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MBL 93CT
Year Module
IMPORTANT INFORMATION:
This module overview contains important information
about your module.
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Page
CONTENTS
Page
CONTENTS ............................................................................................................................................. 2
INTRODUCTION ...................................................................................................................................... 3
1
PURPOSE AND BROAD AND SPECIFIC OUTCOMES FOR THE MODULE ............................. .3
1.1
Purpose ........................................................................................................................................ 3
2.1
Lecturers....................................................................................................................................... 3
2.2
Area ............................................................................................................................................. 3
2.3
University ...................................................................................................................................... 4
3.1
3.2
3.3
TOPICS ........................................................................................................................................ 5
ASSESSMENT ........................................................................................................................... 15
7.1
7.2
7.2.1
7.3
7.4
Assignments ............................................................................................................................... 15
EXAMINATION ............................................................................................................................ 21
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11
13
CONCLUSION ............................................................................................................................. 22
INTRODUCTION
Dear Student
Welcome to MBL93CT-Corporate Governance. This course will provide you with an
understanding of the scope and importance of Corporate Governance. This course aims to
provide students with knowledge of corporate governance so that they are able to meet the
imperatives while reflecting on relevant examples of the responsibility of corporate citizenship
and ethical action. Practical guidelines are provided with special emphasis on the South African
context. The King Code and report on Corporate Governance for South Africa known as King III
(2010), King II (2002) and the Companies Act (2008) are interrogated and the governance
principles are investigated. Good corporate governance is about effective and ethical leadership
that is based on the universal governance principles of transparency, fairness, accountability
and responsibility.
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1.1
Purpose
The aim of this elective is to explore the principles of good corporate governance with particular
focus on the role of boards and directors in integrating company strategy with values and ethics
that underpin sustainable practices. The module develops competencies to apply an integrative
approach to good governance. A fair amount of time will be spent on duties and obligations of
directors affected by the King Code of Governance Principles (King III), including JSE listed
companies, banks and financial services institutions, as well as public sector enterprises. The
impact of the new Companies Act 71 of 2008 on Directors will be looked at. The module will
start off by examining theories and models of corporate governance
1.2
It is imperative that a moral compass guides business and students behavior and professional
conduct. It is also important to understand the increasing extent to which corporate governance
must be considered from a legal perspective as well as ethical and strategic perspectives.
In particular, it aims to provide students with knowledge of specific current issues that impact on
an organization and society in general. Further to this, the course aims to develop the capacity
of students to critically engage with issues at the heart of corporate governance debates,
including financial reporting, auditing, risk-taking, shareholder communications, transparency,
fairness and accountability. The most efficiently managed companies are those that are
cognizant of their wider responsibilities to stakeholders and society in general and continue to
drive the corporate social responsibility agenda.
The view behind the selection of prescribed reading material is to bring to the fore debates on
corporate governance from different perspectives. The readings, reflections and discussions
aim at developing leadership and critical thinking competencies that facilitate effective decision
making around corporate governance issues.
The aim ultimately, is to enable students to integrate new knowledge into professional practice,
and towards enhancing their decision-making skills so as to ensure that they conduct
themselves with courage and integrity, and act in the public interest.
2.
2.1
Lecturer
2.2
AREA
Please direct any administrative enquiries concerning this module to Ms Telana Lebelo at
lebeltg@unisa.ac.za; +27 (0)11 652 0352.
2.3
University
Description of enquiry
E-mail address
Zinhle
dlaminz@unisa.ac.za
Registrations
sblregistrations@unisa.ac.z
a
Prescribed books
Terrance
Lebepe
lebepmt@unisa.ac.za
MBL
administration
programme Telana
lebeltg@unisa.ac.za
Library
scheema@unisa.ac.za
EDS support
edssupport@sbleds.ac.za
43582 (SMS)
MyUnisa
myUnisaHelp@unisa.ac.za
Finance
SBLfinance@unisa.ac.za
MODULE-RELATED RESOURCES
3.1
Prescribed book.
Naidoo, R. 2009. Corporate Governance An Essential Guide for South Africa Companies. 2nd
Edition. Durban: LexisNexis
3.2
Recommended/Prescribed reading
Adams, C. 2004. The ethical, social and environmental reporting-performance portrayal gap,
Accounting, Auditing & Accountability Journal, 17(5): 731-757.
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Ameer. R, Ramli. F and Zakaria. H. 2010. A new perspective on board composition and firm
performance in an emerging market, Corporate Governance, 10(5):647-66
Dahya. J, McConnell, J.J & Travlos. N.G. 2002. The Cadbury Committee Corporate
Performance and Top Management Turnover, Journal of Finance, 57(1):461-483
DeLoach, J. 2004. The new risk imperative an enterprise-wide approach, Handbook of
Business Strategy, 5(1): 29-34.
