OLD (Pre-Period 35) Topic 17 Corporate Governance - RESUBMISSIONS ONLY

@ trephena, i have decided to use secondary data for my project as i think it will be easier and of course like many would like pass at first submission!!... lol.. I have also decided to go for a company that is known to have a problem with their board members and remuneration of directors, as i think it will make my presenting quiet interesting. Thanks for the advice you gave me regarding secondary data vs primary data i would like to say that you were right, its very difficult to implement. It was like God's grace when the company i approached rejected me to do the project with them. I have decided to use the Kings 111 as my framework and my business model, i hope this is a good idea? I have a question that i hope you will be able to answer; how do i test for ethics if i use secondary data.

@tshepo123456 - Kings should be fine. In Part 2 part of it is like doing a literary review briefly where you discuss the development of CG and state why you consider Kings lll is appropriate. With Ethics you normally have to research from independent sources as the company though it may produce an ethics statement is never going to say that it is not behaving ethically. So you look for articles that either question some of the company practices or praise them for the way they operate or find examples of awards they have received for good staff relations, or customer and community relations. There are some websites that rate big companies on ethics or comment on those that overlook the welfare of overseas workers etc. Bring in these sorts of things to either support or counter the company statements. You do not have to make a judgment but just let the reader know that you have researched well and have a balanced report i.e. it does not assume just because the company says it does something it practices this in reality without looking at available evidence. (Remember Tesco had a good CG statement in 2014 and promoted itself as an ethical company and no doubt so did Volkswagen, which as I write is suspected of very underhand and illegal behaviour that deliberately set out to deceive regulators regarding pollution control).

@ trephena thanks for your swift response, i will surely do as you advise. The other thing i find very awkward is the research questions, i feel OBU is just repeating the objectives, I am finding it difficult to come up with questions when i have stated my objectives. I will be submitting my project in P32, is ther any advise that you would like to advise me regarding this project? Thanks alot Trephena, i dont know what i will do without your assistance.

@trephena - https://opentuition.com/topic/p30-welcome-to-all-newcomers-and-returners-to-the-obu-forum/page/2/#post-272786

@trephena In situations where the Anglo-Saxon model of CG is being practised, it seems logical that "key stakeholders" refers to only the shareholders. The obvious reason being that it's a market-based shareholder model. However, if Mendelow's stakeholder mapping puts regulators and employees in the category of high power and interest, does this imply that the "...impact on shareholders" doesn't necessarily have to be a part of this report? - considering the word count!

@sssteeeve - The key word in T17 is 'Quality' of the organisation's CG and its impact on its principal stakeholders and NOT just the shareholders that any code you are using may have restricted itself to. I would not include regulators or legislators in the Mendelow analysis as although they may have supreme power, this and any interest is at a macro level and therefore not directed specifically at the individual entity you are studying. Mendelow needs to be applied in the context of the particular organisation under review i.e. looked at from the micro level. It is more obvious who these other stakeholders are when one considers who would be affected by poor CG. To take a very topical case, the Volks Wagen scandal - the whole community of the German town where VW has its manufacturing base, workers there and overseas, and the company's customers are implicitly interested. To be successful with T17 (or T20) students need to think 'outside' the box' and do adequate independent research (as no doubt any who fail these have been told in their feedback)

Great news everyone! - eminathsana sent me a PM to say that not only had they passed first time with their T17 submission but like alfred, they too had been awarded a grade B !!! This is an exceptionally good result as only 12% of the total P31 submissions were awarded a B. So very well done for eminathsana who apparently hadn't even studied yet for the P1 paper and congratulations to everyone else using this T17 forum who also passed in P31. :-D Anyone who is new to this Forum topic -read all of the posts here on how to produce a successful RAP on T17 Corporate governance and you to could be celebrating shortly. :-) One thing I have heard that markers will be looking out for in P31 is a bit of a 'literary review' / background to CG. In Part 2 Don't go overboard and produce a long boring commentary citing every consultative report that has ever been written but show you understand why in the late 20th century CG became so important and why decades on it still seems hard to achieve a perfect 'system' (as all the infamous scandals of the last 15 years have demonstrated). You may find that the Big 4 accounting firms have some discussion on evaluating CG so worth looking at their sites and publications

hey guys which accounting or business techniques should I use for topic 17? Can I use the mendelows matrix and the COSO Framework? If yes is there any other that I can also use?

Yes Medelows matrix is the one usually used for the stakeholder section. If your company is US registered then the COSO framework is very relevant (I particularly like the COSO Cube). Remember though you should do some sort of benchmarking too and make comparisons with other organisations to help with some objective assessment of your organisation.

Thank you Trephena. I am in Zimbabwe and I am using a local bank. My mentor said I should also use primary data for my research, so I used a questionnaires from a certain website. My question is should I also reference these questionnaire as they are not part of the main report.

