Annual Reports

ANNUAL REPORT

Introduction

Annual reports involve notes regarding the inspection and verification of the accuracy of financial records and statements. Private businesses and all levels of government release annual reports containing internal audits of accounting records and procedures. Internal audits are conducted by a company’s own personnel to uncover bookkeeping errors and also to check the honesty of employees. In large companies, annual reporting is an ongoing procedure. A company that trades stock on a registered stock exchange or is preparing to issue new shares of stock must indicate it on the annual report. These companies are known as publicly traded companies. An external audit is used to give the public a true statement of a company’s financial position. It is made at least once a year by public accountants who are not regular employees of the company. The auditors make sure that the company has followed proper ethical reporting procedures in its financial records and annual reports. They compare the current annual report with those of the previous year to determine whether the statements are calculated consistently. If they are not, they present a distorted picture of the company’s position. Annual reports also contain statements regarding assets to see if their value is overstated. Debts and other liabilities are also indicated to see if they have been understated (1995).

The practice of annual reporting has a much longer history than many of the other developments that can be considered and the large firms of accountants, in which many financial auditors work have become influential advisory institutions throughout the world.  Thus annual reporting has provided the model which has influenced the design of auditing practice in many other fields. Although environmental, medical, or value for financial reporting are conceived as distinct from annual reports, the latter continues to exert its normative influence as a centre of gravity for debate and discussion. And it is in the context of annual reports that the dependency of acts of verification on judgment and negotiation is most apparent. The power of the annual reports lies in its benchmarking potential for other reporting practices. In part this potential is realized indirectly through the work of the board of directors, for whom the annual report is a fundamental component of their expertise and whose advice in areas of control is shaped by it. But the influence can also be direct as entities such as hospital trusts, privatized industries, charities, and many other organizations become subject to an intensification of financial control and annual reporting requirements. This is an expanding domain, not just of neutral checking but also of judgment and of an evaluation of the fundamental purposes of organizations. Paradoxically, given the influential role of the annual reports suggested above, its status as a practice is unclear. What do annual reports produce and how are they effective? (1992)

Annual reports are subject to expectations and demands which are, justifiably or otherwise, often disappointed. Nevertheless, the official procedural knowledge base of annual reports has evolved in response to scandals and corporate failures in such a way that the essential puzzle of what annual reports produces their effectiveness remains hidden from view as an article of faith. Finally despite, and probably because of, this puzzle it is argued that annual reports maintain itself as an institutionally credible system of knowledge. Notwithstanding crisis and scandal it satisfies the aspirations and demands of a variety of regulatory programs. Particular annual reports may fail but the system as such cannot. The possibility of effective and ethical annual reporting is necessarily presupposed by regulatory intentions. Traditionally, annual reports have applied itself to the domain of finance, but organizations are increasingly finding value from annual reports that monitor other aspects of their activity. Annual reports, for example, have been championed by firms in response to the ethical concerns of both shareholders and the public in relation to the company’s impact upon the locality. Annual reports are growing in importance too, partly in response to recent major scandals such as the collapse of companies and organizations, and also in order to monitor the increasingly complex demands being made upon by the management ( 2002).

However, annual reports remain something of a mystery to those outside of the profession, and have become more specialized as accounting has become more sophisticated. For example, while best practice has evolved certain tools for analytical review or establishing ethics for annual reports, an element of subjective judgment remains as the management decides what evidence to include. Further, rules of thumb can never be ruled out. Annual report risks have developed as an issue too, as the models for reducing the probability of mistakes being made on sampling, for example, become more subtle. Annual reports provide a degree of assurance, but not insurance, as to the financial position of the firm.

