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Which of the following organisations has no representation on the Board of the Financial Reporting Council of Nigeria?
A. Chartered Institute of Taxation of Nigeria
B. Chartered Institute of Stockbrokers
C. Nigerian Institute of Bankers
D. Nigerian Institute of Estate Surveyors and Valuers
E. National Insurance Commission
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At the Annual General Meeting of TAIMAKO Nigeria Limited, shareholders expressed displeasure about what they considered to be excessively high remuneration paid to members of the company’s board of directors. Some shareholders believed that board remuneration should be tied to the company’s financial performance. Consequently, a group of shareholders has asked you to advise them on the position of the Code of Corporate Governance on remuneration of directors.
Required:
a. The purpose and structure of the remuneration package for board members. (5 Marks)
b. The role of the remuneration committee. (5 Marks)
c. The problems of linking board members’ rewards with the company’s performance. (5 Marks)
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Drewal and Taiwo jointly established a plastic company after a long period of economic recession. The Board of Directors is in the process of drawing out the corporate code of ethics for the company. Advise it on:
a) The nature of a corporate code of ethics. (2 Marks)
b) THREE basic reasons for developing a company’s code of ethics. (6 Marks)
c) Any FIVE general provisions that a corporate code of ethics should specify. (5 Marks)
d) FOUR provisions or statements the corporate code of ethics should have in respect of employees and any THREE in respect of customers. (7 Marks)
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Remuneration packages should attract individuals to a company and persuade them to work for the company. Ghana’s Code of Best Practices makes three statements about remuneration policy. The Code adds that the remuneration level for individual directors should reflect their experiences and the level of responsibilities they undertake.
Required:
i) Explain the three statements about remuneration as stated in the Ghana’s Code of Best Practices policy to support Bazar management engagement with the General Welfare Committee (GWC). (6 marks)
ii) Explain to the management of Bazar why executive remuneration is a governance issue. (4 marks)
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The board of COM currently consists of one executive director, the CEO, six non-independent non-executive directors (NEDs), and three independent NEDs. The chairman of the board has indicated that since the company is now listed, it is prudent to increase the number of independent NEDs. This, in the view of the board chairman, will ensure a ‘balance of power’ on the board so that no individual or small group of individuals can dominate decision-making by the board.
Required:
The Board chairman has approached you, a corporate governance expert and consultant, to make a presentation to the board on the factors that would be considered in selecting independent NEDs as provided in the Code of Best Practices on Corporate Governance. Limit the factors to FOUR (4).
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The Accountant advised the CEO that to strengthen governance, the Board should concern itself with the establishment of strong internal control systems. Failures or weaknesses in internal controls will have adverse consequences for HPC’s finances, financial reporting, operational efficiency and effectiveness, or regulatory compliance.
Required:
Write a paper, explaining FIVE (5) factors to the Board the nature of internal controls that could be instituted by HPC to strengthen governance. (10 marks)
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In addition to the Auditor’s Report, the auditor communicates with those charged with governance and audit committees of their clients.
Required:
i) What are the objectives of an auditor communicating with those charged with governance or audit committees? (3 marks)
ii) State SEVEN (7) matters to be communicated with those charged with governance or audit committees of a non-listed company by an auditor. (7 marks)
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ISA 260 Communication with those charged with governance requires that certain issues are communicated to those charged with governance. You are an audit manager of Adiepena and Co. Chartered Accountants, and one of the junior staff has asked you about concerns that can be communicated to those charged with governance.
Required:
Explain three matters that could be communicated to those charged with governance.
(3 marks)
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You have completed the audit engagement for ABC Company Ltd, and the engagement partner has asked the audit manager to bring the draft communication with those charged with governance for discussion. You were among the audit field staff who performed the audit and prepared the working papers and documented issues for management’s considerations.
Required:
Discuss the main matters that should be included in the communication with those charged with governance.
(10 marks)
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External Auditors play a key role in the corporate governance framework. They conduct one of the most important corporate governance checks that help to monitor management’s activities. The audit of financial statements makes disclosures more reliable, thus increasing confidence in the company’s transparency.
Required:
Explain FIVE (5) roles that External Auditors play in Corporate Governance.
