Accounting

The concept of Corporate Governance is as old as the foundations of publicly traded companies. However, the emergence of its importance gained hype during period of severe economic losses faced during Asian crisis and fraudulent activities by major companies around the world and especially in U.S. The huge losses of investors as well as employees and embezzlement streaming through top management in firms like Enron, WorldCom and Tyco, led financial authorities into formation of more stringent rules and requirements for publicly traded companies.

Corporate Governance and its emergence
The Code of Corporate Governance refers to an authoritative system of corporate government where the owners and operators of business are responsible and accountable to shareholders for all the activities and transactions taking place in any organization. Corporate Governance ensures that certain risk elements are eliminated to protect investors and other stakeholders in a company from unethical approaches as well as ensure transparency for stakeholders. The motivation behind promotion of corporate governance was to increase accountability of companys top management and directors who have the greatest access to companys assets and therefore, greater power of manipulation. Since application of stringent Corporate Governance, research shows considerable improvement in effectiveness of risk management in firms and enhanced trust among stakeholders and company management.

Corporate Governance Regulations by FRC
According to Code of Corporate Governance, formulated by Financial Reporting Council, management has to fulfill several disclosure requirements in its annual reports to provide transparent and relevant information to shareholders regarding risk management tools of the company as well as its Board structure. Since every company has a different structure, the compliance rules may vary firm to firm. However, FRC requires each firm to state its reasons for exclusion of any law regarding corporate governance disclosure. Due to various financial disasters around the globe, the code of corporate governance requires disclosure of information regarding the Board, directors, executives and auditors of firm in its annual reports. Along with this, the selection of directors and executives, their remuneration and meetings should be disclosed as well to prove the justifiable distribution of firms earnings. The information regarding risk management tools that a firm uses and how efficient the firm has been over the year has to be shown in financial statements for investors and stakeholders.

Lloyds TSB 
The financial statement of Lloyds TSB bank complies with Code of Corporate Governance by disclosing relevant information for shareholders. The financial report includes Directors report regarding firms performance over the year along with any risk elements that caused losses for the firm. The names for all directors, their remuneration and their responsibilities are also shown. The statement clearly reports executive and non-executive schemes, their meetings and voting power over issues under Share capital section and executive schemes. The report also focuses on auditors, their report for the firm and assurance of independent position of auditors and management is also provided. The accounting policies adopted and different pension schemes and employee benefits are discussed in detail along with allocation of companys shares among its own directors, management and employees in section 46, 47 and 48 under Accounting policy, Share based payments and Related party transactions.  Under section 50 of notes, Financial risk management, the management has discussed various forms of risks that the firm faces including credit risk, operational risk, liquidity risk and market risk. Under Future developments, the management has reported firms future plans for investments and other business related activities that can affect firms performance.

Barclays
Compared to Lloyds, Barclays provide a more structured reporting product in form of annual report through separate section of Corporate Governance. The statement presents Chief executives report regarding firms performance over year along with economic and business factors that resulted in losses for the firm. Barclays report includes a separate section for analysis and presentation of risk factors associated with the bank. The section includes basic structure of organization and risks associated along with banks approach and policies for dealing with each type of risk. The report informs shareholders about each process and control mechanism that managers use to tackle risks. Under Corporate governance section, information regarding board and executive committee is provided with identification of executive and non-executive members. Under business review, remuneration, benefits, annual meetings, dividends and other share based compensations are discussed. Along with all relevant information, firms Group chairman has separately provided statement on Corporate Governance at Barclays and its adherence to Code of Corporate Governance under which each element and regulation of Corporate Governance is discussed. The report also provided number of meetings held among the members, attendance of members, auditors and executives, summary of matters reserved to Board, Board structure, and process of annual statement approval through disclosure, executive, auditor and technical committees.

Comparison
The presentation of factors regarding corporate governance is, although, acceptable for both companies, yet Lloyds lack several elements that could have been a part of financial report. Firstly, the company should have separately provided detailed analysis of factors related to code of corporate governance to present a clear and detailed analysis of activities at the bank. Secondly, the firm did not provide detailed information regarding board meetings and their details for convenience of shareholders. The detail regarding decisions taken at Board meetings is also missing. The report presents general description of risks associated with Lloyds activities while no specific and relevant information is provided for investors benefit as is provided in Barclayss report. Overall both companies do comply with Code of corporate governance with Lloyds requiring certain improvements in presentation of its report for more transparency and clarity of firms affairs.

Conclusion
The emergence of corporate governance is a sensitive issue for investors and stakeholders who have their stake involved with publicly traded firms and therefore, the Financial Reporting Council has provided an effective framework for managers to inform investors regarding a firms activities.  The comparison of two UK based firms, Lloyds and Barclays, shows that firms in general are compelled to present all relevant information regarding issues associated with stakeholders and accountability of managers to keep the stakeholders informed. Results show that Barclays provide a great insight into management structure and transparency of firms operations and therefore, complies completely with Code of Corporate Governance. On the other hand Lloyds provide basic information yet insufficient details regarding risk management tools and activities of executives and directors over the year.