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AUE2602 Assignment 2 Semester 1 2022 R80,00   Add to cart

Exam (elaborations)

AUE2602 Assignment 2 Semester 1 2022

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Corporate Governance in Accountancy Assignment 2 Semester 1 Questions and Answers

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  • May 20, 2022
  • 10
  • 2021/2022
  • Exam (elaborations)
  • Questions & answers
  • aue2602
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PulsoSolutions
Corporate Governance
Module Code:AUE2602
Assignment 2

, Question 1.1



Governing body (board of directors): Composition of the board

1. Principle 7 point 8 of King IV Report states that the governing body should comprise a
majority of non-executive members, most of whom should be independent. Book
Marked only has 3 non-executive directors and 4 executive directors which
means Book Marked is non complaint on this point.
2. Principle 7 point 9, as a minimum, the chief executive officer (CEO) and at least
one other executive should be appointed to the governing body to ensure that it
has more than one point of direct interaction with management. Book Marked is
in compliant because Mr. Scott, Ms. Grey and Ms. Adam who are executive
members are part of the governing body.
3. Principle 7 point 10 of the King IV Report state the governing body should set
targets for race and gender representation in its membership. Book Marked is
complaint in this regard because it has female and male members in the
composition of the governing body.

4. Principle 7 point 13 of the King IV Report states the governing body should
establish a succession plan for its membership which should include the
identification, mentorship and development of future candidates. This principle
was demonstrated and complied with when Ms. Grey announced her retirement
from her position as CFO and recommended that Mr. Rhodes, the financial manager
should take over her position on the board, which the board accepted.


Governing body: Chairperson of the Board

1. Mr. Adofo is a member of the Audit committee which is not compliant because Principle 7 point
36(a) the chair should not be a member of the audit committee.
2. Principle 7 point 34 of King IV Report states that the CEO of the organization should not also
chair the governing body, and the retired CEO should not become the chair of the governing
body until three complete years have passed after the end of the CEO’s tenure. Mr. Adofo was
appointed Chairperson before three complete years had passed, only 2 years 11 months have
elapsed since Mr. Adofo was CEO. Book Marked is not complaint in this regard
3. The governing body should elect an independent non-executive member as chair to lead the
governing body in the objectives and effective discharge of its governance role and responsible.
Mr. Adofo owns 7% equity in the company and this is not complaint with the requirements of
King IV Report because he is not independent due to him having equity in the company.

Audit Committee

1. Principle 8 point 57 of the King IV report states the governing body should appoint an
independent, non-executive member to chair the audit committee. Mr. Adofo who is the
elected chairperson of the audit committee is not and independent member because he has 7%
equity in the company.

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