Final answer:
Corporate governance holds the management team responsible for the financial reporting process and financial statements, ensuring transparency and accountability. The board of directors and auditing firms contributes to corporate governance by providing oversight and reviewing financial records. Corporate governance aims to provide reliable financial information to investors and shareholders.
Step-by-step explanation:
Corporate governance clearly indicates that the management team is responsible for the financial reporting process and the financial statements. The board of directors, elected by the shareholders, plays a key role in corporate governance and oversees the top executives. The auditing firm hired by the company also contributes to corporate governance by reviewing the financial records and certifying their reasonableness.
For example, the management team ensures that accurate financial information is reported by following accounting standards and guidelines. They are responsible for preparing the financial statements, such as the income statement, balance sheet, and cash flow statement, which reflect the financial position and performance of the company. The management team's accountability in the financial reporting process helps maintain transparency and build trust among investors and stakeholders.
The primary goal of corporate governance is to provide investors and shareholders with reliable and accurate financial information, ensuring that the company is operating transparently and in their best interests. By holding the management team accountable for the financial reporting process and financial statements, corporate governance promotes ethical behavior and strengthens the overall financial health of the company.