- 10 Marks
Question
In reference to Ghana’s Code of Best Practices in Corporate Governance, discuss FOUR (4) key issues that could determine how well or badly HPC is governed, taking into consideration the intention and business relationship of the Board Chairman. (10 marks)
Answer
- Role and Responsibilities of the Board:
The Board of Directors should provide suitable leadership and be clear on their responsibilities. However, the Board Chairman’s personal relationship with the CEO may cause a conflict of interest, compromising governance. - Board Composition and Balance:
A balanced board ensures no dominance by a single individual. In HPC, the close relationship between the Chairman and the CEO poses a risk of power imbalance, which may undermine governance standards. - Director Remuneration and Conflict of Interest:
The intention of the Chairman to pursue a personal relationship with the CEO could create self-interest and lead to biased decisions in director remuneration and governance practices. - Risk Management and Internal Control:
Effective risk management requires strong internal controls. However, the personal relationship between the Chairman and CEO might lead to override of controls, creating risks for the company’s governance framework.
These issues could either strengthen or weaken HPC’s governance depending on how the Board manages potential conflicts of interest and ethical concerns.
- Topic: Professional Ethics and Code of Conduct for Auditors
- Series: APR 2022
- Uploader: Dotse