T17 Corporate Governance

When doing Topic 17 you need to be able to compare and evaluate the company CG performance against a corporate governance code and best practice.

I suggest you use the SIngapore Code and do a quick assessment about whether Singhealth gives you much scope to do this.

Probably it is worth looking at Topic 20 [use the search facility as there is forum for it]. From the info you have given here I think the company might fit the brief for Topic 20 better.

Instead of using a Code for the structure as you usually do with T17, for T 20 look at Carroll’s Pyramid as it is used to evaluate the company on its four dimensions: profitability, ethics, legal and discretional/charitable and ethics and integrity.

Can you please suggest any Accounting / Business models relevant with topic 17 other than Mendelow matrix

Hello.

I am from Malaysia and intend to submit my OBU on Nov 2020.

I am choosing Kayaba Corp for my Topic 17.

KYB has falsified product quality data for their seismic shock absorption product in order to meet the tight delivery deadline and to compliance with the regulation standard set by the Japan authority.

But aside from this, there is nothing major about KYB.

https://www.kyb.co.jp/english/company/media/KYB_2019_envi_en.pdf

Appreciate if i can get a review and response on this.

I tried to draft my part 3 . But my mentor has told me no link to CG in depth .

Really need help on this.

Thanks in advance

hie guys
submitting this Nov

I’ve set my layout as follows and Id like to have your opinion
in Part 3, I begin by describing the
current CG structures on my subject org.

The CG framework, the enabling instruments, how board members are selected, board composition and I went on to describe the board committees and their functions.

Next, I Identified the CG issues under a separate heading.
I stated what the CG code prescribes (or other statutory instruments) vand then desceribed what the org did that is contrary to the aforementioned provision of the code or legislation.

then Root causes of each identified issue

then Implications of tge issues. from financial, operations to impact on stakeholders

the management responsibilities

on that, there’s this issue about the composition of the board, its a CG issue which the management may not even be aware of.
I read on an ealier post that this new topic focuses mainly on the management responses.
My mentor has also advised me to allocate 1500 words to a section about the responses.

how do I resolve that when there hasn’t even been a response because I am the one who I dentified the issue?, The management may not even be aware of it.

lastly, theres recommendations and conclusions.
Which comes first between the 2?

@14munashe, please can you contact me on omoayorichard@gmail.com
Apologies to admin, I don’t know if I have just done a wrong thing.

@14munashe

been looking for you everywhere Mukoma.

Doing mine on NSSA, Submitting 1 Nov 2020

Using Zimbabwe CG framework
PECG Act 2017, NSSA Act 1989, CG framework 2010, NCCG 2014 and other internationally recognized codes such as UK CG Code, ICGN & OECD, King Report as examples of best practice.

email me. shockothomas@gmail.com

I trust you are preparing for P44 now as it is a bit late to complete the Analysis & Evaluation [which is the key element of the whole report] if you haven’t really started it yet.

I would suggest using the UK CGC 2016 as a STRUCTURAL framework – read the Preface as well as the Principles themselves and go through and apply it systematically alongside the Japanese CG code. Reference can be made to the more recent codes as best practice but your evaluation should assess the Board performance using both their actions and statements in the annual reports and compare and contrast the requirements of the 2 codes in the process. You could bring in the OECD Code but word count usually means that there isn’t much scope for this unless you can show that it is more relevant to the company than the UKCGC

NO comparator organisation is usually necessary for Topic 17 – although if there is a huge difference in their standards of governance then it might be appropriate occasionally to do such comparisons. A lot would depend on the circumstances

I suggested the 2016 Code as the STRUCTURAL framework e.g. start with culture and tone at the top and then work your way through using the main Principles as headings and do your evaluation and comparisons under each as appropriate. Markers are keen to see that the report uses a systematic approach and this is one of the best ways of doing this.

You can refer to the 2018 where relevant e.g. because it clarifies the position or contains something not in the 2016 Code. Regarding which Japanese Code it is probably better to use the one that was current at the time of the malpractices but the aim of the report is to compare the weak governance and board behaviour with best practice, so you can bring elements from the more recent codes if they are appropriate to the point being made.

Good I am pleased that you have been encouraged to do this topic as so many students fail to see the RAP as an opportunity to broaden their skill set. It can be a very useful topic especially for those who see their career path as a board member .

