What is corporate governance? - ANSWER Corporate governance is the system of standards, procedures and policies by which an organisation is controlled
- a framework that is created around the organisation's values and objectives, making an organisation effective, efficient and successful
Wha...
L4M1 - Chapter 3 QUESTIONS &
ANSWERS(RATED A)
What is corporate governance? - ANSWER Corporate governance is the system of standards, procedures
and policies by which an organisation is controlled
- a framework that is created around the organisation's values and objectives, making an organisation
effective, efficient and successful
What is a conflict of interest? - ANSWER A conflict of interest occurs when a procurement professional
has to make a decision that may affect them personally
A perceived conflict of interest occurs when a procurement professional hhas a private interest that
could affect a decision making process
E.g.
- buyer having a close friend or family member
- buyer awarding a contract to a family member
- accepting payment from suppliers in exchange for information
The 4D Model - ANSWER Disclose - disclose the potential conflict of interest to the organisation,
maintaining ethical behaviour
Distance - if a manager has suggested that the individual who has disclosed a potential conflict of
interest does not have direct input with the contract, the individual should distance themself from the
associated deal
Delegate - if procurement professional cannot distance themself, they should delegate any tasks to a
colleague who has no conflicts of interest with the supplier
, Disassociate - if the contract is critical to the organisation and COI is certain, the procurement
professional should disassociate themself from the deal to ensure compleye objectivity in the contract
process
Procedures = the way the policy will be carried out
Policies are based on:
- organisational objectives
- legislation
- regulation
- standards
Documented policies and procedures - ANSWER - Ensure conformance = conform to the regulations and
standards detailed within policies and procedures
- Ensure compliance = conform to legislation as detailed within policies and procedures
- Protect from coercion, bribery or fraud
- Continuity of supply = ensure buyers have a back up supplier
- Promote ethical behaviour = document how a procurement professional should behave, check COI
- Aid with legal cases = if a breach of legislation occurs, policies and procedures may be reffered to in
court
What is organisational accountability? - ANSWER Organisational accountability is about all members of
the business working together to achieve the objectives
, The Global Standard for Procurement and Supply Structure - Five levels of competence - ANSWER 1.
Tactical - applies key tasks associated with the work of procurement and supply
2. Operational - provides advice and guidance to key stakeholders on the performance or organisational
procedures & policies
3. Managerial - develops, improves and fulfills organisational and functional objectives in procurement
and supply
4. Professional - formulates direction and advice, manages change, leads and influences both internal
and external stakeholders
5. Advanced professional - leads procurement teams within an organisation and influences the board to
adopt leading-edge procurement strategies
How can accountability be enhanced? - ANSWER - defining clear roles and promoting team leadership
- promoting a sense of ownership for team results
- providing freedom, control, support and ownership
- not focusing on the negatives and embracing the positives
Reporting concerns or poor practice - ANSWER If buyer discovers something that concerns them or
appears to be poor practice they should report it - ensure the best value is sought and addressed
Reporting budget variances - Formula - ANSWER Relate to how organisational spend is tracked against
the budget - buyers have to be accountable for the amount of money spent, reports can be produced to
assess any variance in budgets
Variance = Actual spend - Budget
Buyers may need to:
- request a budget increase
- reduce costs
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