Governance
Governance is the system by which an organisation is directed and controlled. In financial reporting it includes assigning responsibility for records, controls, accounting judgments, financial statement preparation and oversight. Directors are responsible for preparing the statements; auditors provide an independent opinion where required. Effective governance supports reliable reporting, accountability and appropriate handling of conflicts.
Worked example
A board reviews significant estimates, challenges unusual transactions and approves the financial statements after considering whether they comply with the reporting framework.
Common mistake
Delegating bookkeeping or appointing an auditor does not remove directors’ responsibility for the accounts and the controls supporting them.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA4 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |