Explain the concept of corporate governance for microfinance and discuss its importance to the survival of microfinance institutions, in the context of a new Managing Director addressing a Director's concerns.
You have been appointed as a Managing Director of a microfinance company. Prior to your appointment, one of the Directors of the company intimated that they have been to several Corporate Governance training programs but complained that most of the time, the training is loaded with many people and the time allotted was inadequate, so he was not able to ask questions on the basic principles of Corporate Governance practices in Microfinance institutions.
a) Explain the concept of corporate governance for Microfinance. [6 Marks]
b) Discuss the importance of corporate governance to the survival of microfinance institutions.
You're reporting an error for "MRB – APR 2023 – L4 – Q6 – Corporate Governance in Microfinance Institutions"
20 Marks
MRB – APR 2023 – L4 – Q4 – Role of ESG in Performance and Sustainability of RCBs
Critically examine the role of Environmental, Social, and Governance (ESG) principles in the performance and sustainability of Rural and Community Banks (RCBs) in Ghana, highlighting their integration beyond traditional corporate governance.
Hitherto corporate governance was pivotal in the sustainability programming and satisfaction of the regulatory frameworks of rural and community banks. During the 2022 Bankers’ Week celebration, it was concluded that the operationalization of Environmental, Social and Governance (ESG) principles into the operation of the RCBs has taken a more critical dimension. Critically examine the role of ESG’s in the performance and sustainability of RCBs in Ghana.
a) Akosa Minerals Limited (AML) has undergone significant transformations in its operations, particularly with the integration of lithium extraction into its core business. This shift has presented both opportunities and challenges, including regulatory compliance, technological advancements and stakeholder management. Successfully navigating these changes requires effective leadership and change management.
Rosabeth Moss Kanter suggests that managers in change-adept organisations must possess key skills to drive transformation effectively. As AML continues its diversification efforts, the company’s leadership must demonstrate these skills to sustain growth and maintain a competitive edge.
Required:
Identify and explain the critical role of leadership in managing change and THREE out of five key change management skills suggested by Kanter that AML’s leadership should exhibit to effectively manage its diversification and growth strategies.
b) Akosa Minerals Limited (AML) recently engaged a risk consultant from Isodek Consultants to conduct a comprehensive risk assessment and provide recommendations on managing the transformational changes the company is undergoing. The consultant’s report highlights key risks and challenges related to AML’s diversification strategy, operational restructuring, stakeholder engagement and compliance with global sustainability standards.
To navigate these challenges effectively, AML’s leadership needs to apply the Gemini Consultants’ 4Rs model which provides a structured framework for managing large-scale organisational change.
Required:
Using the Gemini Consultants’ 4Rs model, discuss how each component can be applied to address the operational and environmental risks identified in the consultant’s report.
a) The data below relates to Azumah Enterprise for the month of August. The data relates to activities for his four areas of distribution in Accra.
Distribution Area
Selling Price Per Unit (GHc)
Standard Variable Cost Price Per Unit (GHc)
Awoshie (A)
120
80
Banana-Inn (B)
100
60
Cantonments (C)
80
45
Dansoman (D)
45
25
Sales Units
Budgeted
Actuals
Awoshie (A)
65,000
48,000
Banana-Inn (B)
45,000
55,000
Cantonments (C)
35,000
28,000
Dansoman (D)
25,000
28,000
Required:
Estimate the sales volume variance for each distribution area and in total for the month using a contribution income statement.
b) There are many models of evaluation available to a Management Accountant. Benchmarking is one of such models.
Required:
Under what circumstances would benchmarking be an effective model of evaluating performance?
c) IFAC describes Environmental Management Accounting as “The management of environmental and economic performance via management accounting systems and practices that focus on both physical information on the flow of energy, water, materials, and wastes, as well as monetary information on related costs, earnings and savings.” The above quotation shows the increasing relevance of Environmental Management Accounting.
Required:
Discuss with examples FOUR categories of environmental costs.
a) Djato Autos LTD (DA) is a major car distributor in Ghana. DA is currently preparing its financial statements for the year ended 31 August 2024. The company sells cars in three different zones across Ghana. At reporting date, DA has a fleet of 300 cars (same type, model, and age) for which DA’s directors would like to estimate their fair value.
