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Honda Motor Company

Honda Motor Company included a separate Corporate Governance Report (CGR) in its 2017 Annual Report. First, the CGR states, among other things, the following:

The company strives to enhance corporate governance as one of the most important tasks for its management, in order to achieve several aims, including strengthening the trust of the shareholders and investors, customers and society. The company is adopting an “Audit and Supervisory Committee” system in order to reinforce the supervisory function of the Board of Directors and ensure the prompt decision-making. The company will ensure transparency of its management. Second, the CGR explains in detail the risk factors relevant to Honda Motor Company.

Required- Students will need the Honda Sustainability Report 2017and the Module 8 Homework Assignment Word file to complete the requirements below:

1- Using the 2017 Annual Report of Honda Motor Company which includes the Corporate Governance Report, discuss the way in which Honda Motor Company attempted to establish a high level of corporate governance.

2-Explain the possible link between corporate governance and auditing.

Full Answer Section

to react to market changes and opportunities quickly. Finally, the company's explicit commitment to transparency of its management is a hallmark of good corporate governance. By pledging to be open about its operations and financial performance, Honda aimed to build and strengthen the trust of its various stakeholders, including shareholders, customers, and the broader society. Transparency is fundamental because it allows stakeholders to make informed decisions and holds management to a higher standard of conduct.

2. The Link Between Corporate Governance and Auditing

The relationship between corporate governance and auditing is symbiotic and crucial for a company's integrity. Corporate governance sets the framework of rules and practices that direct and control a company, while auditing provides the essential checks and balances to ensure that this framework is functioning as intended.

Sample Answer

Honda's Approach to Corporate Governance

Based on its 2017 Corporate Governance Report (CGR), Honda Motor Company demonstrated a commitment to establishing a high level of corporate governance through a multi-faceted approach centered on oversight, efficiency, and transparency. First, Honda reinforced the supervisory function of its Board of Directors by adopting an "Audit and Supervisory Committee" system. This committee is an essential pillar of strong corporate governance. By creating a dedicated group of independent directors to oversee the company's financial reporting, internal controls, and auditing processes, Honda ensured that management's actions were subject to rigorous and impartial review. This structure serves as a crucial check and balance, protecting the interests of shareholders and investors by holding executives accountable. Second, Honda focused on efficiency in its decision-making processes. The CGR states that this new committee system was designed to "ensure prompt decision-making." This highlights a key aspect of effective governance: the ability to balance strong oversight with the need for timely and agile strategic choices. A well-governed company mu