Topic: Corporate Governance

Search 500 + past questions and counting.

MGE – Nov 2014 – L2 – Q6 – Corporate Governance

Evaluating stakeholder impact and ethical principles in response to financial reporting manipulation.

Question

Gloria Okeke is the Chairman and Chief Executive Officer of Magi and Magi Pharmaceuticals, which produces drugs for the Lagoona region of the country. Gloria is convinced that the company is doing quite well and the management is following due process in terms of structure and governance. She believes that this is the reason for the company’s steady growth in terms of revenue, profit, and earnings.

In 2013, Magi and Magi Pharmaceuticals made a profit of 70% over and above the 2012 results. Mr. Joeb, the Chief Accountant, is quite impressed and is of the opinion that the company should make full disclosure of its profits in the Financial Statements, thinking this would engender greater confidence and attract additional investment in the company.

However, Gloria, claiming to be the boss, instructed Joeb to increase her compensation and inflate the cost of production of pharmaceutical drugs to reduce the disclosed profit of the company.

Joeb outrightly disagreed with Gloria’s instruction, giving her a long talk about his duty to comply with his Institute’s professional rules of conduct. However, Gloria cut short the meeting, saying that she did not wish to entertain any further discussion about her decision. She advised Joeb, in his own interest, to implement her instructions.

Required:

a. As a chartered accountant, specify any THREE categories of stakeholders that Joeb should consider in taking any professional decision or action with regard to the instruction stated above and give reasons for your choice.
(7½ Marks)

b. Discuss the basic principles of ethics that Joeb, as a chartered accountant, should comply with in the course of carrying out his professional responsibilities.
(7½ Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Governance, Ethical Threats, Independence, Professional Ethics, Stakeholders
Level: Level 2

Topic: Corporate Governance

MGE – Nov 2014 – L2 – Q1 – Corporate Governance

Ethical and governance issues in appointing auditors with familial ties to company management.

Question

ROC Company Plc. manufactures aluminium (stainless) household equipment. Its plant is located by Alobe river, which is the source of water for the community. The company currently has the largest share of the market on the West African Coast and plans to expand its operations to East African and South African markets.

At the 26th Annual General Meeting (AGM), shareholders approved the appointment of Adeola & Partners as External Auditors to the company. The Managing Partner of Adeola & Partners, Sir Segun Adeola, is a nephew of the Managing Director of ROC Company Plc. The appointment of Adeola & Partners as External Auditors to ROC Company was facilitated by the Managing Director, who did not disclose his relationship with Sir Segun Adeola to the company’s board.

At a recent board meeting, the Managing Director of ROC expressed concern that so much resources were expended towards satisfying the interest of the community at the expense of the company’s shareholders. According to him, shareholders are the primary stakeholders of the company, and their interest should be given the highest priority. He further opined that although other stakeholders are important to the company but only to the extent that ROC needs them. Consequently, the board resolved that henceforth, the company should not spend more than 0.5% of its Profit After Tax (PAT) on other stakeholders.

At the peak of the company’s production cycle, one of its underground waste tanks ruptured, and a large quantity of chemical waste leaked into Alobe river. This led to the destruction of aquatic life and contamination of neighbouring farmlands. This catastrophic event devastated the community as many farmers and fishermen lost their sources of livelihood. The community’s major source of drinking water was also contaminated.

The leadership of Alobe River Community Association approached the management of ROC Company Plc. and requested them to pay huge sums as compensation to the affected people and also to construct ten bore holes for the community. The management, however, informed the community leaders that based on the resolution of their board, expenditure on the issue would be limited to only 0.5% of profit after tax at the end of the year, which was projected to be far less than the amount of compensation demanded by the community. As a result, all discussions with the leadership of the community broke down.

The youths of the community responded with a sit-in protest, leading to a blockade of the company’s gate and disruption of its operations. The board of the company is now seeking immediate and amicable resolution of this problem.

While this was going on, the company suffered a major fire outbreak in its second factory, destroying its main furnace, machines and a large quantity of its finished goods. Some of the workers were severely burnt while attempting to put out the fire at the factory’s major warehouse. This event culminated in production shutdown at the second factory and temporary disengagement of several skilled workers as well as some casual staff. Fortunately, the company is covered by comprehensive fire and workers compensation insurance policies with Nagode Risk and Life Assurance Plc.

Required:
a. As a Strategic Risk Consultant of ROC Company Plc. you are to evaluate the adequacy of the risk management processes, including its information and communication systems. (8 Marks)

b. Evaluate the company’s residual risks in contrast to the management’s risk appetite. (7 Marks)

c. Using the stakeholders theory, evaluate the Managing Director’s position. Are there other stakeholders important to the company? (9 Marks)

d. Identify and discuss the ethical issues involved in the scenario described above. (6 Marks)

Answer:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor Independence, Corporate Governance, Ethical Issues, Risk Management, Stakeholder Theory
Level: Level 2

Topic: Corporate Governance

CSME – May 2021 – L2 – Q6 – Ethics in Business

Analysis of Mr. John’s actions regarding insider trading based on various ethical perspectives.