The board chairperson believes that the fair value should be based on inputs from the market which provides the highest net benefits from car sales. Information about all three markets is as follows:
Total market volume
DA’s sales volume
Selling price GH¢
Transportation costs GH¢
Transaction costs GH¢
Northern zone
6,500
960
27,000
2,000
1,500
Southern zone
9,800
608
28,000
3,100
1,900
Western zone
5,000
800
25,000
2,500
2,500
Total
21,300
2,368
Required:
In line with IFRS 13: Fair Value Measurement, explain with calculations how much fair value should be placed on the total 300 cars at 31 August 2024, and comment on the correctness of the board chairperson’s opinion.
b) A pharmaceutical entity, Kwanpa Pharma (KP), is currently developing a drug that will be used in the treatment of a very specific ailment affecting a small group of patients. Management has decided to pursue this drug for reputational reasons. KP has introduced an innovative pricing mechanism for this drug, whereby a patient will only pay if the drug is proven to be effective. KP has received regulatory approval from the Food and Drugs Authority and believes that all other capitalisation criteria in IAS 38: Intangible Assets have been met, except for concerns about its market potential.
In a different situation, KP has determined that it has met the capitalisation criteria for a vaccine delivery device. It is continuing expenditure on the device to add new functionality. The development of this device will require new regulatory approval.
Required:
In line with IAS 38: Intangible Assets, explain how KP should account for the development cost for the limited market use and the development expenditure on the new functionality.
c) Tupaye Minerals LTD (TML) is making significant strides in Ghana’s mining sector with its recent discovery of lithium deposits in commercial quantities. This project is poised to be the first lithium mine in the country and industry specialists expect it to significantly contribute to the global supply of spodumene concentrate – a critical raw material for lithium-ion batteries. The company aims to produce over 300,000 tonnes of spodumene concentrate annually, making it one of the largest operations of its kind globally. As expected, the Project has garnered huge attention for its potential economic benefits, including job creation, local investment opportunities and substantial revenue generation. Recently, TML listed on the Ghana Stock Exchange (GSE), allowing local investors to participate in the project and aiming to foster greater local ownership and economic inclusion.
Despite its promising prospects, the project faces multifaceted challenges spanning environmental, social and governance concerns that need addressing to ensure long-term viability and minimal negative impact on the environment and local communities. For instance, to initiate its operations, there is the need for extensive land clearing, while during operations, a water-intensive extraction technology is expected to be deployed. Due to the expected heightened health risks from exposure to the mining-related pollutants, local communities are to be relocated. Industry experts suggest that regulatory compliance is likely to be hindered by enforcement weaknesses, while transparency and accountability issues risk undermining sustainability and community trust. The experts similarly suggest that to ensure long-term sustainability, there is the need for robust post-mining land rehabilitation, ongoing community engagement, and the adoption of sustainable mining practices like renewable energy usage and efficient waste management to mitigate environmental impacts.
You are the honourary Vice-President in charge of climate and sustainability research of a leading Think Tank in Ghana, you have been invited by a national television station as a guest speaker on its current affairs programme
Required:
Discuss the sustainability issues associated with the operations of TML with regards to environmental, social and governance issues to help the ordinary Ghanaian understand the operations of TML.
The Chairman of Imperial Oil Services Limited, a company which prides itself as a leader in corporate social responsibility, has just returned from a training programme on ‘Efficient Board Management’. He stated that during the programme, Sustainability Reporting was identified as one of the key responsibilities of the Board of Directors by the Nigerian Code of Corporate Governance, 2018.
As the Chief Compliance Officer of the company, the Chairman requests for a paper discussing the relevant principles and issues to be covered by the company’s policies on sustainability as required by the code.
Required:
Present a paper discussing the relevant principles and issues to be covered by the company’s policies on sustainability as required by the code. (10 Marks)
Customer Focused Ltd has updated its management accounts (Exhibit 1) to produce a
forecast for the year 2020 and these have indicated some significant problems. The business
owners are unsure what to do next.
