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AUE2602 LATEST EXAM PACK
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2014
AUE 2602 EXAM PACK
EXAM: 15 MAY 2014
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UNIT 1
AUE2602 Page 1
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Unit 1 – Corporate Governance and statutory matters.
Study Unit 1.1 – The background to corporate governance in South Africa
Define corporate governance and briefly explain why is important to society that companies
operate within the frame work of good corporate governance.
Corporate governance is a system or process whereby companies are directed or controlled. It is about
companies being good corporate citizens and all that this entails. Companies are integral part of the
modern society and it therefore follows that healthy, honest, open, competently and responsible
controlled companies will improve the quality of modern society.
Key aspects of the King III report
1. Leadership
2. Sustainability
3. Corporate citizenship
Three important aspects of sustainability
1. Inclusivity of stakeholders
2. Innovation, fairness and collaboration
3. Social transformation
Application of the code
King III applies to all entities regardless of the manner and form of incorporation. However the size
and nature of the company will determine how the entity applies the reccomnadtions. Further it is
recommended by King III that an entity discloses the practices/principles they chose not to apply and
explain why.
Study unit 1.3 – The King report and code on governance in South Africa
No ‘one size fits all’
Entities and stakeholders will have to develop a deeper understanding of governance issues. This will
enhance their ability to decide how governance principles and practices should be implemented. The
‘one size fits all’ approach will not work.
The challenges will be deciding the optimal level of application required, balancing the costs and
benefits to all stakeholders and being able to disclose such principles and practices in a fair and clear
manner.
Ethical leadership and corporate citizenship
The board should provide effective leadership based on an ethical foundation
Four ethical values underpinning good corporate governance
1. Responsibility – the board should assume responsibility for the assets and actions of the
company and should take corrective action to keep the company on its correct path.
2. Accountability – the board should be able to justify its decisions and actions to all
stakeholders.
AUE2602 Page 2
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