That’s the good news, however I have a few concerns about using a local (i.e. non UK company) and in particular those that are based on bribery/fraud / corruption. I have raised this issue with the RAP Programme Lead as too often I have had students come to me having failed with a previous mentor and their feedback tells them to do a ‘systematic comparison of the weak governance in the chosen company with the UK code’. This I fear is because quite a few of the markers are simply not up to speed with CG or up to task in marking T17. Many overseas CG cases do not easily lend themselves to such a comparison (especially fraud cases). I think such a narrow approach and stipulation by some markers is tantamount to Indirect racial discrimination as it places foreign students at a significant disadvantage compared to those choosing a UK company. I am monitoring this situation (as Brookes could have a legal case to answer here)… and the Programme Lead has promised to monitor this too (but anyone who has experienced this can contact me so that I can present the evidence).

However back to actually answering your queries.

1. A SWOT and /or PESTLE are definitely NOT suitable for T17 and your main model should be the application a good CG Code (UK/ OECD or local code PROVIDED the latter is fairly comprehensive or possibly some mention of the COSO Principles). There should also be another model, as well as some ratio analysis showing the impact of the weak CG on specifically relevant financials. These other model(s) would depend on the specifics of the case

2. You might try Cressey’s Fraud Triangle and extensions of this. However don’t forget to (a) appraise it and it’s limitations and (b) have a slide showing its APPLICATION in your presentation (a nit-picking marker failed one of my student’s presentations specifically for this – she had only shown the theory of it)

3. You are right on this one see my earlier answers- but Mendelow’s is arguably a bit useless and unless you can apply it well, choose something else (as again a nit-picking marker failed one of my students for not applying it well enough). Personally I think this model is more relevant to T20 than T17 so application is going usually to be a bit rote and difficult.

PS Don’t overlook the company response as that is another area they home in on.

Good luck!

Hi,
Can anyone guide me?
I am doing the part 3 of my RAP on topic 17. The company I am doing it on is “Luckin Coffee”. I have essentially finished the part 3. I am on the last topic where I am planning to tell the responses to fraud. According to my research, I am planning to discuss the internal Research Luckin Coffee initiated against the fraud. I am also discussing the response by the US regulators. Is that enough or do I discuss more responses.

Personally, I found the company very promising with regards to the topic but I am getting confused towards the end of it i.e. the responses. There is too much information and all the hirings and resignations after the fraud came out are very confusing.
Can you suggest some points that I could mention in this regard. I have been very deep with my research and it has been a great learning experience but responses have put me in a great deal of confusion.

Thanking you in anticipation!

As with many fraud cases for T17, Luckin Coffee can be hard to structure as the emphasis in the analysis and evaluation should be on how the weak governance allowed the fraud to happen and not so much on the fraud itself, so please bear that in mind.

I have had an issue with markers insisting with many overseas companies that they should be evaluated ‘systematically’ against the UK Code. I have taken this up with Programme Lead as this approach is not always possible or feasible for an overseas company where fraud has played a key role in its demise and I think it discriminates against the many students who do not choose a UK case (mainly non-UK students).

That aside, your approach in how to evaluate the response is sound

I think you need to being in somewhere about the lack of independence on the board, the weakness of internal controls and complete failure of the audit committee and external auditors. Well done if you have these already.

It is also worth mentioning about the need for an independent chair to lead NEDs in challenging executives and emphasise the differences between US CG and that of other Codes on this (notably the UK).in these respects. (The UK is far stricter on the definition of ‘independence’)

Again the US focus is on fraud prevention whereas good CG also is about adopting an appropriate strategy and having this scrutinised by the board directors and studying reported figures to ensure the company is on track (the reason the majority of directors should be independent)

Diagrams of boards may make it easier to show the board changes (and they save words). Try to focus on what is really significant in terms of response -avoid the very fine detail as a reader needs to be able to assimilate the info quickly and effectively so ask a third party to read it through to see whether they understand it easily.

1. This appears to fall within the rules for Topic 17 as the 5 years takes you up to Dec 2022
2- & 3. I would advise you to use both. This is based on having seen marker feedback that advises students to do a ‘systematic’ evaluation comparing provisions/principles of both the UK and the local code.

However I would caution as I have mentioned previously in this thread: you do need a good structure for the report and this can be harder to deal with when the underlying cause of a company collapse was fraud rather than dubious, barely legal practices and mismanagement (as in Carillion). This is because the company may have superficially complied with Codes (separate CEO and Chair, had mostly independent well qualified directors etc.) so comparisons with the Codes do not provide much help. You would need to focus more on the work of the audit committee, internal controls and potentially external auditors here as it is usually inadequacies in these that allowed the fraud to take place and possibly bringing in best practice in respect of these elements and the COSO Principles. Therefore it is not so easy to structure the report around just one main Code and comparisons and do a ‘systematic evaluation’ that some uninformed markers demand!