Dey, D.K. and Chauhan, Y.K. 2009. Board Composition and Performance in Indian Firms: A
Comparison, The IUP Journal of Corporate Governance, VIII (2):8-19.
Gill, S.M, Vijay, T.S & Jha,S. 2009.
Corporate Governance Mechanisms and Firm
Performance: A Survey of Literature, The IUP Journal of Corporate Governance, VIII (1): 7-21.
Institute of Directors in Southern Africa 1994. King Report on Corporate Governance for South
Africa. Johannesburg: IODSA.
Institute of Directors in Southern Africa 2002. King Report on Corporate Governance for South
Africa. Johannesburg: IODSA.
Institute of Directors in Southern Africa 2009. King Report on Corporate Governance for South
Africa. Johannesburg: IODSA.
Institute of Directors Southern Africa. 2009. King Code of Governance for South Africa 2009. Institute
of Directors Southern Africa. [Online] Available: http://www.iodsa.co.za/ Accessed 15 January 2014.
Loubser, Anneli 2010 The business rescue proceedings in the Companies Act of 2008:
Concerns and questions (Part 1), Tydskrif vir die Suid-Afrikaanse Reg, 3:501-514.
Loubser, Anneli 2010 The business rescue proceedings in the Companies Act of 2008:
Concerns and questions (Part 2), Tydskrif vir die Suid-Afrikaanse Reg, 4:689-701
Naidoo, M. 2008. The impact of the new Companies Bill on Directors. Accountancy SA,
October: 30-33.
Nnabuife, E. K. N. 2010. Defining and enforcing ethical leadership in Nigeria, African Journal
of Economic and Management Studies, 1(1): 25-41.
Painter-Morland, M. 2006. Triple bottom-line reporting as social grammar: integrated social
responsibility and corporate codes of conduct, Business Ethics: A European Review, 15(4):
352-320.
Rasche, A. 2010. Collaborative Governance 2.0., Corporate Governance, 10(4): 500-511.
Rezaee, Z., Kingsley, O.O., and Minmier, G. 2003. Improving corporate governance: the role of
audit committee disclosures, Managerial Auditing Journal, 18(6/7): 530-537.
Rossouw, G.J. 2009. The ethics of corporate governance, International Journal of Law and
Management, 51(1): 43-51.
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Scarborough, S; Haynie, J.J and Shook C. 2010. Board composition, process, and activism:
evidence within American Firms, Management & Marketing, 5(1): 3-18.
Soberbaum, F. 2004. Modes of Regional Governance in Africa: Neoliberalism, Sovereignty
Boosting, and Shadow Networks, Global Governance, 10(4): 419-436.
Svensson, G. and Wood, G. 2011. A conceptual framework of corporate and business ethics
across organizations: structures, processes and performance, The learning organization, 18(1):
21-35
3.3
Other Resources
The prescribed book and articles are sufficient to gain an understanding of the topic presented
here but you would benefit from keeping updated with postings on the following websites:
http://finance.yahoo.com/
http://www.iodsa.co.za
http://www.deloitte.com/dtt/section_node/0,1042,sid%253D5601,00.html
http://www.info.gov.za Republic of South Africa. 2000. Protected Disclosures Act, 26 of
2000. Retrieved from. [Accessed 18 Dec, 2013]
Students are advised to read widely to gain a broader understanding of the topics below.
4.
TOPICS
4.1
Introduction and King III Report, and implications for selection of the board
4.1.1
Tuition period
4.1.2
Specific outcomes
Evaluate the selection of the board, the duties and responsibilities of the board and the various
advisory committees.
Assessment criteria
Evidence shows that students can:
Define the term corporate governance
Understand the separation of ownership and control
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4.1.3
Critical questions
What contribution has the King 111 Report made to Governance in Southern Africa?
What best practice should be followed when selecting a new board?
4.1.4
Review chapters 1 to 4 of the Corporate Governance: Essential Guide for South African
Companies (Naidoo, 2009) for background.
4.1.5
Self-assessment
Evaluate the composition and selection of the board of a company you are familiar with.
4.1.6
Reflection
Reflect on how the King III Report converges with the new Company Act.
4.1.7
Conclusion
By this stage you are aware of the King III Report and know how to evaluate the selection of a
board.
4.2
Evaluate the selection of the board, the duties and responsibilities of the board and the various
advisory committees.
Assessment criteria
Evidence shows that students can:
Explain the role of the board and corporate governance issues relating to it.
Discuss how several issues in corporate governance relate to the qualities of individual
directors.
Explain the boards decision making power.
Identify four key decisions which the board must reserve for itself and not delegate to
executive managers.
Discuss the role of the chairperson and chief executive officer as well as non-executive
directors.
How the best practice encapsulated in the King III Report match up with the environment where
you work?
