BHP Billiton Limited Essay Example | Topics and Well Written Essays - 1000 words

BHP Billiton Limited - Essay Example The concept of corporate governance can be defined as the procedures which are used to direct and control an organisation in alliance with its determined mission and vision. The extended role of corporate governance further exhibits a proper structure specifying the delegation of rights as well as the responsibilities bestowed upon the participants of an organisation including its board members, lower and middle level managers, stakeholders, shareholders and other interest groups (OECD 2005). The corporate governance comprises the three basic factors. In this context, it provides with adequate transparency in its decision-making process. Transparency in turn provides scope for accountability that entails the responsibilities of the decision makers within an organisation. It also provides accountability for the conservation of the concern with respect to the shareholders’ interests as well as the commitment of the organization towards its stakeholders. Indeed, accountants and o ther financial decision makers play a vital role in determining organizational effectiveness to mitigate such concerns through high degree of ethical commitments. Thus, it can be stated that the accounting theories and the corporate governance are interrelated as the underlying function of the corporate governance is to control organizational activities and the utilization of the corporate resources (Clark 2011). Based on this understanding, the objective of the paper reflects the corporate governance practices of BHP Billiton Limited (BHP) to alleviate the risk related to the corporate factor with further reasons to such conventions. Areas of Corporate Governance in BHP Billiton Limited to Alleviate the Risk of the Corporate Failure The corporate governance system practiced in BHP entails the approaches to provide the value that has been created on a long term basis complying with a high-quality governance framework (FRC 2012). The company believes that the governance must not be l imited to the Board, but it must be spread within the organisation. Through its governance system, BHP aims to foster a culture that values as well as awards the ethical standard prevailing in the organisation along with the personal and the corporate integrity and the standard to have respect deciphered aptly for its stakeholders on the whole. The company hereby aims to establish an appropriate ‘Code of Business Conduct’ for the employees, the suppliers and the customers constituting a major proportion of its stakeholders group. The application of these approaches related to the governance further attempt to foster the long-term goodwill of the company playing a major role to alleviate the risks of the corporate failure on the basis of accounting discrepancies (BHP Billiton 2012). Notably, the corporate governance structure of the company entails the diversified perspective of the Board of Directors. The structure in BHP comprises of the shareholders, the Board of Dire ctors, the functional committee, the Chief Executive Officers and the group management committee. The framed structure helps the company to