Required:
You are acting as an advisor to the company and they ask you to:
Based on your work in Questions 1 and 2, identify and explain three key factors which must be addressed for Customer Focused Ltd to be sustainable over the short term.
Sustainability assessment and test for Full-Cost Accounting (FCA) of HVSC is to measure the impact over the full product life cycle. The Management team is concerned about the great deal of judgment that would be exercised. Conceptually, FCA appears straightforward, but it is also not an easy technique to develop and use in practice if adopted by SavvyTech plc.
The Sustainability Assessment Model (SAM) measures the impacts on sustainability of a product such as HVSC over its full life cycle from raw material extraction through the production process to final usage and disposal.
Required:
Explain the SAM four-step approach to measuring product HVSC over its entire life cycle.
The question asks for the factors motivating companies to disclose environmental and social information and the challenges in recognizing and measuring financial effects of environmental matters.
The directors of Kibi Ltd, a bauxite mining company in East Akim Municipal Assembly, after reviewing their published financial statements, are of the view that their financial statements have limited environmental information and do not address a broad enough range of users’ needs.
Despite the difficulties in recognizing and measuring the financial effects of environmental matters in financial statements, Kibi Ltd discloses the following environmental information in its financial statements:
Release of minerals and other naturally occurring impurities including heavy metals;
Loss of natural fishing and recreational places;
Soil erosion and sedimentation, noise, and dust.
Required:
i) Explain THREE (3) factors which motivate companies to disclose social and environmental information in their financial statements. (3 marks)
ii) Identify FOUR (4) specific difficulties in recognizing and measuring the financial effects of environmental matters. (4 marks)
An increasing number of users have an interest in environmental matters, either as socially responsible investment (SRI) analysts, private investors, banks, employees, or customers. In cases where there are material environmental impacts, they will normally expect to see something in the annual reports.
Required:
What might users expect to see in a company’s annual report to indicate that environmental concerns are receiving adequate attention?
Explain the concept of corporate governance for microfinance and discuss its importance to the survival of microfinance institutions, in the context of a new Managing Director addressing a Director's concerns.
You have been appointed as a Managing Director of a microfinance company. Prior to your appointment, one of the Directors of the company intimated that they have been to several Corporate Governance training programs but complained that most of the time, the training is loaded with many people and the time allotted was inadequate, so he was not able to ask questions on the basic principles of Corporate Governance practices in Microfinance institutions.
a) Explain the concept of corporate governance for Microfinance. [6 Marks]
b) Discuss the importance of corporate governance to the survival of microfinance institutions.
You're reporting an error for "MRB – APR 2023 – L4 – Q6 – Corporate Governance in Microfinance Institutions"
20 Marks
MRB – APR 2023 – L4 – Q4 – Role of ESG in Performance and Sustainability of RCBs
Critically examine the role of Environmental, Social, and Governance (ESG) principles in the performance and sustainability of Rural and Community Banks (RCBs) in Ghana, highlighting their integration beyond traditional corporate governance.
Hitherto corporate governance was pivotal in the sustainability programming and satisfaction of the regulatory frameworks of rural and community banks. During the 2022 Bankers’ Week celebration, it was concluded that the operationalization of Environmental, Social and Governance (ESG) principles into the operation of the RCBs has taken a more critical dimension. Critically examine the role of ESG’s in the performance and sustainability of RCBs in Ghana.
a) Akosa Minerals Limited (AML) has undergone significant transformations in its operations, particularly with the integration of lithium extraction into its core business. This shift has presented both opportunities and challenges, including regulatory compliance, technological advancements and stakeholder management. Successfully navigating these changes requires effective leadership and change management.
Rosabeth Moss Kanter suggests that managers in change-adept organisations must possess key skills to drive transformation effectively. As AML continues its diversification efforts, the company’s leadership must demonstrate these skills to sustain growth and maintain a competitive edge.