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Read Chapters 1-3 of the King Report III on Corporate Governance for South Africa and King II.
4.2.5 Self-assessment
Evaluate and critique the appointment and conduct of directors within your organisation.
4.2.6 Reflection
With the new responsibilities and accountabilities for directors, do you think we will soon have a
shortage of suitable directors?
4.2.7 Conclusion
By this stage you should be aware of the role, authority, responsibilities and accountability of
directors.
4.3
Assessment criteria
Evidence shows that students can:
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Identify the lessons learned from Enron in 2002 in terms of serious failures in corporate
governance.
Discuss the suitability of directors to hold their positions as well as collective integrity of
the board.
Critically explain the board and its decision-making powers.
Clearly define the distinct roles of the chairperson and the chief executive officer.
What is the role of the non-executive director in relation to the advisory committees?
How are the advisory committees operating in your work environment?
4.3.5 Self-assessment
What is the most critical information that must be forwarded from the committees to the board?
4.3.6 Reflection
4.3.7 Conclusion
By this stage you should be able to comment on the composition and functioning of advisory
committees.
4.4
4.4.1
Tuition period
4.4.2
Specific outcomes
Critique the strategy of private and public sector entity from a board perspective.
Assessment criteria
Evidence shows that students can:
Apply a balanced scorecard approach to indicate the success or failure of an
organizations board to evaluate strategy and suggest remedial action where required.
Understand the value of Kaplan and Nortons (1992) strategy after reading up on this on
the internet.
Discuss the practical aspects of making board appointments.
Explain how directors could be inducted and trained.
4.4.3
Critical questions
4.4.4
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4.4.5
Self-assessment
Do you use the balanced scorecard (BSC) in your organisation? If not, how would you use the
BSC in your organisation?
4.4.6
Reflection
4.4.7 Conclusion
After this topic you should be able to identify and solve strategic issues regarding directors
governance.
4. 5
4.5.1
Tuition period
4.5.2
Specific outcomes
Evaluate issues related to private and public sector governance by ethics as a moral compass
Assessment criteria
Evidence shows that students can:
Elaborate on how ethics is a moral compass.
Define ethics.
Discuss employment equity and black economic empowerment (BEE).
Discuss the benefits of implementing a code of ethics.
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4.5.3
Critical questions
4.5.4
4.5.5
Self-assessment
4.5.6
Reflection
4.5.7
Conclusion
4.6
4.6.1
Tuition period
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4.6.2
Specific outcomes
Assessment criteria
Evidence shows that students can:
Understand the significance of good corporate governance of understandable and
accurate financial statements.
Understand the role of audit committees.
Show the difference between an audit report and a qualified audit report.
Suggest how financial statements can become misleading.
Explain the responsibilities of directors for financial statements.
Discuss the key issues in financial reporting and auditing.
4.6.3
Critical questions
4.6.4
Review the article by Svensson, G. and Wood, G. 2011 and comment on how the theory
presented in the article could be used to strengthen the ethical infrastructure of your
organisation.
Read Chapters 11 -15 (Naidoo R, 2010).
Visit the websites of at least three companies and look at their annual report and financial
statements. How do they present their audit reports? What is the scope of the audit?
www.anglogold.co.za
www.sasol.co.za
4.6.5
Self-assessment
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4.6.6
Reflection
Explore appropriate remedies to solve the complex problems related to the companys
relationship with its stakeholders.
4.6.7
Conclusion
After studying this topic you should be able to apply the principles of financial management to
complex problems and explore the availability of appropriate remedies.
4.7
Risk management
4.7.1
Tuition period
4.7.2
Specific outcomes
Evaluate issues related to private and public sector governance by using risk management
principles.
Assessment criteria
Evidence shows that students can:
Suggest how financial reports could be improved.
Suggest ways in which fraud and error could be detected, e.g. accounting and
internal controls measures.
Discuss statutory records and reporting.
Explain in detail the five main categories into which risk can be divided
(terminate/accept/reduce/transfer).
Discuss the TART approach to risk management.
Explain the steps that could be taken to implement a risk governance plan.
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4.7.3
Critical questions
What is risk and how is it measured? This is a much more complex question than you think.
4.7.4
Read Chapters 4 of the King III Report on Corporate Governance for South Africa
Chapters 11 and 12 (Naidoo R, 2010)
4.7.5
Self-assessment
4.7.6
Reflection
What measures should Anglo Platinum take to manage and to protect the company from
risks associated with mismanagement of stakeholder relationships?
4.7.7
Conclusion
4.8
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4.8.1
Tuition period
4.8.2
Specific outcomes
Evaluate issues related to private and public sector integrated sustainable reporting.
Assessment criteria
Evidence shows that students can:
Critically evaluate the impact of companies on society.
Discuss how companies can marry profit motives with corporate citizenship.
