(Archive) T17 Corporate Governance

Final question (I hope). Throughout my report I mentioned how issues came to the attention of the board. Which was for most of the part through third parties (i.e. a customer, a whistleblower etc). I'm commenting on tone at the top now and bringing in the point that with what our 'man' good-ol Jes did it's no wonder that issues have always come through outsiders. My question dear Trephena is, am I expected to cite all the issues here (author, date) when I discussed them elsewhere in the report or I can get away with saying; it's no wonder all the issues identified in this report...... I read somewhere that in the conclusion one must not bring up something that is not mentioned in the main report. I was going to do this! So one day if you have a little time to kill please do a little explanation for us on why this is so. I know I'm not the only one to have fallen to this - the temptation comes when starting out the conclusion because we don't know what much to say after 'they did this but didn't comply with this'. Thanks Lexa

I think you are asking 2 questions here: one about referencing the Conclusion and one on whether new material can be introduced? The Conclusion should really be a summary of the key points from your findings in relation to the objectives you stated at the beginning. So for that reason completely new material and ideas are not normally appropriate. However if you are summarising a previously discussed topic but bringing in a confirmatory new opinion that would be permissible, however as it is new it would require a reference. Previously discussed issues from already cited sources however wouldn't normally require a reference in the Conclusion. (If any new material contradicts though the topic should have also been brought in earlier in the discussion on findings otherwise the Conclusions, which should be succinct, become a bit confusing. PS You can always have a Recommendations section if you want where there are no set rules on what you put

Thank you. (Yes I endend up introducing another question there without explicitly stating.. sorry for the confusion. Somethings come to mind while writing on something else.)

Is it a good idea to shorten the title? It's taking up just about 30 words with the organisation name inserted!

Yes, if you are desperately short of words just write 'Topic 17' ! In the grand scheme of things it is immaterial...

Please i want ask for period 36 submission, I need help with how to go about referencing and on how to source for information or is it majorly sourcing information from the internet. Secondly what are the books recommended for topic 17. Would be grateful if i get an answer concerning the above questions. Thanks

We have a whole article on Referencing 'The Open Tuition Ultimate Guide to Referencing your RAP' (3 parts) - available on our homepage www.opentuition.com/obu It is impossible to prescribe specific sources - normally with the new topic 17 most of the sources would come from recent articles on the internet in respect of your chosen company - use key words in your search. However use Google Scholar to research the background to Corporate Governance and PLEASE PLEASE recognise that CG did NOT start with Enron - (an obvious fact when you realse that the Cadbury Report predated Enron by 10 years!)

Trephena please help, I am having a nightmare with this RAP. I have done parts 1 & 2 of the report but am struggling with how to lay part 3 out. I have contacted my mentor, but she just keeps telling me to follow the layout in the information pack. But its the pack I don't understand. My RAP is on Tesco and the objectives and research questions are: Objectives: 1. Identify the recommended governance practices relevant to public companies 2. Review the corporate governance practices of Tesco identifying any areas of weakness 3. Determine the impact of such weak corporate governance and the organisations response Research questions: 1. What are the recommended practices of corporate governance relevant to public companies? 2. What are the indicators of good corporate governance? 3. What are the corporate governance structures adopted by Tesco? 4. What went wrong and how did the corporate governance issues unfold? 5. To what extent has Tesco complied with the codes adopted? 6. What was the impact on Tesco and how did they respond? 7. What was the impact on relevant stakeholders? My mentor has told me to answer the research questions in Part 3. So if i was to answer questions 1-3, then that would be 3 sections containing factual information wouldn't it? Is that what I am supposed to do? Would I outline the recommended practices, set out the indicators of good governance and explain the structures Tesco has adopted. And would I THEN go onto analysing the corporate governance? I am panicking, time is ticking away and I am really struggling. Vicky x

Dear Vicky, Covering for Trephena while she is away. Out of respect for your relationship with your mentor, we will not be directly addressing all your research objectives/ question. Do allow us to give you general points that will still be very helpful. During such moments of confusion, it is always clarifying to go back to the title of your report. The title will clearly show what PART 3 must accomplish. The title of 17 is - Select an organisation that has been identified as having weak corporate governance structures within the past 5 years. Critically evaluate their corporate governance practices including an assessment of the origins of the corporate governance issue(s) and the organisation’s response. Let's dissect this a) Critically evaluate their corporate governance practices - You evaluate this by the use of a benchmark (e.g. UK or OECD code). You can also occasionally bring in a competitor to give a more localized perspective. b) an assessment of the origins of the corporate governance issue(s) - How and why did the issues arise? Usually, this refers to deep rooted beginnings and some historical analysis has to be done here. - Look at bigger picture issues such as culture, shareholder pressure etc - Usually, the more significant the origins, the harder it is to solve the problem (e.g. it is hard to change a culture of corruption that existed for 10 years) - Do not pin superficial blame on someone (e.g. the greedy, wicked CEO) because usually, the origins is more complicated than that. (e.g. why was the CEO allowed to make such decisions without being challenged?) c) assessment of ..... the organisation’s response. - How did the organization respond? Was it sufficient? How can you tell if it is sufficient (e.g. did stakeholders approve of the measures? Did share price recover?) Do use these points to consider your Part 3. To reiterate, the examiner, after reading your part 3, must feel that you have fulfilled the needs of the TITLE of topic 17. We hope this helps! All the best, Irwin The Learning Luminarium

