UNIVERSITY OF SAN JOSE - RECOLETOS
Magallanes St., 6000 Cebu City Philippines
School of Business and Management
Accounting 404 - Operations Auditing (3416)
Weekly Group Reflective Journal on Chapter 1 - Review of Governance Concepts and
Professional Ethics
Jasper A. Egdamin
Jasmin Dianne Juanico
BSA 4 | Block 2
Reflections/Insights/Personal Feelings and Thoughts on the topic
Corporate Governance is the set of rules, practices, and processes that govern and
direct business corporations (Cabrera E. & Cabrera, G. 2019-2020). In simple terms, it is a
system of rules and practices put utilized to direct and control companies. Initially, I have
obtained knowledge about partnerships and corporations during our RFBT 2 subject wherein
some discussions and concepts about corporate governance have been discussed such as the
composition of the board and its roles and responsibilities. The computation of shares or
investments in the companies and partnerships have also been taught to us during our
Financial Accounting and Reporting (FAR) subjects. Reading the first chapter has provided
me with additional necessary and supporting knowledge about operations auditing in terms of
the future career path I intend to pursue. It made me realize that aside from making financial
statements, auditing is also one of the non-negotiable functions in the business industry since
it thoroughly verifies that the financial statements are fairly presented and conforms with the
appropriate accounting principles . Furthermore, it has given me a good overview of how
being a part of a business entity works step by step, especially in doing actual practice in
corporations and various business organizations.
The main topics of the first chapter are the Revised Corporate Governance in the
Philippines, the definition of Corporate Governance, four corporate principles of CG and the
establishment of its board, the board’s roles and responsibilities, the establishment of board
committees and its different types, internal control and risk management framework,
cultivation of a synergic relation with shareholders/members, principles of the code, ethics
concerning the code and its related ethical dilemmas. I find the discussions in this chapter
useful in terms of entering into practice since it revolves around the management and controls
to be done effectively in operational audits. It has been emphasized that the ultimate goal of
corporate governance is adding long-term value to a corporation (De Leon, E. et al 2022).
How did the topic impact you as a student? How do you think you can use your
knowledge in your future job as an internal auditor on operations?
As a continuing accountancy student, the corporate governance’s ultimate goal gives a
sense of familiarity since but when it comes to actual practice, I believe that the goal will
have paramount importance to me. Having read in-depth information about corporate
governance, which should always rule on good governance, I realized its great significance in
the financial industry —in maintaining the stability of financial markets and economic
growth (Cabrera E. & Cabrera, G. 2019-2020). The applicable knowledge from this chapter is
mostly used in performing operational audits. Operational audit examines the processes of
how a business conducts its activities. It is important to note that internal auditors play a
crucial role in becoming a service to management concerning any phase of an organization’s
business activities (Miller R. 1957). In order to establish an organization, different board
committees must be established. In charge of both internal and external audit operations is the
audit committee. They are independent parties of management who make sure that financial
statements are accurately portrayed in their business operations.
Since it has been consistently established that audit activities should be unbiased, it is
best to eliminate any organizational influence. Internal auditors must be independent and
should not have any direct responsibility or authority over the activities they are subjected to
audit. Professional objectivity must be strictly adhered to, so it has been emphasized to us
time and time again that we must always act with integrity and honesty when conducting
audit procedures in the future.
What impact did it bring to you in terms of planning about your career as an
accountant?
After reading the whole chapter which talks about the concepts on governance and
professional ethics, I could say that it left a positive or good impact on my plans regarding
my future career as an accountant. It is because there are certain principles, values, and
ethical behaviors which I would consider as non-negotiable both in my personal life and in a
workplace, and that I aspire someday to become a member of an organization which shares
the same stand as mine and who would always honor and practice good ethical culture. The
"moral agents" of businesses and societies are accountants and auditors (Schweiker, 1993)
which is why I wanted to go on the same path as those accountants and auditors who
established themselves as role models and advocates of strong ethics.
When it comes to corporate governance, accountants play a crucial role in
safeguarding the integrity and transparency of information both inside and outside the
company. However, there are particular situations where accountants are faced with ethical
dilemmas which could impair one’s morality and values. As someone who would want to
take on this journey, I am well aware of the ethical issues surrounding the profession. Several
problems regarding the profession all boil down to the importance of ethics for cases such as
corruption, money laundering, embezzlement, and inappropriate accounting practices. That is
why the people in the profession should do something to maintain high ethical standards
which could start as early as addressing the problem in schools. By changing the curriculum
through raising the standards for morality and decision-making skills, it would aid in
reducing unethical activities before it happens (Chiang & Braender, 2014). As an aspiring
accountant, I remain hopeful for a future filled with people of good values and ethical
behaviors who will bring change in this world, one company at a time.
Any new insights or knowledge learned? And how do you think this benefit you in the
future?
For chapter 1, I have learned something new to me when it comes to the concepts of
governance which is about the “Comply or Explain” approach. I wasn’t aware of this
approach since I assumed that corporations and other covered companies are compelled to
comply with all the recommendations of the corporate governance codes for uniformity and
ease in regulating these companies. After further research, I also learned more information
regarding the approach which was first introduced in 1992 by the Cadbury Report. Its main
purpose is to allow companies to freely choose the structure that best fit the company because
structures and rules alone cannot increase the standards on corporate governance for every
company is different which is why it is deemed inappropriate to impose a “one size fits all”
framework (Arcot, Bruno, & Faure-Grimaud, 2010). Learning about this approach is
beneficial for me in the future because I am also somewhat interested in working for publicly
listed companies that would use this kind of approach. The effective use of the “Comply or
Explain” approach for covered companies could lead to good governance where good
governance could be preserved and problems between companies and its stakeholders could
be solved without the need for regulatory intervention.
I have also learned after going through the reading material that becoming a certified
internal auditor is not an easy process because I just learned that it would require passing an
examination and years of work experience. Knowing about the different threats to auditors
independence made me think how difficult their job is because their values and ethics would
be tested eventually which is a situation that would make or break someone. I am also
concerned with the percentage of internal auditors facing threats towards their independence
but I think I am more concerned with the fact that there are consequences when these internal
auditors would not choose to go along with these unethical requests because I can’t imagine
being punished or penalized just for simply choosing a morally right decision. This would
serve as an eye-opener for me especially when these are the realities in an actual workplace
which is actually a scary thought. I just hope that I would become part of an organization that
would never undermine the values and beliefs of its employees.
References
Arcot, S., Bruno, V., & Faure-Grimaud, A. (2010). Corporate governance in the UK: Is the
comply or explain approach working? International Review of Law and Economics,
30(2), 193–201.
Cabrera E. & Cabrera, G. (2019-2020). Corporate Governance: Business Ethics, Risk
Management and Internal Control.
Chiang, B. & Braender, L. (2014). Business Ethics in Public Accounting: Ethical Dilemmas
Faced by Today’s Public Accountants and Its Implication to Accounting Education.
Journal of Accounting, Ethics and Public Policy, Vol. 15, No. 2, 2014.
De Leon, E. et al (2022). Operations Auditing. A Conceptual and Practical Approach (2022
Edition).
Miller, R. W. (1957). "Operations auditing: a study of the newest phase of internal auditing" .
Master's Theses. Paper 792.
Schweiker, W. (1993). Accounting for ourselves: accounting practice and the discourse of
ethics. Accounting Organizations and Society.