corporate governance

What is corporate governance and who is responsible for it

The system controlling companies. The board of directors is responsible

Why can’t directors fees be classified as salaries and wages

They must be disclosed separately as they are a material amount

Explain accountability and responsible management

Accountability: answering to shareholders for actions taken

Responsible management: commitment to ethical and environmental impact

Why must SAICA members be qualified CAs

Upholds high standards and ensures competence

Why must SAICA take corruption seriously

To maintain integrity of the profession and enforce ethical standards

List the 3 types of audits and which one undermines corporate governance

Qualified, unqualified, and disclaimer. Disclaimer undermines governance as it indicates unreliable financial book keeping

Why is insider trading illigal

It uses non public information for gain, violating market fairness

What should shareholders ask when fraud occurs

Why the board failed to detect corruption

How will losses be recovered

What new controls will be put in place to prevent it

How does fraud affect shareholders and workers

Shareholders: distrust in the company and may withdraw investment

Workers: face reduced benifits

Why might shareholders oppose issuing more shares

Dilutes ownership % and EPS, reducing control and returns

Why buy back shares despite lower NAV than market pricd

Potential capital gains if market price rebounds

Why become a majority shareholder

To control board decisions, appoint directors, and influence strategy