The auditor's role in corporate governance in Maltese listed companies

Abstract

Corporate governance has become a long-standing issue and a main subject of intense academic and policy debates. The discussion has been introduced in England by a number of well-known publicized corporate problems in the late 1980s. It seems that the most prominent reason of corporate governance has resulted from a series of company failures, financial difficulties, fraud and other scandals. The role of corporate governance standards goes beyond the requirement of preserving integrity and honesty of the company. It must contribute to business efficiency so as to lead to profitability. The restructuring of corporate governance system cannot be solely attributed to one specific factor. The most important factors are creative accounting, increased competition of firms in financial markets, misappropriation of shareholders' funds by management and limited role of auditors. In spite of the fact that various governance models have been drawn up, none of them can be said to be suitable to all countries, since governance is dependent on the practices and regulations within a country. Nonetheless a common definition of governance has been devised. Governance describes the role of persons who are entrusted with the supervision, control, direction and accountability of the entity.