Question

Mr John, a professional accountant, is the Chief Executive Officer of a company quoted on the Nigerian Stock Exchange. He also owns about 20% of the company’s shares worth hundreds of millions of Naira. Due to several factors, the company began performing poorly, leading to an unpublished financial report indicating a huge loss. In anticipation of a slide in the company’s share price, Mr. John instructed his stockbroker to sell half of his shares for potential repurchase once the price drops after the financial statements are released. He profited substantially from this transaction.

Required:

a. Analyse the action of Mr. John using:
i. The Model Code (3 Marks)
ii. Critical Theory (3 Marks)
iii. Moral Development of Accountants (4 Marks)

b. Advise Mr. John on the fundamental ethical principles which professional accountants are expected to comply with. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Critical Theory, Ethical Principles, Insider Trading, Model Code, Moral Development
Level: Level 2

Topic: Corporate Governance, Ethics in Business
Series: MAY 2021

CSME – May 2021 – L2 – Q5a – Corporate Governance

Discussing four different ways in which agency conflict can arise between stakeholders.

Question

Discuss FOUR of the different ways in which agency conflict can arise. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency Conflict, Earnings Retention, Effort Level, Moral Hazard, Risk Aversion
Level: Level 2

Topic: Corporate Governance
Series: MAY 2021

CSME – May 2021 – L2 – Q3b – Corporate Governance

Explanation of board responsibilities per ICSA guidelines that cannot be delegated.

Question

Using the Institute of Chartered Secretaries and Administrators (ICSA) guidance note, explain responsibilities of board of directors that should not be delegated.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Board Responsibilities, Corporate Governance, ICSA Guidelines, Non-Delegable Duties
Level: Level 2

Topic: Corporate Governance
Series: MAY 2021

CSME – May 2021 – L2 – Q3a – Corporate Governance

Advising on voting rights to protect a shareholder's investment in a struggling company.

Question

A friend of yours, who invested heavily in the ordinary shares of a company that has been struggling in recent years, came to you for advice. He is confused as to what he can do to protect his investment.

Advise him on:
i. How he can use his voting rights as a shareholder to secure his investment. (6 Marks)
ii. Limitations to the use of his voting rights. (4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Governance, Investment Protection, Rights Limitations, Shareholder Voting
Level: Level 2

Topic: Corporate Governance
Series: MAY 2021

CSME – May 2017 – L2 – SC – Q7 – Corporate Governance

Explain the Nolan principles guiding public life and discuss standards for ethical conduct in the public sector.

Question

Nolan Committee on standards in public life was set up to report on standards of behaviour amongst politicians, civil servants and public bodies. Provide an analysis of Nolan‟s‟ SEVEN Principles of Public Life. (15 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accountability, Ethics, Integrity, Nolan Principles, Public Sector
Level: Level 2

Topic: Corporate Governance
Series: MAY 2017

CSME – May 2023 – L1 – SA – Q3 – Corporate Governance

Explanation of corporate governance statement contents and voluntary disclosure.

Question

The code of corporate governance prescribes corporate governance disclosures for listed companies.

(a) Explain the contents of a corporate governance statement. (12 Marks)

(b) Not all information that corporate entities can provide is mandatory. Explain the justifications and drawbacks of voluntary disclosure in corporate governance reports. (8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Ethics, Corporate Governance, Stakeholder Communication, Transparency, Voluntary Disclosure
Level: Level 2

Topic: Corporate Governance
Series: MAY 2023

CSME – Nov 2015 – L2 – Q6 – Corporate Governance

Evaluates how specific corporate governance issues impact the effectiveness of a company's governance.

Question

Explain briefly how the following key issues in corporate governance establish how well or badly a company is governed:

a. The role and responsibilities of the board of directors
b. The composition and balance of the board of directors
c. Financial reporting, narrative reporting, and auditing
d. Directors’ remuneration
e. Risk management and internal control

Answer

Find Related Questions by Tags, levels, etc.

Tags: Board Composition, Corporate Governance, Directors’ Remuneration, Financial Reporting, Risk Management
Level: Level 2

Topic: Corporate Governance
Series: NOV 2015

CSME – Nov 2015 – L2 – Q5 – Corporate Governance

Outlines key responsibilities and duties of the board in corporate governance, relevant for improving corporate structure and performance.

Question

The owner of ABC Company learned from a conference and a professional magazine that weak corporate governance accounted for recent corporate failures in Nigeria. Many board members were found lacking a clear understanding of board responsibilities and duties.

Required:
The Managing Director will soon address the board and has requested a paper detailing the board’s responsibilities and duties.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accountability, Board Duties, Board Structure, Corporate Governance, Strategic Oversight
Level: Level 2

Topic: Corporate Governance
Series: NOV 2015

CSME – Nov 2019 – L2 – Q3a – Corporate Governance

Discusses basic concepts that are essential for good corporate governance and their relation to governance practices.

Question

(a) There are basic concepts that must be observed for good corporate governance in an entity.