Required:
Identify and explain the critical role of leadership in managing change and THREE out of five key change management skills suggested by Kanter that AML’s leadership should exhibit to effectively manage its diversification and growth strategies.
b) Akosa Minerals Limited (AML) recently engaged a risk consultant from Isodek Consultants to conduct a comprehensive risk assessment and provide recommendations on managing the transformational changes the company is undergoing. The consultant’s report highlights key risks and challenges related to AML’s diversification strategy, operational restructuring, stakeholder engagement and compliance with global sustainability standards.
To navigate these challenges effectively, AML’s leadership needs to apply the Gemini Consultants’ 4Rs model which provides a structured framework for managing large-scale organisational change.
Required:
Using the Gemini Consultants’ 4Rs model, discuss how each component can be applied to address the operational and environmental risks identified in the consultant’s report.
a) The data below relates to Azumah Enterprise for the month of August. The data relates to activities for his four areas of distribution in Accra.
Distribution Area
Selling Price Per Unit (GHc)
Standard Variable Cost Price Per Unit (GHc)
Awoshie (A)
120
80
Banana-Inn (B)
100
60
Cantonments (C)
80
45
Dansoman (D)
45
25
Sales Units
Budgeted
Actuals
Awoshie (A)
65,000
48,000
Banana-Inn (B)
45,000
55,000
Cantonments (C)
35,000
28,000
Dansoman (D)
25,000
28,000
Required:
Estimate the sales volume variance for each distribution area and in total for the month using a contribution income statement.
b) There are many models of evaluation available to a Management Accountant. Benchmarking is one of such models.
Required:
Under what circumstances would benchmarking be an effective model of evaluating performance?
c) IFAC describes Environmental Management Accounting as “The management of environmental and economic performance via management accounting systems and practices that focus on both physical information on the flow of energy, water, materials, and wastes, as well as monetary information on related costs, earnings and savings.” The above quotation shows the increasing relevance of Environmental Management Accounting.
Required:
Discuss with examples FOUR categories of environmental costs.
a) Djato Autos LTD (DA) is a major car distributor in Ghana. DA is currently preparing its financial statements for the year ended 31 August 2024. The company sells cars in three different zones across Ghana. At reporting date, DA has a fleet of 300 cars (same type, model, and age) for which DA’s directors would like to estimate their fair value.
The board chairperson believes that the fair value should be based on inputs from the market which provides the highest net benefits from car sales. Information about all three markets is as follows:
Total market volume
DA’s sales volume
Selling price GH¢
Transportation costs GH¢
Transaction costs GH¢
Northern zone
6,500
960
27,000
2,000
1,500
Southern zone
9,800
608
28,000
3,100
1,900
Western zone
5,000
800
25,000
2,500
2,500
Total
21,300
2,368
Required:
In line with IFRS 13: Fair Value Measurement, explain with calculations how much fair value should be placed on the total 300 cars at 31 August 2024, and comment on the correctness of the board chairperson’s opinion.
b) A pharmaceutical entity, Kwanpa Pharma (KP), is currently developing a drug that will be used in the treatment of a very specific ailment affecting a small group of patients. Management has decided to pursue this drug for reputational reasons. KP has introduced an innovative pricing mechanism for this drug, whereby a patient will only pay if the drug is proven to be effective. KP has received regulatory approval from the Food and Drugs Authority and believes that all other capitalisation criteria in IAS 38: Intangible Assets have been met, except for concerns about its market potential.
In a different situation, KP has determined that it has met the capitalisation criteria for a vaccine delivery device. It is continuing expenditure on the device to add new functionality. The development of this device will require new regulatory approval.
Required:
In line with IAS 38: Intangible Assets, explain how KP should account for the development cost for the limited market use and the development expenditure on the new functionality.
c) Tupaye Minerals LTD (TML) is making significant strides in Ghana’s mining sector with its recent discovery of lithium deposits in commercial quantities. This project is poised to be the first lithium mine in the country and industry specialists expect it to significantly contribute to the global supply of spodumene concentrate – a critical raw material for lithium-ion batteries. The company aims to produce over 300,000 tonnes of spodumene concentrate annually, making it one of the largest operations of its kind globally. As expected, the Project has garnered huge attention for its potential economic benefits, including job creation, local investment opportunities and substantial revenue generation. Recently, TML listed on the Ghana Stock Exchange (GSE), allowing local investors to participate in the project and aiming to foster greater local ownership and economic inclusion.