Hi again If I am using ratios to prove certain points, do i use the formula i learnt in my ACCA studies, or do I use the ratio the company itself has used. It appears they have added things to their formula and so I get a different answer to them for ROCE if i use the formula i am used to Vic

Hi Vicky It is the discussion of the implications of the CG practices that are important in this topic. As the ratios are only a small part of this make life easier for yourself and go with the ratios the company has produced.

Phew, that has taken a weight off my mind! But regarding the spreadsheet work, I am struggling to think of something to show I can use formulas etc. I can put the ratios in a spreadsheet and make a chart / graph to show the consequences of bad coroprate governance but will that be enough?

Can i ask another question? I am analysing Tesco and I am going round and round in circles on how to present question 3 and I am getting very confused. How do I lay out section 3? My objectives focus on the accounting scandal of 2014 and I am looking at corporate goverance practices prior to 2014 and how they contributed and then I am looking at practices subsequent to that to evalute any improvement etc. Do you think that is an acceptable route to follow? Or am I going way off tangent?

There no prescribed one way of setting this out. It is important to use clear headings though. Don't overlook the final element of the impact on stakeholders e.g. many big investors divested themselves of Tesco shares and Tesco 's market share has diminished considerably. This as well as questioning the quality of audits (especially as one of the Big Four was involved) - so just 3 things that instantly come to mind. ( Tesco was used fairly frequently as the subject company for OLD T17 so please read through the latter half of the thread "Topic 17 Corporate Governance RESUBMISSIONS ONLY" which currently can be found on page 3 of our topic list. Please also look at the website of Applied Corporate Governance as there are some interesting articles on CG there including one specifically on Tesco and whistleblowing https://www.applied-corporate-governance.com/tesco-and-whistleblowing.html Regarding the spreadsheet - you could show changes in market share (calculating the year on year decrease) and perhaps calculations and a bar chart or graph to show the the difference in the originally stated profit and amended profit figures after they have been adjusted to comply with correct financial reporting standards. Charts for market share and profit figures can be shown in the report to illustrate key points and such charts are also useful to break up the text and make it easier for the marker to read and assimilate information.

I'm really struggling. I'm thinking of deferring to the next submission period as the pressure is getting ridiculous. :( I have my research, but I am struggling putting it down the report. For example, I have looked at the external auditors as an example of questionable governance. I have a section which describes what the auditors "should" do, what they actually did, why this was questionable etc and related it back to the code and agency theory. But after the 2014 scandal, this set up changed. So my quesiton is, do I write about the changes in this same section, or do i use a different section later on to write about the changes made (as part of the "organisations response" section. I am getting so hung up on where to put things in the report, it is really holding me back.

Can i also another quick question. If I am looking at Tesco's CG practices in 2014, do I use the code relevant at that time to compare. Or do I use the most recent version now as a comparison for everything?

Me again! I'm sorry for clogging up the thread! I've been workin on my report all day. I just sent a section of my part 3 to my mentor and she says I am doing it wrong :( I am soooo confused! My part 1 sets the scene- so it discusses the topic and organisation choice then gives my objectives and research questions and overall approach to the research Part 2 is where I outline my sources and how i collected info / limitations and goes into the ethical issues I experienced etc. I am fine with with all of that. I then have the section on accounting and business techniqus used. I have 4 sections to this: Ratio analysis, corporate governane theory (including the code), stakeholder theory and agency theory. I explain about each of them and discuss their limitations. So this is all theory. Part 3- this is where I am struggling. I was planning to tackle the obvious problem areas with Tesco in turn. So for example, I start with the external auditors. I explain what the code and other guidance suggests, then i have a section which evaluates Tesco's auditors practices and how it differs from the guidance. I touch on their fees, their independence and the threats that came out of their 30yr relationship with Tesco. But my mentor says I am going about it wrong. She says i need to follow the layout I prescribed in Part 2. So i should start with ratio analysis, then "do" agency theory. I don't know what she means by "do" agency theory. Please help, I am confused. Vic x

