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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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The Public Financial Management Act, 2016 (Act 921) requires that all public sector entities should have audit committees. The Act also prescribes the functions of such committees; the functions include mandatory responsibilities and advisory responsibilities. Fortunately, you have been appointed to serve on the audit committee of a Government Agency for a term of two years, renewable for a second term, also for two years.
Required:
Discuss FIVE (5) responsibilities for the first year of your tenure. (10 marks)
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Code of Ethics are drawn up to be followed by all the company’s structures and professionals. It serves as a guide to professional conduct and guarantees concerns about efficiency, competitiveness, and profitability.
Required:
Identify THREE (3) codes of ethics for Accountants in Ghana.
(3 marks)
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You are the manager responsible for the audit of CGL, a public interest entity, for the year ended 31 December 2018. Your firm was appointed as auditors of CGL in September 2017. The audit work has been completed, and you are reviewing the working papers in order to draft a report to those charged with governance. The statement of financial position (balance sheet) shows total assets of GH¢ 78 million (2017 – GH¢ 66 million). The main business activity of CGL is the manufacture of farm machinery.
During the audit of property, plant, and equipment it was discovered that controls over capital expenditure transactions had deteriorated during the year. Authorisation had not been granted for the purchase of office equipment with a cost of GH¢ 225,000. No material errors in the financial statements were revealed by audit procedures performed on property, plant, and equipment.
An internally generated brand name has been included in the statement of financial position (balance sheet) at a fair value of GH¢ 10 million. Audit working papers show that the matter was discussed with the financial controller, who stated that the GH¢ 10 million represents the present value of future cash flows estimated to be generated by the brand name. The member of the audit team who completed the work programme on intangible assets has noted that this treatment appears to be in breach of IAS 38 Intangible Assets, and that the management refuses to derecognise the asset.
Problems were experienced in the audit of inventories. Due to an oversight by the internal auditors of CGL, the external audit team did not receive a copy of inventory counting procedures prior to attending the count. This caused a delay at the beginning of the inventory count, when the audit team had to quickly familiarise themselves with the procedures. In addition, on the final audit, when the audit senior requested documentation to support the final inventory valuation, it took two weeks for the information to be received because the accountant who had prepared the schedules had mislaid them.
Required:
a) Identify FIVE (5) purposes of including ‘findings from the audit’ (management letter points) in a report to those charged with governance. (5 marks)
b) From the information provided above, identify the matters which should be included as ‘findings from the audit’ in your report to those charged with governance, and explain the reason for their inclusion. (15 marks)
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a) The Minister of Finance has recently called on Citizens not to be Spectators but participate in the art of governance by demanding accountability from duty bearers and public officers.
Required:
Explain FIVE ways in which duty bearers and public officers can ensure public accountability in the management of Public Funds.
(5 marks)
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The Public Financial Management (PFM) Act, 2016 (Act 921) was introduced to ensure that public funds and resources are properly safeguarded and are used economically, efficiently, effectively, and with due propriety.
Required:
State and explain FOUR (4) ways in which public financial resources can be safeguarded under the PFM Act 2016.
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a) In an effort to strengthen public financial accountability, the Public Financial Management (PFM) Act, 2016 (Act 921) has introduced an Audit Committee in the covered entities as part of the public financial governance infrastructure to replace the Audit Report Implementation Committee (ARIC). Many experts hold the view that ARIC did not perform well due to lack of independence and legal framework. To address these lapses, the PFM Act paid attention to the composition of the Audit Committee and empowers the Minister of Finance to issue regulations for the effective functioning of the committee. A good number of Audit Committees have since been inaugurated and operational.
i) Describe the composition of the Audit Committee and explain how the structure of the committee could enhance the effectiveness of public financial governance. (5 marks)
ii) Explain THREE (3) responsibilities of the Audit Committees as enshrined in the PFM Act and the related guidelines issued by the Minister of Finance. (3 marks)
iii) Suggest TWO (2) ways by which the effectiveness of Audit Committee can be enhanced. (2 marks)
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a) Those charged with governance describe the role of persons entrusted with an entity’s supervision, control, and direction, thus ordinarily accountable for ensuring that the entity achieves its objectives.
Required:
Explain FOUR (4) duties and responsibilities of those charged with governance.
(10 marks)
b) On 1 January 2020, the following was extracted from the books of Gaga:
| Item | Amount (GH¢) |
|---|---|
| Motor vehicles at cost | 150,800 |
| Accumulated depreciation on vehicles | 95,700 |
During the year, the following occurred:
Required:
Prepare the following accounts for the year ended 31 December 2020.
i) Motor Vehicle at cost.
ii) Motor Vehicle accumulated depreciation.
iii) Disposal account for Motor Vehicle C.
(10 marks)
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