of placing board of director on their resumes. He is basically giving himself all responsibilities and power instead of letting each board member be independent. Relationship between the self-interests of management relate to effective corporate governance