Good 2 Reading

ASSIGNMENT BACKGROUND

Optimistically/realistically assume you have successfully obtained a good honours degree and gained employment. You have been immediately seconded as an adviser to the Finance Minister of Breakavia, a newly-independent country in Eastern Europe. Breakavia has been formed by splitting from a former Communist state and whose government recognises the advantages of forming a democracy and adopting capitalist principles. The new government is also confident the country can function as an independent state as it has substantial oil and mineral reserves that have recently been discovered. A favourable banking and tax regime, with low cost commercial and housing opportunities and potential for a tourist industry, means the government is also confident it can attract European companies to base their operations in Heeritis, their capital city. The government is also talking to neighbouring countries regarding the feasibility of setting up a Stock Exchange in Heeritis and eventually joining the European Union.

The government of Breakavia is now seeking your advice on the development of corporate reporting in their country to support and encourage the successful growth of its business and commercial sector.

The Finance Minister has posed you the following four questions:

1. Who do you think is best placed to support the initial development of regulation for corporate reporting in our country? Are there examples of good national or international practice that we can use?

2. In your UK-based experience, who are the main users of corporate reports and do you feel their needs are met by such reports in their current form?

3. Will company management teams be able to influence or distort figures in financial statements that could potentially mislead users? If so, what will be the effects of such influence or distortion and how do you suggest we seek to overcome these effects?

4. I've read a lot about the importance of "corporate governance" as part of corporate reports. What does this term mean - we never saw it in Communist days - and how might adopting this approach be beneficial to users of corporate reports?