The principles of annual reports has steered the way companies have taken into consideration with regards to their operations and the legal aspects in achieving their individual goals. In the said settings, the directors (or executives) of the corporations steer the entire organization towards these individual goals (Zingales, 1998). Though the director’s job seems to be based on decision making, the performance of the entire organization is highly dependent on their method of corporate governance as reflected in their annual report. Moreover, despite the apparent power and authority held by these directors, they are still accountable to a much higher entity in the organization: the shareholders (2005). This means that the directors are has the responsibility to their shareholders to keep them in the loop with regards to which path the organization seeks to take in the corporate world. In this context, directors have to contend with several important elements to effectively carry out their jobs. Among the primary elements that are deemed important which should be indicated in the annual report includes the primacy of the shareholders of the corporation as well as corporate disclosure within the company. Being of utmost importance in the performance of an organization’s corporate governance, these two elements have been subjected to controversy in many regimes in an international scale. This is similarly the case in the setting of Huaneng Power Inc and CPL Holdings Ltd, two highly regarded companies in Hong Kong. Specifically, there are still issues regarding the extent to which the directors of these companies could exercise their power, and in the same time, not infringe their duty to the shareholders. To what extent does the information on the annual report be included? How much should be disclosed to the shareholders? This study will be attempting to explain this issue in the Hong Kong setting with special consideration to the remuneration of the directors in the company. In the same way, the study will also take into consideration the specific courses of action that the Hong Kong government took in attempting to deal with the said issues.   

The Comparison of Ethical Reporting

1. The Audit Report

A. CPL Holdings Ltd.

CPL Holdings Ltd. values the ISA 240, a description and discussion of the auditor’s responsibility to consider fraud in the audit of financial statements. It is divided into different titles that includes an introduction; the description of the characteristics of fraud; description of the responsibilities of those charged with governance and of management; the inherent limitations of an audit in the context of fraud; the responsibilities of the auditor for detecting material misstatement due to fraud; professional skepticism; discussion among the engagement team; risk assessment procedures; identification and assessment of the risks of material misstatement due to fraud; responses to the risks of material misstatement due to fraud; evaluation of audit evidence; management representations; communications with management and those charged with governance; communications to regulatory and enforcement authorities; auditor unable to continue the engagement; documentation; effective date (2000).

B. Huaneng Power Inc.

On the other hand, Huaneng Power, Inc. is guided by SAS 99 in terms of its audit report, which is a description and discussion of consideration of fraud in a financial statement audit. According to SAS 99 Fraud is a broad legal concept and auditors do not make legal determinations of whether fraud has occurred. Rather, the auditor’s interest specifically relates to acts that result in a material misstatement of the financial statements. The primary factor that distinguishes fraud from error is whether the underlying action that results in the misstatement of the financial statements is intentional or unintentional. Fraud is an intentional act that results in a material misstatement in financial statements that are the subject of an audit. Three conditions generally are present when fraud occurs. First, management or other employees have an incentive or are under pressure, which provides a reason to commit fraud. Second, circumstances exist for example, the absence of controls, ineffective controls, or the ability of management to override controls that provide an opportunity for a fraud to be perpetrated. Third, those involved are able to rationalize committing a fraudulent act. Some individuals possess an attitude, character, or set of ethical values that allow them to knowingly and intentionally commit a dishonest act. However, even otherwise honest individuals can commit fraud in an environment that imposes sufficient pressure on them. The greater the incentive or pressure, the more likely an individual will be able to rationalize the acceptability of committing fraud.

 

Fraudulent financial reporting need not be the result of a grand plan or conspiracy. It may be that management representatives rationalize the appropriateness of a material misstatement, for example, as an aggressive rather than indefensible interpretation of complex accounting rules, or as a temporary misstatement of financial statements, including interim statements, expected to be corrected later when operational results improve. According to SAS 99 Fraud also may be concealed through collusion among management, employees, or third parties. Collusion may cause the auditor who has properly performed the audit to conclude that evidence provided is persuasive when it is, in fact, false. For example, through collusion, false evidence that controls have been operating effectively may be presented to the auditor, or consistent misleading explanations may be given to the auditor by more than one individual within the entity to explain an unexpected result of an analytical procedure. As another example, the auditor may receive a false confirmation from a third party that is in collusion with management. Although fraud usually is concealed and management’s intent is difficult to determine, the presence of certain conditions may suggest to the auditor the possibility that fraud may exist. For example, an important contract may be missing, a subsidiary ledger may not be satisfactorily reconciled to its control account, or the results of an analytical procedure performed during the audit may not be consistent with expectations. However, these conditions may be the result of circumstances other than fraud. Documents may legitimately have been lost or misfiled; the subsidiary ledger may be out of balance with its control account because of an unintentional accounting error; and unexpected analytical relationships may be the result of unanticipated changes in underlying economic factors. Even reports of alleged fraud may not always be reliable because an employee or outsider may be mistaken or may be motivated for unknown reasons to make a false allegation