Oh NO!!!! Please do not go there! Please see my reply to @thusang on p.2 of this forum topic. Sorry but your mentor is wrong on this one. Believe me unless you know what you are doing if you include a questionnaire at the expense of doing proper objective analysis you are giving your RAP the kiss of death :-( (Anyway why include one when both @alfred and @eminathsana both got a B without doing one!???) Unless you really understand statistics and how to design and implement a good survey it is not advised. If you are going ahead with one then take a look at /www.applied-corporate-governance.com/importance-of-business-ethics.html and read up on how best to go about it....(in the real world, yes companies should survey their stakeholders but they would use a suitably qualified statisticians so the results would be reliable - something that can rarely be said about RAP student surveys alas!) Good luck!

@trephena Hi. I have completed my part 1-3, of xceeded the words upto around 7680 words. Now am reviewing it. In my recommendations I wrote a comment about advising the board to increase their stake in the company but apparently the CEO Dave Lewis has bought shares after the last results were announced. So i was wondering whther I should remove my comment. Moreover since most of my research analysis was based on headlines tesco took over the years and almost no room for direct comparison.. Do u think it would be enough? In addition to this.. I have yet to begin my SLS now, would appreciate any tip U could provide me. Thank you

Thank you so much. I was really confused because I'm not that good in statistics. On the other hand the questionnaires are taking long , its been a month now since I have been waiting for them to be completed.

@Eena - just remove it, as long as you have a sensible Conclusion don't worry about the recommendations. Parts 1 &2 are usually good places to 'trim' as the marker wants it short and crisp there - less about why you chose the company and more precision about the reliability of the data &info sources and any of their limitaions. There may be something in this article by Kamal Ahmed as it is bang up to date and he is a good biz editor (I confess I didn't manage to read everything but there was something about the living wage for the employee section). https://www.bbc.co.uk/news/business-34462482

Thanx a lot for your response, you really helped :D

@trephena I have referenced to the code as ' thereby complying with A.1.1..(and then included the intext citation)' so it is displayed as '(financial reporting council,2012,pg) But my mentor has said that I can just refer to the code as '...thereby complying to provision A.1.1 of the code 2012' without any intext citation to the code everytime. Which way do u think is appropriate?

@Eena - in this particular case you could use either method. (To save on word count I would always suggest that as FRC is a recognised abbreviation for the Financial Reporting Council this abbreviation could be used, once it has been used in full in the report and if using FRC in the text, then this designation must be used in the reference list).

@trephena...thanks for the various feedback you have given to people. Iam also contemplating on T17.Suppose i choose a company involved in the agriculture sector, to be specific growing sugar cane for sugar production,,,is it okay to choose a comparator in the agriculture sector but maybe this one is involved in wheat production or maybe the comparator should also grow sugarcane? cosum

@cosum - yes that would be fine. T17 is not like T8 - a comparator is not mandatory but very useful to benchmark aspects of your company's CG and when considering what is the norm in the industry.

For all those submitting on T17 in P31 - my special checklist reproduced from P29 & P30