Listen Vicky you are making all of this far harder than you need to. I don't know who your mentor is (and neither do I need to know) however what you (and perhaps she) need to know is that just reciting theory is not going to get you a pass. It is your analysis of the situation I.e. the content of Part 3, that the marker will be focusing on (as anyone can regurgitate theory). So don't waste too many words and effort on agency theory - and give just a brief summary of your chosen stakeholder theory model. In my opinion (and bear in mind I can confidently say I have advised more students than your mentor) you are approaching this correctly. Don't 'start with ratio analysis' - ratios are ancillary to this topic by that I mean they are used to illustrate points but are not key to the topic like they are to Topic 8 ( maybe your mentor is more used to mentoring Topic 8 and she is the one who is confused here?). You therefore only bring in ratios appropriate to the discussion. You relate the info to the code applicable to the accounting period so the 2012 Code would relate to the problems in YE 2013 and the 2014 Code to 2015 onwards. (I think the Code was only amended in late 2014 and therefore inapplicable to YE 2014 as the 2014 revision is applied to the next full year I.e. YE 2015). As for for where you discuss the response to the auditor problem, as long as you cover it in Part 3 in the grand scheme of things it does not matter if you do this as one integrated section or separate it out. Time you started to chill. Get you info down and bring in adequate discussion. When you have finished then you can edit it all as it will be more evident then when you read through with a critical eye which bits are best where

For those thinking of doing this topic who would prefer NOT to choose a UK company there are a couple of Japanese companies that would be suitable see https://blog.applied-corporate-governance.com You would need to briefly consider those aspects of Japanese CG that are different to the Western model but this would allow you to compare and contrast the two models in your discussions. You could also make some reference to the well documented Olympus case which was a landmark CG Japanese case back in 2010 allowing you to reflect how CG in Japan has changed (or not as the case may be)

Thank you Trephena for that much needed pep talk. I wish you were my mentor!! I need to get a grip and get on with it, which is what I shall do right now. Code of corporate governance here I come......!

You will be fine I am sure. Just chill baby, chill ! [Don't overlook the importance of referencing however - our "Open Tuition Ultimate Guide to Referencing Your RAP" (available on our homepage) be invaluable in this respect if your mentor is not sufficiently wised up]

Hi again. So I have spent pretty much all of today trying to write about Tesco's shareholders relations and I am getting nowhere, so I am here to ask for any hints and tips on what i should be looking at when comparing Tesco's shareholder relations to the Code (Section E). I really don't know how to start. I've looked at the Code, I've looked at other examples of good shareholder relations, but I am finding it difficult to bring Tesco in. Any advice? x

Have you put two key words in a search engine "Tesco AGM" ? I suspect when you do you will be inundated with articles from not just the Financial press but also Share Action.... ...The Code is never going to give you anything dynamic - it is a static instrument about what things should be like in an ideal world if everything was going to plan and everyone was doing what they should. [Let's put it like this, I found a wealth of information when I put in those 2 magic words in omniscient Google ]

Hi vickyshaw, How’s your topic 17 going? I’m also writing on topic 17 and I’m also stranded in part 3 after successfully completing parts 1 and 2. I can’t defer to the next submission period. My family would be unspeakably disappointed if I had to wait until November to submit. I’m still keeping my head up and working towards May submission in less than two weeks! I hope you are too (or that you’ve already submitted)!

@vickyshaw said: Hi again. So I have spent pretty much all of today trying to write about Tesco's shareholders relations and I am getting nowhere, so I am here to ask for any hints and tips on what i should be looking at when comparing Tesco's shareholder relations to the Code (Section E). I really don't know how to start. I've looked at the Code, I've looked at other examples of good shareholder relations, but I am finding it difficult to bring Tesco in. Any advice? x

I missed this quote for my last post about topic 17. It's past 3 AM. I guess my brain is fast asleep!

Hi, all. am planning on submitting this Nov and was wondering how much time is needed to comfortably complete this project. i was looking at spending 2 hrs a day 4 days a week. will this be enough? am thinking of doing topic 17 as I've been following these forums and i think it'll give me a good chance of getting a good grade. Many thanks

Well done that you are planning ahead Frank as taking your time over this will give you the opportunity to develop insight (ideas and thoughts on improvements take time to emerge). 8 hours pw for say 20 weeks if used appropriately (good research and information sources) should be more than adequate for a good grade. Don't forget though that the Topic 17 title has now changed so you must choose a company that has recently (no more than 5 years ago) been involved in a scandal. Many high profile banks fit this bill and obviously the current furore over Facebook is a very recent example. Explore the issues and repercussions from as many angles and stakeholder positions as possible and look for articles in the business press and the Applied Corporate Governance website. Good luck!

@trephena. thanks, i should now get my sleeves rolled! will keep you posted on how i progress.

Well here's a good one and very topical so there is sure to be lots of relevant material on it in the business press both now and during the next few months. https://www.bbc.co.uk/news/business-44129678 As you probably know with Carillion, the proverbial hit the fan a few months back but as with Tesco (which, like some of its products is nearing the end of its shelf-life - for Topic 17 that is) it is set to run for a while to come ! :-D

@trephena Hi trephena, For topic 17, if I chose an US company, is there any corporate governance code to follow? I did search online, but seems US doesn't have an overarching code for the country. Or any other guidelines could be used as a substitute? Thank you for your help! Ling