2. The Chairman’s Statement

A. CPL Holdings Ltd.

The Chairman’s Statement of CPL Holdings Ltd. includes several elements that are evidently present in the setting of the company. The Chairman’s Statement of CPL Holdings Ltd. typically indicates a strong public policy regarding governance which should be established in a specific department of the company. This means that laws and legislations with respect to reporting, auditing and other financial activities should be specified in the legal system. Another element that is always present in the Chairman’s Statement of CPL Holdings Ltd. is the proclamation of the existence of a sturdy and well-built regime for practicing internal governance within the company itself. This means that in order for corporate governance be effective, the top level management personnel of the company should be knowledgeable and well-trained in such a way that their actions are still in the bounds of the established legislation of the land. And lastly, the Chairman’s Statement of CPL Holdings Ltd. almost always indicates the need of a network of independent auditors that would serve as the needed link and check of corporate governance of the company in general. This means that an independent body is required in order to monitor whether the actions of the top level management of the company does complement what the legislators have created, particularly the regime governing corporate governance as a whole.   

B. Huaneng Power Inc.

Traditionally, the Chairman’s Statement of Huaneng Power, Inc. includes the concept of shareholder primacy, and this has been considered as the primary mandate of the directors and senior officers of the company in the context of Hong Kong corporate law. Specifically, the Chairman’s Statement of Huaneng Power, Inc. specifies that all the “energies” of the board should be geared towards the advancement of the shareholders in general. This claim similarly talks about the fiduciary obligation of the board of directors of the company to make the decision making within the organization known to the corporation and its shareholder.

The Chairman’s Statement of Huaneng Power, Inc. never fails to indicate that shareholder primacy rests on a couple of general assumptions: (a) the shareholders are the principals “on whose behalf corporate governance is organized;” and (b) it is the shareholders that should be controlling the entire enterprise. These generalizations being included in the Chairman’s Statement of Huaneng Power, Inc. basically places the claim of the said principle on the shareholders, being the primary recipients of and even protected by corporate governance, should be the ones making the decisions in the company, not a privileged few.

The problem in the Chairman’s Statement of Huaneng Power, Inc. is that the principle of shareholder primacy reveals what is ideal to the organization. However, the management of Huaneng Power, Inc. claims that in the actual setting, their shareholders entirely do not have any “direct or indirect mechanism of control.” This leads the Chairman to the hypothesis of the existence of “director primacy” in the company contrary to what is traditionally claimed as ideal. Based on the said arguments of the Chairman’s Statement of Huaneng Power, Inc., the principles presented by traditional corporate laws in Hong Kong may possibly be progressively becoming obsolete and impractical in the current setting. The value of the shareholders has considerably seen as diminishing by the more contemporary scholars of corporate law (Kay, 1995). Possibly, the delegation of the decision making power of these shareholders are given to the board of directors such that learned decisions are carried out. However, the Chairman’s Statement of Huaneng Power, Inc. contends that the decision making authority should not be entirely left on the hands of the board of directors. Though it appears that what most claims is rather in effect already, the actions of the directors of Huaneng Power, Inc. should constantly be subjected to the knowledge of the shareholders.

3. Management’s discussion and analysis

A. CPL Holdings Ltd.

Most of the typical discussions in the management of CPL Holdings Ltd. involve corporate disclosure. CPL Holdings Ltd. believes that corporate disclosure is an important instrument of accountability for their directors and to the shareholders of their company. The management of CPL Holdings Ltd. believes that the use of corporate disclosure takes on a facilitating function for particular members of their company: investors, creditors, regulatory agencies, and the general public. It serves as a function facilitating the decision-making of the said individuals particularly whether or not they are make decisions that would one way or another affect the capital creation of the company.

Theoretically, the board of directors of CPL Holdings Ltd. is employed by the shareholders to take into consideration specific elements of the operations of the company. This means that the shareholders of CPL Holdings Ltd. have instilled their trust to these individuals to steer their company towards a better position in the industry. However, in the context of the remuneration of these directors may perhaps be compromised by the possibility of their view on whether their welfare is closely tied to the top management of CPL Holdings Ltd., not the shareholders. For this reason, the disclosure of such remuneration is imperative on the part of the shareholders.

