a.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To explain: The basic principles of corporate governance that appear to have been missing.
b.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To examine: Whether or not external auditors can expect the effectiveness of corporate governance.
c.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To explain: The manner in which external auditors might respond to concerns about the quality of governance.
d.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To explain: Whether or not the company should have an independent chair.
e.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To explain: Whether or not the CEO of the company should be removed.
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Chapter 2 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
- Tim, a member of a company desired to put forward a resolution about changing the director of the company. However, the accountant of the company mentioned to him that he cannot pass the resolution alone. Nevertheless, Tim did not take the advice of the accountant and put forward his resolution. Required1. With reference to Companies Act of Fiji 2015, explain the laws pertaining to members’ resolutions.arrow_forwardASSIGNMENT TWODazzle Co. is a stock‐market listed company that manufactures personal protection equipment. At a recent board meeting of Dazzle Co., a non‐executive director suggested that the company’s remuneration committee should consider scrapping the company’s current share option scheme, since executive directors could be rewarded by the scheme even when they did not perform well. A second non‐executive director disagreed, saying the problem was that even when directors acted in ways which decreased the agency problem, they might not be rewarded by the share option scheme if the stock market were in decline. Required:(a) Explain the nature of the agency problem in detail. (b) Discuss the use of share option schemes as a way of reducing the agency problem in a stock‐market listed company such as Dazzle Co.arrow_forwardThemba lives in clarendon Jamaica, he is a shareholder of electro Tech Limited. He received notice of an annual general meeting of Electro Tech Limited to be held in Port of Spain, Trinidad. He cannot attend the meeting on that day, but feels strongly about certain of the proposed resolutions set out in the notice of the meeting, and wants to express his views on these matters to the board of directors. Themba also wishes to vote against certain of the resolutions which the company proposed to pass. Advise him how he could exercise his right to vote and to express his views at the annual general meeting of Electro Tech Limited even though he cannot attend the meeting with a law casearrow_forward
- W17-2 Shirley Yu, president of SY Corporation, is concerned about several large stockholders who have been very vocal lately in their criticisms of her leadership. She thinks they might mount a campaign to have her removed as the corporation's CEO. She decides that buying them out by purchasing their shares could eliminate them as opponents, and she is confident they would accept a "good" offer. Yu knows the corporation's cash position is decent, so it has the cash to complete the transaction. She also knows the purchase of these shares will increase earnings per share, which should make other investors quite happy. (Earnings per share is calculated by dividing net income available for the common shareholders by the weighted-average number of shares outstanding. Therefore, if the number of shares outstanding is decreased by purchasing treasury shares, earnings per share increases.) Instructions: Answer the following questions. (a) Who are the stakeholders in this situation? (b) What…arrow_forwardCaplan Pharma, Inc., recently was sued by a competitor for possible infringement of the competitor’s patent on a top-selling flu vaccine. The plaintiff is suing for damages of $15 million. Caplan's CFO has discussed the case with legal counsel, who believes it is possible that Caplan will not be able to successfully defend the lawsuit. The CFO knows that current U.S. accounting guidelines require that come gencies (such as lawsuits) must be disclosed in the annual report when a loss is possible. However, she is unsure whether this rule must be applied in the preparation of interim financial statements. She also knows that disclosure is necessary only if the amount is material, but she is unsure whether materiality should be assessed in relation to results for the interim period or for the entire year. Required Search current U.S. accounting standards to determine whether contingencies are required to be disclosed in interim reports, and, if so, how materiality is to be determined.…arrow_forwardA group of environmentalists have purchased shares in a mining company. Some 200 members of the group are now shareholders and holding various amounts of shares. The members of the group who have purchased shares are not against profits being made by their company, but are concerned that appropriate health and safety standards are not implemented by the company, and further that appropriate environmental safeguards are implemented when extracting a mineral, transporting it and manufacturing the final product.What rights do members have to question directors at a meeting regarding the company’s environmental practices?What are the rights of members to actually call an extraordinary meeting in order to discuss a particular environmental issue that has arisen since the last meeting of members was held?arrow_forward
- In a recent AGM, the executive team and shareholders of Simons Exploration were in disagreement with the bids being made by certain companies such as Garfunkel Hydro for issued shares. The executive team of Simon Explorations isn't sure about whether to accept a cash bid offered for the issued shares by Garfunkel Hydro and asks you, a highly paid financial consultant, for your advice. Garfunkel Hydro also has a $630,000 tax loss carry-forward that Simon Explorations can apply over the next 2 years. Garfunkel Hydro estimates that it can give $162,500 in after-tax cash flow (after tax income + CCA) each year for the next 20 years. ($315,000 per year). Simon Explorations has other offers but the one by Garfunkel Hydro seems particularly aggressive to the executives and they are not sure how to handle it. At the same time ,they also know a minority of their shareholders are excited about the bid as they have connections and profited greatly from Garfunkel Hydro in their previous dealings.…arrow_forwardThe board of directors of Purdido Corporation have just directed Purdido’s officers to abandon further efforts to complete an acquisition of all the outstanding common stock of Sontee Company in a business combination that would have resulted in a parent company–subsidiary relationship between Purdido and Sontee. After learning of the board’s decision, Purdido’s chief financial officer instructed the controller, a CPA who is a member of the AICPA, the FEI, and the IMA (see Chapter 1), to analyze the out-of-pocket costs of the abandoned proposed combination. After some analysis of Purdido’s accounting records, the controller provided the following summary to the CFO:PURDIDO CORPORATIONOut-of-Pocket Costs of Abandoned Business CombinationApril 17, 2005Legal fees relating to proposed business combination ………………………………$120,000Finder’s fee relating to proposed business combination …………………………………….0*Costs associated with proposed SEC registration statement forPurdido common stock to have been…arrow_forwardRecently, Boho Ltd learned that one of the company's shareholders made statements to the media which caused anger and embarrassment for the New Zealand government. Boho Ltd's board of directors is concerned that the comments will negatively impact the company's chances of winning a million sales dollar with the New Zealand government. Analyse whether Boho Ltd can validly expropriate the shares of this shareholder, and if so, how it should be carried out.arrow_forward
- Munir has been appointed as a non-executive director director in Syarikat Mualim Sdn Bhd (“the company”). Other Mualim’s directors have now discovered that Robert has previously been an executive director of three public listed companies. Discuss whether there are any grounds on which the Registrar may disqualify Munir from acting as a non-executive director.arrow_forwardMr. B wanted to become a Board of Director, however 8 years ago he was convicted by final judgment of an offense punishable by imprisonment for a period exceeding six (6) years. He wants to run as Board of Director in the coming elections of the company next week. He comes to you, his well versed in law accountant, for advice. What would be your advice to him? Explain with basis. pls help me, thank youarrow_forwardKimball, a partner in a one-office firm, inherits 15 shares of Spotless Housekeeping Services stock. The stock has a market value of $25 per share; there is a ready market for them; and there are 300,000 shares outstanding. Spotless is an audit client of the firm, and Kimball does no work or consulting for Spotless engagements. Which of the following is CORRECT regarding Kimball receiving this stock and maintaining the firm's independence with Spotless? As long as Kimball does not work on the engagements for Spotless, nothing need be done. If he works on the engagements for Spotless, then the shares must be promptly sold to preserve the firm's independence. Since the shares are worth only $375 and they were inherited, nothing need be done. If Kimball transfers the shares to a blind trust where he is the beneficiary, independence with Spotless will not be impaired. The shares must be sold within 30 days of their receipt.arrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
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