Provide a detailed description of the key principles of responsible companies.
Define sustainability.
Explain sustainability in the context of the triple bottom line.
Provide a detailed explanation of Bob Willards seven reasons for companies to
implement sustainable business practices.
4.8.3
Critical questions
4.8.4
4.8.5
Self-assessment
4.8.6
Reflection
How does one prevent too much or too little information going to a board of directors?
4.8.7
Conclusion
5.
All study schools are held in Midrand. Attendance is compulsory and students will be advised
about the dates and venues well in advance. Students are responsible for their own
accommodation, travel arrangements and expenses incurred while attending the study schools.
Study schools give students an opportunity to network with fellow students and to interact with
academics.
6.
Students are expected to read the specific Chapters in the prescribed text in preparation for
Study School and achieve the learning outcomes. In addition, further reading of related articles
is advised.
It is recommend that you set a study programme for yourself for this year and that you allocate
sufficient time to work through the study guide, to study and read the relevant sections of the
prescribed books, to incorporate additional material if necessary, to do the assignments and to
prepare for the examination. You will need to spend at least 240 hours working on this module.
This includes approximately 100 hours of reading and studying the learning material, 80 hours
of doing activities and assignments and 60 hours of preparation for the examination. This
includes attending the study schools. Use your my Studies@Unisa brochure for general time
management
and
planning
skills.
This
brochure
is
available
at
http://www.unisa.ac.za/contents/study2012/docs/myStudies-Unisa-2014.pdf.
7.
ASSESSMENT
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7.1
Assessment plan
To determine how well you have accomplished the modules learning outcomes, you will be
assessed throughout the year by means of two individual assignments (these comprise the year
mark) and an examination.
The weight of the year mark is 40% and that of the written examination is 60% of the final mark.
7.1.1 Individual assignment 1
Students will be able to critique the duties and responsibilities of directors in their
environment.
Students will understand how boards are structured
Students will be able to critique and evaluated performance of board members in their
environment.
In South Africa board of directors are empowered by the King III Codes of Corporate
Governance and by the new Company Act of 2008 to provide oversight on the activities of
management and to be accountable for performance of organisations. The board is identified as
the focal point of the corporate governance system because it is ultimately accountable for the
performance of the company. Collectively, board members are viewed as a centre of power
that is charged with the responsibility of establishing structures and processes that enable
directors to discharge their fiduciary duties as well as their legal duties of care, skill and
diligence.
Using a case study organisation of your choice provide a critical analysis of how the
performance of the board is evaluated. Conduct interviews with relevant people as part
of the evidence gathering process of how the performance of the board of your case
study organisation is evaluated.
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[30]
Requirement:
The ability to select and correctly apply theoretical sources and concepts
The ability to critically evaluate and provide a synthesis of relevant literature
Citation of relevant works in the assignment
2 Quality of evidence
Requirement:
[30]
practical situation
Was interview data properly cited and referenced in the assignment
Did the student show insight into the nature of the industry and the organisation?
3 Argumentation skills
Requirement: The student shows the ability to develop a logical approach to answering
a question
The student established a common thread or flow throughout the assignment
[5]
Clear conclusions were provided, that are clearly linked to the discussion
[10]
Evidence of intellectual maturity in the argument. In other words the ability to integrate
divergent theoretical views with practice and mount a cogent argument.
[15]
4 Technical aspects
Length requirement
[2]
[2]
Correct referencing
[6]
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Students will understand the issues pertaining to financial reporting, as well as internal and
external audit processes
Assignment:
Identify a private or public company of your choice. Using a case study approach, provide a
critical analysis of the audit committee processes in the context of the audit committee report
outlined in the annual report of your case study organisation
Make use of the companys annual reports, popular press and interviews with key people to
obtain relevant facts.
EXAMINATION
An open book examination will be written in October/November 2014. The duration of the
examination is four hours. The examination will consist of short essay-type questions and one
or more case studies, with specific questions related to the case(s). All reading material set out
in this module overview, together with all material covered at the study schools, should be
studied for the examination.
Examination eligibility will be according to the rules and procedures applicable to the MBL.
Students will be required to adhere to the Unisa examination timetable as well as the timetables
of the designated Unisa examination centres. Students may be required to write more than one
module per day during the examination period.
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FREQUENTLY-ASKED QUESTIONS
The my Studies@Unisa brochure contains an A-Z guide of the most relevant study information.
This brochure is available at http://www.unisa.ac.za/contents/study2012/docs/myStudies-Unisa2014.pdf
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SOURCES CONSULTED
Naidoo, R. 2009. Corporate Governance An Essential Guide for South Africa Companies. 2nd
Edition. Durban: LexisNexis
CONCLUSION
You are now equipped to begin studying this module. You are most welcome to contact the
relevant academic or support staff members should you require further support to improve your
learning experience.
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