 B. Huaneng Power Inc.

Huaneng Power, Inc. believes that there are several factors to consider for corporate disclosure to be effective. Their management values the importance of materiality of the information disclosed. Disclosure has a facilitating function for several components of Huaneng Power, Inc. Similarly, it has a facilitating function in the decision involving investments and other operational choices made by the management of the company. Thus, it is important that the information disclosed by the directors of Huaneng Power, Inc. is able to substantially make the stakeholders establish decisions with regards to the internal elements of the company. This brings about the second principle, clear disclosure. This means that the information disclosed to the shareholders of Huaneng Power, Inc. have to be understandable such that it would allow them to draw their respective conclusions to which their decisions will be based ( 1976).

Another principle that has been the topic of Huaneng Power, Inc.’s management includes the equal treatment of investors. This indicates that the individual shareholders of Huaneng Power, Inc. should be able to get access on the information disseminated by the company through the same medium. A prejudiced provision of information may well lead to accusations of insider trading. In connection with this principle, the management of Huaneng Power, Inc. looks into the internet as the medium to which company information is disclosed. They found out that with the emergence of the internet becoming one of the major mediums to which their shareholders are able to access information brought about a lot of “gray areas” with regards to the application of specific securities and corporate laws. The creation of the company websites of Huaneng Power, Inc. are still a new conduit to which information is publicly offered, and to such extent there has yet to be considerable legislation, and studies even, that addressed this medium of corporate disclosure.

4. Report of the directors

A. CPL Holdings Ltd.

Based on the discussion of the directors of CPL Holdings Ltd. regarding the various roles available for its corporate governance, a general theme resonates. It is clear that the directors of CPL Holdings Ltd. believe that corporate governance is aligned with the attainment of the objectives of the corporation. This includes whose and how’s of interest protection within the organization. However, the translation of theory to practice when it comes to corporate governance is still unknown in the company since there is still much debate about who among the various stakeholders should be taken into consideration.

However, it is undeniable that from the report of the directors of CPL Holdings Ltd. abovementioned, their corporate governance can be considered as a mere part of a bigger economic context. This means the corporate governance of CPL Holdings Ltd. can be seen in the context of product competition, market factors and macroeconomic policies. As such, corporate governance in the company is also dependent upon institutional, legal and regulatory environments. This being the case, factors such as the ethics, societal and environmental awareness can affect the long-term success of the company (1986).

B. Huaneng Power Inc.

The presentation of the report of the directors of Huaneng Power, Inc. also paved the way for formulating the criteria for evaluating the corporate governance being implemented in the company. Thus, good corporate governance in Huaneng Power, Inc. can be observed when the proper incentives are provided to the Board and the management in order to ensure the pursuant of the company’s objectives and upholding the interest of the company and its shareholders. In addition, good corporate governance in Huaneng Power, Inc. also sees to the efficient use of its resources. These criteria of good corporate governance in Huaneng Power, Inc. entail the prevention of damage to the interest of the parties involved. Logically, corporate governance is associated with the performance of the company.

Even though, the definitions and criteria presented above by the directors of Huaneng Power, Inc. are concerned with businesses. It is evident that the most of the definition and conditions of corporate governance of Huaneng Power, Inc. is applicable to other forms of organizations. This is the case since the organizational structure used in most of the definitions is generic in a sense. The presence of the Board and other stakeholders in Huaneng Power, Inc. can also be observed in other organizations such as educational institutions for example.

The premise of governance in Huaneng Power, Inc. is based on the manner of operation. From the Latin root of the word governance itself, which is steering, it can be stipulated that governance in Huaneng Power, Inc. is generic regardless of the nature of the organization since the main objective of governance is to serve as a guide. All organizations, profit or non-profit, need guidance in order to achieve their objectives. ]

 

 

5. Corporate governance report

A. CPL Holdings Ltd.

Corporate governance in CPL Holdings Ltd. possesses different features with reference to the different structures of the corporate sector of the company. This means that the general features of corporate governance in CPL Holdings Ltd. depends on the environment to which the company operates. The focus on corporate governance of CPL Holdings Ltd. has not always been the focus of the businesses. Long ago, the buying and selling of corporation stocks in the company were individualized. Investors were primarily composed of wealthy business people. However, as the market evolved so did the buyers and sellers of the company’s stock. A shift form individual trading soon faded and was replaced by large institutions such as banks, insurance companies and mutual funds to name a few. This is the case since the market became highly institutionalized. As the number of institutional investors increased so did the professional diligence, which was intentional in order to improve the parameter of the stock market. However, these improvements do not necessarily go in accordance to the interests of small investors who are still many in numbers during that time.