Despite its promising prospects, the project faces multifaceted challenges spanning environmental, social and governance concerns that need addressing to ensure long-term viability and minimal negative impact on the environment and local communities. For instance, to initiate its operations, there is the need for extensive land clearing, while during operations, a water-intensive extraction technology is expected to be deployed. Due to the expected heightened health risks from exposure to the mining-related pollutants, local communities are to be relocated. Industry experts suggest that regulatory compliance is likely to be hindered by enforcement weaknesses, while transparency and accountability issues risk undermining sustainability and community trust. The experts similarly suggest that to ensure long-term sustainability, there is the need for robust post-mining land rehabilitation, ongoing community engagement, and the adoption of sustainable mining practices like renewable energy usage and efficient waste management to mitigate environmental impacts.
You are the honourary Vice-President in charge of climate and sustainability research of a leading Think Tank in Ghana, you have been invited by a national television station as a guest speaker on its current affairs programme
Required:
Discuss the sustainability issues associated with the operations of TML with regards to environmental, social and governance issues to help the ordinary Ghanaian understand the operations of TML.
The Chairman of Imperial Oil Services Limited, a company which prides itself as a leader in corporate social responsibility, has just returned from a training programme on ‘Efficient Board Management’. He stated that during the programme, Sustainability Reporting was identified as one of the key responsibilities of the Board of Directors by the Nigerian Code of Corporate Governance, 2018.
As the Chief Compliance Officer of the company, the Chairman requests for a paper discussing the relevant principles and issues to be covered by the company’s policies on sustainability as required by the code.
Required:
Present a paper discussing the relevant principles and issues to be covered by the company’s policies on sustainability as required by the code. (10 Marks)
Customer Focused Ltd has updated its management accounts (Exhibit 1) to produce a
forecast for the year 2020 and these have indicated some significant problems. The business
owners are unsure what to do next.
Required:
You are acting as an advisor to the company and they ask you to:
Based on your work in Questions 1 and 2, identify and explain three key factors which must be addressed for Customer Focused Ltd to be sustainable over the short term.
Sustainability assessment and test for Full-Cost Accounting (FCA) of HVSC is to measure the impact over the full product life cycle. The Management team is concerned about the great deal of judgment that would be exercised. Conceptually, FCA appears straightforward, but it is also not an easy technique to develop and use in practice if adopted by SavvyTech plc.
The Sustainability Assessment Model (SAM) measures the impacts on sustainability of a product such as HVSC over its full life cycle from raw material extraction through the production process to final usage and disposal.
Required:
Explain the SAM four-step approach to measuring product HVSC over its entire life cycle.
The question asks for the factors motivating companies to disclose environmental and social information and the challenges in recognizing and measuring financial effects of environmental matters.
The directors of Kibi Ltd, a bauxite mining company in East Akim Municipal Assembly, after reviewing their published financial statements, are of the view that their financial statements have limited environmental information and do not address a broad enough range of users’ needs.
Despite the difficulties in recognizing and measuring the financial effects of environmental matters in financial statements, Kibi Ltd discloses the following environmental information in its financial statements:
Release of minerals and other naturally occurring impurities including heavy metals;
Loss of natural fishing and recreational places;
Soil erosion and sedimentation, noise, and dust.
Required:
i) Explain THREE (3) factors which motivate companies to disclose social and environmental information in their financial statements. (3 marks)
ii) Identify FOUR (4) specific difficulties in recognizing and measuring the financial effects of environmental matters. (4 marks)
An increasing number of users have an interest in environmental matters, either as socially responsible investment (SRI) analysts, private investors, banks, employees, or customers. In cases where there are material environmental impacts, they will normally expect to see something in the annual reports.
Required:
What might users expect to see in a company’s annual report to indicate that environmental concerns are receiving adequate attention?