@trephena said: QUICK CHECKLIST FOR T17 I have set out lots of information on this forum but as you come to completing your RAP and before you submit take a quick look through this (and maybe re-read all of the posts) to ensure that you have covered sufficient areas and adopted the right approach for a pass (and it goes without saying don't forget to reference your sources!) For P31 ensure that you have done a BRIEF 'literary review' that is, outlined the development of CG and why it can be a problem area. 1. Have you used a suitable Code? (More than one possibly for some overseas companies) 2. Have you made some comparisons with another company /other companies operating in a similar sector particularly on areas where your company may not be performing so well? 3. Have you considered the role of auditors (the length of their appointment and relationship with the Board?) take a look at the attached article about Tesco in relation to its auditors https://www.telegraph.co.uk/finance/newsbysector/epic/tsco/11125833/Its-time-for-Tesco-to-stock-a-new-brand-of-auditor.html Any evidence of a threat to audit independence in your company? (remember that Arthur Andersen were heavily criticised about their relationship with Enron to the point they never recovered their reputation) 4. Have you based most of your work on primary data? – if so you need to remedy this fast… 5. Have you considered all the relevant stakeholders properly? There are two parts to T17 ! 6. Do you have prima facie evidence of the impact of CG on company performance? (some basic information on share price / EPS - a few nice graphs please :-) ) 7. Have you used visual means to display your information wherever possible – saves both on words and lots of boring long paragraphs so makes your work far more interesting to read 8. Don’t forget other aspects of CG that may be outside the code – whistleblowing has been the means of discovery for a lot of malpractices (Enron, Tesco, Olympus and many big name companies); The importance of transparency (those companies with complex tax arrangements or who base themselves in the Caymen Islands don’t spend huge amounts on these complexities and lawyers fees if they have absolutely nothing to hide!). Are there company policies to deal with anti-bribery and money-laundering? 9. And don’t just accept what the Board writes in their CG statements – what they don’t write in it can be more important and what they actually do rather than what they say they do. Question and look for proof (comparisons and research for articles on the company in the business press). A pass requires some critical thought not blind allegiance and a re-write of the company’s CG declarations! Remember: CG statements can be wishful thinking - take a look at: https://www.tescoplc.com/assets/files/cms/Annual_report_2014/Corporate_governance.pdf And yet 6 months later this statement is in tatters and I doubt there are many happy smiling faces now….https://www.bbc.co.uk/news/business-29613946 10. Don't forget that depending on the type of your organisation other regulations as well as the Code may come into play e.g. if you have chosen a bank you will be expected to have outlined the more recent Basel Accords and how your bank complies with these if applicable. In the UK there is the Prudential Regulation Authority and its specific recent guidance on 'Senior Management Arrangements, Systems & Contols [see SYSC 2 of the PRA Handbook]. ( Both the Basel Committee and the PRA are concerned with risk assessment but Basel looks at capital adequacy etc but the PRA in addition looks at the balance and actual skills of the management) One word of warning - do not to go overboard in praising your company – stick to facts and make your judgments objective e.g. on the basis of your research you believe that XYZ is adopting measures that are in line with the principles of good CG / or there is evidence that ABC could do more to comply with accepted codes and that it is trailing behind similar companies in important areas. That way if some skeleton emerges from the CG cupboard after you submit your glowing endorsement of the company you won’t be left with egg on your face! And finally... leading on from the point above: You need to appreciate that CG is a developing & dynamic subject so you must show you are 'on the ball'. Although you may have used the latest annual report as the basis of your Findings and analysis you have to consider any more recent dramatic/important developments that may have occurred since the report was published that may impact on the entity's CG e.g. sudden departure of the Chairman, financial scandal etc. This is particularly so if they happened at least 3 months ago. NOTE: It doesn't mean a complete re-write just a paragraph or so (call it update [since year end] if you like, just to show you are aware of it and really know your subject :-D

Don't forget to look at my general checklist (at the top of our Forum page) for other tips for a successful submission

@Trephena pls can you do a checklist for topic 20?

@unyimeedem - Your wish is my command - I have now posted a checklist for T20 on the T20 Forum Trephena :-)

@trephena -happy 2016. i am planning of doing topic 17. can i choose a comparator which is not in the same sector as a company am researching on?

@cosum -all the best for 2016 to you too! Ideally a comparator for T17 would be a 'best fit' in terms of size and industry. However remember you are assessing quality of CG so you are required to consider best practice, therefore you may make comparisons with any companies which are best in class. In this sense T17 is not so rigid as T8 but you may need to consider any limitations and validity of the comparisons e.g. a very small scale operator would have fewer resources than a FTSE 100 company so may have fewer committees as a consequence and number of NEDs might be affected.

Dear respected, if i choose topic 17 what models will be supposed to use for analysis and evaluation.

@khalidiqbal - in all RAPs you have to use appropriate business/accounting techniques and models. For T17 this is benchmarking your organisation against an appropriate corporate Governance code and principles of 'best practice' for the first part of the topic and applying a stakeholder model in the second part Most students use Mendelow's matrix but you could also consider the Kendall & Kendall model devised by our colleagues on their website Applied Corporate governance https://www.applied-corporate-governance.com/best-corporate-governance-practice.html You will also find a lot of other good information about CG on their website. There is also this excellent article from the Global Corporate Governance Forum that also looks at how good governance can benefit all stakeholders as well as the company itslef https://www.arge.com/wp-content/uploads/2010/03/ARGE_Corporate_Governance_Model_PSO17.pdf

Dear Trephena, Are you mentor yourself? If yes I would love to have you as my mentor and apply for T17 in May 2016.

@Ishaque - no, because of personal and work commitments I am not able to take on mentees but thank you for your comments. There is lots of advice here on the T17 forum, which if you follow should put you on course to achieving a pass grade. Good luck!

Hello there After much consideration and debate I've decided to do topic 17 and first of all can i just say thank you for all the answers you've provided here,after going through this thread i have a clearer picture of how to go about this! Now comes my problem,i cant seem to come up with any sensible objectives and research questions,can you offer me any advice on this???? Jae

@jossj - these can be very simple and straightforward such as: - to assess the quality of CG at XYZ plc by assessing it with the requirements of the UK Code and comparing its CG practices with ABC plc, (a key competitor)# - to assess the impact of XYZ's CG practices on its stareholders and other stakeholders - to consider any factors in XYZ's current CG practices that could be improved to enhance the quality of it and to provide relevant recommendations # this does not necessarily have to be another competitor but it should be an equally prominent company of a similar size in the same country if a direct competitor is not relevant You may choose a local company and a local code but it may also be relevant to consider the UK code (or Sarbannes Oxley legislation) as this topic is about 'best practice'