            Even though, the rationale behind the vested powers of the corporate board of CPL Holdings Ltd. is theoretically for the good, simultaneous slips in the omission of large corporations caused some companies to face pitfalls that threaten the performance of their businesses in general. For example, principal shareholders of CPL Holdings Ltd. traditionally choose the Boards of Directors. In many cases, principal shareholders of CPL Holdings Ltd. have emotional and monetary investments in the company. As such, principal shareholders entrust the overseeing of the company as well as the principle executives to the Board of Executives. Being responsible for the principle executives, the Board is responsible for the hiring as well as firing of the company’s president or chief executive officer.

However, this tradition slowly changed in CPL Holdings Ltd. Nowadays, the Board hesitates in firing the president or the CEO since they think that it will only cost time as well as financial losses and thus they would just let go of their interest. In addition, it is now common in CPL Holdings Ltd.  that the president is the one who chooses the Board members. Unfortunately, most of the appointments are based on the relationship of the president’s to the appointee. In addition, the shareholders hardly ever object with the appointments being made by the president and thus, it often becomes the case that the president also takes over the chairmanship of the Board. With two highly important and powerful positions being held, it becomes difficult for the institutional owners to fire the president.

B. Huaneng Power Inc.

            Huaneng Power, Inc. believes that corporate governance is an institutional arrangement. In addition, it is being assumed that that corporation’s suppliers of finance guarantee themselves that proper return of their investments are viable. This means that Huaneng Power, Inc. views corporate management as a means of protecting the interests of the company’s shareholders.

Aside from that, Huaneng Power, Inc. affirms that corporate governance is a process of directing and controlling the company (Cadbury, 1992). They believe that the direction and control of the company is specified by the distribution of responsibilities as well as rights among the parties involved. The connotation of parties involved includes managers, board members and other stakeholders. In addition, Huaneng Power, Inc. believes that good governance also pertains to the guidelines for making corporate decisions, suggesting that it sets the background on which the corporate objectives sit. As such, corporate governance entails responsibility in attaining and monitoring of the set objectives.

The focus on the narrow application of corporate governance on the structure and functions of the board of Huaneng Power, Inc. as well as the prerogatives and rights of the shareholders in participating in the decision making process was proposed by its Board of Directors.  As such, this means that good governance in the company pertains to the determining who controls the corporation and how the control will be exercised. Moreover, the allocation of the risks and returns from business activities undertaken is also part of corporate governance of Huaneng Power, Inc.

Huaneng Power, Inc. recognized that conflicts between its large shareholders, small shareholders and management can arise brought about by unforeseen factors before the creation of the contract. As such, the company’s corporate governance constitutes the rights entitled to certain parties for the resolution of the disputes.  Huaneng Power, Inc. knows the purpose of its corporate governance, which is to minimize the cost of the conflict between the managers’ and shareholder’s incentives. This can be better reflected upon by going back to the abovementioned scenario where the President of a company tends to horde the available power within the organization by grabbing two major and crucial positions including the chairmanship of the board. This entails that corporate governance in Huaneng Power, Inc. aims to hinder the formation of self-interested managerial behavior.

7. Corporate social responsibility

A. CPL Holdings Ltd.

The importance of corporate social responsibility in CPL Holdings Ltd. has been resonating. Since corporate social responsibility in CPL Holdings Ltd. covers the issues of interest especially the resolution of conflicting ones, corporate social responsibility is related to the over-all performance of the company. With the resolution or impediment of internal conflicts, smoother decision-making and decision implementation can be secure. This means that interests of the stakeholders of CPL Holdings Ltd. are the same, and they will be able to work as one body in order to achieve their objectives and thus uphold their respective interests within the company.

B. Huaneng Power Inc.

On the contrary, the absence of good social responsibility in Huaneng Power, Inc. can lead to the worsening of conflicting interests. Each of the stakeholders in the company has the tendency of agreeing with decisions they think will be beneficial to them, even though, it does not translate to the welfare of other stakeholders. This means that various corporate players can assert their own views and perspectives. As such, Huaneng Power, Inc. will no longer function as one and can be described as very man for himself.

