Reference no: EM132288122

Question 1:
What factors might determine that a non-executive director is NOT independent? List at least four factors and explain their application to the independence of the directors.

Question 2:
As an accountant for an industrial company, you have been working on year-end inventory valuation and you are reporting to the senior accountant. You have reached an opinion that some items of inventory are obsolete, and that their value should be written down to zero. The senior accountant disagrees. He thinks that the inventory should be kept at its current recorded value, without any write-off, in order to avoid a reduction in the reported profit for the year. He also tells you that the matter should not be discussed with the external auditors, should they do an inventory check.
When you argue that inventory should be valued fairly and properly, you are reminded that the company pays your salary and the senior accountant will decide how much that should be next year.
What should you do?

Question 3:
Identify examples of how accounting contributes to:
a) Conformance in governance
b) Business governance or ‘performance'

Question 4:
What is the difference between corporate governance and management?

Question 5:
James Quinn is the Executive Chairman of a company that is about to seek a Stock Market listing. He also holds 30 per cent of the issued shares. He founded the company 25 years ago to provide language tuition and in the last 10 years has opened private schools. During this time he was the Managing Director but last year changed to being the Chair and appointed his deputy to the role of CEO. The company has a strategy to expand into other areas of education by acquisition including running pre-school nurseries and professional training.
There are two non-executive directors on the 10-person board. One is a politician involved in education, whom the Chair believes may be helpful in getting education contracts, and the other is a partner with the firm's corporate lawyers.
Evaluate the corporate governance of this company.

Question 6:
a) Give 3 examples of a conflict of interests for directors.
b) Suggest a situation in which a director may be accused of failing to act with reasonable care, skill and diligence.
c) Suggest a situation in which a director may choose to exercise their powers for an improper purpose.

Question 7:
a) In what ways might the audit committee protect the independence of the external auditors?
b) What are the potential limitations of an audit committee that would reduce its effectiveness?

Question 8:
Shareholders should have the right to participate effectively and vote in general meetings of shareholders.
What measures or procedures might be applied to ensure that this right is upheld and protected?

Question 9:
Identify 3 examples of lack of transparency in the provision of information to by companies.

Question 10:
The chair of an ASX 200 company is concerned that a non-executive director has attended only 50% of the board meetings in the past year and has not contributed greatly to the meetings that they have attended. The director is also a member of the audit committee and has extensive experience in accounting and finance. The chair wants to carry out the annual review of performance of the board before the end of the financial year.
Suggest what the chair might do.

Question 11:
Compare 2 IT systems that meet corporate governance obligations with regards to recording data from operations and transactions. Eg.MYOB

Case Study Question:
In preparation for joining the parliamentary select committee Robert Johnson has asked you to prepare for him a briefing paper on the COMCO collapse, covering the following areas:
a) Explain the factors that might lead institutional investors to attempt to intervene directly in the management of a company, in particular after COMCO's first results restatement was announced.
b) Identify any corporate governance compliance failures which may have contributed to the failure of COMCO. For each failure identify the specific regulation/compliance requirement not adhered to.
c) Advise which internal control / corporate governance processes may have prevented the collapse of COMCO. Provide reasons for your advice.