Required:
Discuss these concepts and show how they relate to good corporate governance. (14 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accountability, Corporate Governance, Fairness, Transparency
Level: Level 2

Topic: Corporate Governance
Series: NOV 2019

CSME – Nov 2019 – L2 – Q2 – Corporate Governance

Comparative analysis of the International Corporate Governance Network (ICGN) guidelines and the Financial Reporting Council of Nigeria (FRCN) Code on corporate risk oversight.

Question

As a risk management consultant, you are required to provide a comparative overview of the International Corporate Governance Network (ICGN) guidelines and the Financial Reporting Council of Nigeria (FRCN) Code of Corporate Governance on responsibilities for the oversight and management of corporate risk. (20 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Governance, FRCN Code, ICGN Guidelines, Risk Management
Level: Level 2

Topic: Corporate Governance
Series: NOV 2019

CSME – Nov 2020 – L2 – Q6D – Corporate Governance

Differentiate between a trade and a profession.

Question

The ICAN Professional Code of Conduct and Guide for Members requires every member or student of the Institute to always “act professionally” and in “the public interest” in the discharge of their responsibilities.

Required:

Differentiate between a trade and a profession.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Comparison, Profession, Trade
Level: Level 2

Topic: Corporate Governance
Series: NOV 2020

CSME – Nov 2020 – L2 – Q5b – Corporate Governance

Discuss sustainability policies required by the Nigerian Code of Corporate Governance.

Question

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)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Governance, Nigerian Code of Corporate Governance, Sustainability
Level: Level 2

Topic: Corporate Governance
Series: NOV 2020

CSME – Nov 2020 – L2 – Q4 – Ethics in Business

Clarify the relationship between ethics and law, explain moral dilemmas, and critique consequentialist theories of ethics.

Question

As a professional accountant, it is important that you are ethical in carrying out your professional responsibilities. This requires, among other qualities, a good ethical foundation consisting of a clear understanding of what ethics is all about.

You are required to:
a. Clarify the relationship between ethics and law. (3 Marks)
b. With the aid of an appropriate example, explain the nature of a moral dilemma. (5 Marks)
c. Present a critique of consequentialist theories of ethics in relation to TWO of its general criticisms and the profit-making objective in business. (12 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Consequentialist Theory, Corporate Governance, Ethics, Moral Dilemma
Level: Level 2

Topic: Corporate Governance, Ethics in Business
Series: NOV 2020

CSME – Nov 2020 – L2 – Q3 – Corporate Governance

Discuss five theories of corporate governance to assist a newly appointed director.

Question

Effective corporate governance requires adequate understanding of the basic concepts and theories of corporate governance.

Required:
Discuss five theories of corporate governance in a way that will assist a newly appointed director to understand and apply them.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency theory, Corporate Governance, Stakeholder Theory, Stewardship Theory, Theories
Level: Level 2

Topic: Corporate Governance
Series: NOV 2020

CSME – Nov 2020 – L2 – Q1b – Corporate Governance

Clarify the nature and objectives of a mission statement in relation to strategic management.

Question

Clarify the nature and objectives of a mission statement.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Mission Statement, Objectives, Strategic Planning
Level: Level 2

Topic: Corporate Governance
Series: NOV 2020

MGE – May 2018 – L2 – Q7 – Corporate Governance

Advises on the essential contents of a standard business plan for a new mushroom farm.

Question

Mr. & Mrs. Phillips, your family friends, have just retired from the public service and are planning to set up a mushroom farm. They hope to use their gratuity and a loan sourced from their bank as initial capital for the business. Their bank manager requested them to present a business plan for this purpose. They approach you for advice on how to prepare a business plan, as they cannot afford to hire a consultant.

You are required to:
Advise Mr. and Mrs. Phillips on the contents of a standard business plan. (Total 15 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Business Plan, Entrepreneurship, Financial planning, Start-up
Level: Level 2

Topic: Corporate Governance
Series: MAY 2018

MGE – May 2018 – L2 – Q4a – Corporate Governance

Discusses the two-tier board structure and its support in governance systems.

Question

Discuss the argument in support of the two-tier board structure. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Board Structure, Corporate Governance, Supervisory Board, Two-Tier Board
Level: Level 2

Topic: Corporate Governance
Series: MAY 2018

MGE – May 2018 – L2 – Q2 – Corporate Governance

Discusses corporate governance, approaches, and key aspects of the Sarbanes-Oxley Act.

Question

Since the onset of the global economic crises of 2008 that led to the collapse of many corporations across the world, there has been a heightened demand for companies to have good and effective corporate governance structures.

a. Discuss the importance of effective corporate governance codes to corporations. (5 Marks)

b. Explain the TWO basic approaches of corporate governance and specify the one you consider to be more acceptable. (10 Marks)

c. Identify FIVE of the main governance aspects of the Sarbanes-Oxley Act. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Governance, Governance Codes, Principles-Based Approach, Rules-Based Approach, Sarbanes-Oxley Act
Level: Level 2