8. Remuneration Report

A. CPL Holdings Ltd.

Employee remuneration in CPL Holdings Ltd. serves as a reward for past performance and as a stimulus to increase future performance.  In the company employee remuneration are called financial stimulants such as incentive wages, profit sharing, bonuses, merit wage increases, and measured day-work.  These items are increasing in importance as part of the compensation package because bigger and costlier benefits continue to be major goals of labor unions. These benefits are often emphasized by individual employees in choosing or remaining with an employer. Other factors leading to increased emphasis upon these items are: increased leisure time available to all workers; higher levels of affluence; and further social legislation by governments.

            CPL Holdings Ltd. has long been concerned with welfare programs designed to protect their employees, or the employee and his dependents, against the basic hazards of life such as the problems of old age, disability, illness and accidents, unemployment, and health.  Some of the programs that have been established in CPL Holdings Ltd. to provide a measure of economic protection against these contingencies include private pension plans, private death and disability benefits plans, workmen’s compensation, unemployment compensation, and Old-Age, Survivors, and Disability Insurance. 

B. Huaneng Power Inc.

Many of the remuneration programs in Huaneng Power, Inc. such as private pension plans, were established directly by the management. In other instances the remuneration programs were initiated by the board of directors, at either the state or the federal level, even though they are largely financed by industry. Old-Age, Survivors, and Disability Insurance, for example, while established by the board of directors is financed equally by the company and its employees, and workmen’s compensation was created by the management at but is also financed entirely by the company.

To the average worker in Huaneng Power, Inc., employee benefits are a concrete and visible evidence of the good life which is his goal. He tends to perceive them as a means of security and a means of tax saving–which is a pleasure to everyone.

RECOMMENDATIONS

Deriving from the analysis between the two companies, corporate governance capabilities and ethical reporting, many strategic options would become imperative. It is therefore essential to evaluate these strategic options as to whether they are appropriate to the issues addressed, whether they are feasible enough to be implemented and their acceptability to key stakeholders.

A. Business Level Strategy

There is definitely a need to reconcile both the inside-out and outside-in capabilities for Huaneng Power, Inc. While the company’s corporate governance capabilities and ethical reporting involves focusing on its core competencies following its resource base, the company will be put into a disadvantageous position should it choose to neglect both the macro as well as micro industry environment. Therefore, Huaneng Power, Inc. has to be aware of the latest corporate governance capabilities and ethical reporting changes, as well as changes in political, economic, legal and even demographic trends in order to develop the outside-in capabilities, such as market sensing, customer linking, channel bonding and technology monitoring.

The advantages enjoyed by Huaneng Power, Inc. may come in the form of increased revenues. Knowing what the market demands and the latest trends could help the company fully exploit its research and development capabilities to come out with corporate governance capabilities and ethical reporting initiatives which are not also cost-effective but also high in quality. The strategic option can even be used as marketing tool where the focus is on staying close to their customers and listening to their feedbacks. On the flip side of the coin, there will be huge mobilization of resources involved, and the associated risks bestowed on the company.

Nevertheless, the mentioned strategic option seems the most practical for Huaneng Power, Inc. in the wake of globalization, since there is a sudden shift towards a more integrated and independent world economy. The key stakeholders too should not have any objections so long as the company’s core business is not threatened. By virtue of Huaneng Power, Inc.’s centralized control of its business, it is being expected that major barriers should not exist in carrying out such an option except additional time may be required given the scope and span of operations.

Understanding the strategic importance of corporate governance capabilities and ethical reporting is something the company has to be familiar with. Huaneng Power, Inc. normally practices a centralized and globally scaled configuration of operations and capabilities. This allows information dissemination to be retained.

CONCLUSION

The results of the analysis carried out on the corporate governance capabilities and ethical reporting of Huaneng Power, Inc. and CPL Holdings Ltd. indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that the corporate governance capabilities and ethical reporting of both companies could still be expected to improve faster than average.

The review of both company’s corporate governance and ethical reporting capabilities and resources revealed very little inconsistencies regarding their strategies. This is coherent with their traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for Huaneng Power, Inc.

The analysis among the environment as well as the corporate governance and ethical reporting capabilities of Huaneng Power, Inc. revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of the company.

Also, Huaneng Power, Inc. has to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options.

 

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