Discuss the way in which Honda Motor Company attempted to establish a high level of corporate governance. Explain the possible link between corporate governance and auditing.

Way of establishing corporate governance by Honda: This includes the following steps taken by Honda:-

• Setting up the board of directors with highly qualified and experienced individuals.
• Setting up an audit committee that ensures the independence of auditors.
• Operational audit to increase operational efficiency.
• Grievance mechanism to deal with the grievance of employees.
• Conducting surveys for customer satisfaction.

The link: They go hand in hand. If a company has followed corporate governance principles, the auditor is more assured about compliance with laws and regulations. The likelihood of the misstatements where the corporate governance principles are followed is likely to be lower.