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AA&A Chartered Accountants have been auditing ABC Company Ltd for the past four years. The company intends to list on the Ghana Stock Exchange, which requires the establishment of an internal audit department if the company does not have one already. Management has asked your firm to brief them about internal audit, and you have been asked to assist in the briefing.
Required:
i) Outline TWO (2) major categories of services that the internal audit function undertakes. (5 marks)
ii) Outline the scope of internal audit function. (5 marks)
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The partner in your firm has requested you to train the newly recruited junior audit staff on ISA 260: Communication with those charged with governance.
Required:
Draft a training material for the new junior recruits on the provisions set out in ISA 260 in relation to:
i) The purpose of issuing a Management Letter to a client after an audit.
(5 marks)
ii) The contents of a Management Letter.
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b) Due to increased workload, your firm has just recruited a new junior audit staff member, George Ansong, who has joined the practice directly from University and so has no previous work experience. You have been assigned as his training manager.
George is now looking at summarised material given to him by the audit partner on ISA 260. ISA 260: Communication with those charged with governance deals with the auditor’s responsibility to communicate with those charged with governance in an audit of financial statements. It focuses primarily on communications from the auditor to those charged with governance.
George would like you to explain in more detail what he has read.
Required:
In relation to George’s request, detail the provisions set out in ISA 260 in relation to the following:
i) The main objectives of the auditor in communicating with those charged with governance.
(4 marks)
ii) SIX (6) significant matters the auditor should communicate with those charged with governance about the responsibilities of the auditor in relation to the audit of the financial statements.
(6 marks)
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Public accountability requires clear definition of responsibilities of public officials and a clear understanding of relationships between public officials and stakeholders on the need for transparency and accountability.
Required:
Discuss FOUR policy objectives of government that ensure that government institutions adhere to the principles of public accountability. (4 marks)
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ABB Bank Ltd (ABB Ltd) is a listed company. It has been given a substantial fine by the Central Bank for serious breaches of the banking regulations and, in the same month, the bank reported that it had suffered large losses because of unauthorized dealings in financial derivatives by a manager in its treasury department. The company’s reported profits for the previous financial year were overstated because of these losses.
The chairman of the audit committee of ABB Ltd has resigned, accepting responsibility for failures by the committee. A newly-appointed director has been made chairman of the audit committee. He has called a meeting with you, the Finance Director. The purpose of the meeting is to review financial reporting and internal control, with a view to making recommendations to the board. ABB Ltd does not have a strong internal audit function, and the company has been using the same firm of external auditors since it acquired its listing 8 years ago.
Required:
a) Explain the role and responsibilities of the audit committee of ABB Ltd with regards to:
i) The external audit of the company’s financial statements; and (6 marks)
ii) The internal control system and internal audit function. (6 marks)
b) In relation to the possible failures in internal controls that have occurred, suggest FOUR (4) changes that might be recommended to the board at the next board meeting. (8 marks)
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Apusco is an indigenous multinational mining company which undertakes a wide range of mining projects around the world. Apusco has to work with many other organizations and government agencies in order to manage pollution and protection of the environment. Apusco’s mission statement states that ‘The basis of our company is built on the values of conducting business in a socially responsible and ethical manner. We respect the law, protect the environment, and embark on developmental projects in the community.’
Apusco’s values are included within its Ethical Code of Conduct. Apusco places high emphasis on its ethical and sustainable business practices. It involves employees, suppliers, and the members of local communities in which it operates in its strategic management processes. All these stakeholders are fully trained by Apusco in the Ethical Code of Conduct and they are expected to adhere to it.
Required:
Discuss FIVE (5) importance to Apusco for incorporating business ethics and sustainability into its strategic management activities.
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Events Tech is a growing media company that specializes in technological solutions for events planning. Events Tech has recently established an internal audit department, and the Board is keen for this new department to cover certain broad areas of the organization and add value to the organization.
Required:
Evaluate FIVE (5) objectives the Board of Events Tech seeks to achieve by establishing an internal audit department.
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One of the critical requirements for effective and efficient strategy implementation is a good design of organizational structure which provides means of exercising appropriate controls as well as responding to challenges of rapid change, knowledge management, and globalization. Structural design can deeply influence the sources of an organization’s advantage, particularly with regard to knowledge management, and failure to adjust structures appropriately can fatally undermine strategy implementation.
Required:
Explain FIVE (5) tests you will perform in assessing the appropriateness of the design of an organizational structure.
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