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

@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

@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

@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?

@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

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 😀

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

@unyimeedem – Your wish is my command – I have now posted a checklist for T20 on the T20 Forum

Trephena 🙂

@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.

@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

@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!

@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’

@namugenze – thank you for your feedback. I think when I created this forum I saw it as a sort of life-line for Alfred and I am so glad that others have benefitted. T17 has fast become a RAP popular topic. The only downside is that I’ve heard rumours that OBU is now thinking that it is too easy to pass this and will look at ways of making it more demanding! Fear not though as I think that as long as you follow the recommended approach success should still be yours.

Critical thought is important with regard to grade so I think perhaps some wider reading round the topic is going to be increasingly necessary. So I would suggest that there is a brief (it would have to be to meet the word count!) assessment of the effectiveness of the Codes and ways regulators and law makers have tried to improve CG generally might be a good addition. Also perhaps if possible some risk assessment of the organisation (a review of the companies last few statements – any important revisions or incidents or occurrence of factors that may indicate a particular weakness for the sector (e.g. some of the practices found to be prevalent at Tesco in relation to recognising revenue could also pertain to many other companies and perhaps not just the retail sector – and then for some organisations there is exposure to foreign currency risk and ways this could be manipulated by an unscrupulous board)

What I am advocating here is getting through the routine information in as few words as possible (but note do not be tempted to paste tables as embedded images to avoid them being picked up – savvy markers are on to this apparently and will fail if there is no conclusion within the 7,500 AFTER they have added back the words that have been pasted as images). Then try to show that you have thought about the topic in more depth.

You may well find that if you search on google scholar you may turn up some interesting new developments and the following links may be helpful when looking at the stakeholder analysis:

https://knowledge.insead.edu/leadership-organisations/measuring-the-effectiveness-of-corporate-governance-1149

https://www.applied-corporate-governance.com/best-corporate-governance-practice.html

(With google scholar you may find that some articles demand that you pay a subscription to read the full article but the trick is to note the authors and title if this is the case and then search using these details as sometimes the authors will have posted a free copy of their work which you can then access)

Good luck! 😀

Trephena

Hard for me to say when they might change it but probably more likely to be P34 – but if you are preparing it now then it shouldn’t be too difficult to add a little at a later date should in come in by P33.

A good topic is one where there are plenty of independent articles available e.g. the internet and business pages so take a look at GSM and set what there is before finalising your choice. The restrictions on company choice do not apply to T17

Hello Trephena,
thanks for your help with T17 I have followed all the threads . I have also read a lot on CG . I’m thinking of choosing volkswagen as my organisation considering the emission scandal that has just rocked the organisation. I like to know what is your take on this choice ? thank you so much .