Page 64 - SBL Integrated Workbook STUDENT 2018

Chapter 7

Purpose and objectives of governance

4.1 For the private sector:

 to monitor those parties within a company which control the resources owned by
investors.

 the primary objective of sound corporate governance is improved corporate
performance and accountability in creating long term shareholder value.

4.2 For the public and not for profit sectors:

 objectives within these organisations are more complex and conflicting.

 organisations are often appraised according to the ‘value for money’ (VFM) that
they generate.

– defined as performance of an activity to simultaneously achieve economy,
efficiency and effectiveness.

The three elements of value for money are:

 Economy = a measure of inputs to achieve a certain service or level of service.

 Effectiveness = a measure of outputs, i.e. services/facilities.

 Efficiency = measure of outputs over inputs.

Illustrations and further practice

Now try TYU question 1.

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