The importance of accounting for corporate governance in Brazil

According to the IBGC (Brazilian Institute of Corporate Governance), “corporate governance is the system by which companies are managed and monitored, involving the relationships between Shareholders / Quotaholders, Board of Directors, Executive Board, Independent Audit and Fiscal Council. Good corporate governance practices aim to increase the value of society, facilitate its access to capital and contribute to its longevity”.

If you are a foreign entrepreneur and want to invest in Brazil, check below the main information about it that GESCON has prepared especially for you!

What is the relation between corporate governance and accounting in Brazil?

In most corporate governance definitions – such as that of the IBGC, for example – a monitoring system is mentioned that involves the relationship between owners, shareholders, the board of directors, the executive board and other control bodies and agents, but accounting also plays an important role in governance.

Accounting helps to maintain the structure that offers more controls in relation to the company’s objectives, generating and providing accounting financial information, as well as about investors, creditors, financial institutions and other stakeholders.

This allows the entity’s prospects in terms of inflows and cash flow to be assessed more efficiently, offering more effectiveness to the management of the company and the board of directors with the fulfillment of their responsibilities.

What is the importance of accounting for corporate governance?

Corporate governance is a management model where transparency and long-term dynamics are aimed at reducing costs. In cases where good corporate governance principles are not respected, there is an informational asymmetry that can result in the possibility of accounting fraud, questionable loans and tax evasion.

Therefore, the importance of the company being able to count on a serious, transparent and qualified accounting professional, to prevent this type of problem from happening.

Due to being a subject of great scope, corporate governance has become an object of study in several areas, such as finance, accounting, economics, administration, law and so on.

Although accounting is very important for the study of corporate governance, the contribution of accounting academics is still very small in view of what it could be.

What is the duty of accounting in this process?

The duty of accounting within corporate governance was then defined as the use of accounting reports in promoting governance mechanisms within companies – which are the means by which managers act in the interests of investors.

Another important duty of accounting for corporate governance is the creation of executive compensation and incentive contracts. In this sense, studies on the subject are already well established.

Accounting information is a product of corporate accounting and reporting systems, which seek to disclose the company’s results to the market.

This disclosure of data is what subsidizes internal control and still provides indirect information assimilated by the market and incorporated into the share price of organizations.

Do you need to improve corporate governance for growing business in Brazil? We can help you!

GESCON’s strategy is based on services tailored to the unique needs of our customers.

We always try to maintain direct and close contact with our customers. We are proud to say that we work on building relationships that allow us to maintain a receptive and supportive attitude to meet any demand.

Our team of specialized professionals has the capacity to attend your company in different demands, always thinking about the individuality of the business.

With GESCON’s accounting advice, you don’t have to worry about the administrative bureaucracy involved in accounting for a project. Thus, you can dedicate yourself exclusively to other activities and goals of the company.

So get in touch with our team and talk to us! Access our website today and find out how we can help you boost your business in Brazil!