Analysis of Acer Company's Corporate Governance, Auditor Independence and CEO-Chairman Split

This report provides a detailed analysis of Acer Company's corporate governance, auditor independence, and CEO-chairman split. It evaluates the management and board's response to corporate governance matters, the independence of the auditor, and whether the CEO and chairman positions are held by the same person. The report includes a critical review, review of enforcement status, and implications of the same person holding both positions.

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Finance
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Table of Contents
Introduction:...............................................................................................................................1
Critical review of the management and the board of directors in response to the corporate
governance matters.....................................................................................................................2
Review on the independence of the auditor:..............................................................................3
Evaluation of whether the position of the chief executive officer and the chairmen of the
company split or it is held by the same person..........................................................................5
Conclusion:................................................................................................................................6
Referencing................................................................................................................................8

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Introduction:
In this report the detailed analysis of Acer Company is undertaken in respect of
various aspects of the company like the board’s and the executive managements response
towards the corporate governance , the state of independence of the auditors of the company
and the existence of any split between chairperson and the chief executive officers of the
company.
Critical review of the management and the board of directors in response to the
corporate governance matters
In response to the corporate governance, the company lays down certain enforcement
status and then evaluates the position of the company in respect of the compliance with its
enforcement status (Dodd, 2017). The enforcement status and the corresponding compliance
status of the company are as follows:
1) The company evaluates whether it has incorporated its guidelines on ethical conduct
in its internal policies and the company has disclosed the same publicly. The company
also evaluates if the management has been able to demonstrate their commitment
towards the prescribed policies (Kraakman & Hansmann, 2017). After the evaluation
that the management and the board of directors have stayed true to its motto that
integrity is the highest principle in Acer. Consequently, they have shown
determination in implementing the company’s guidelines.
2) The company evaluates whether the management and the board has established any
mechanism to avoid any unethical conduct. In addition to that the company finds out
the inclusion of the same procedures in the policies of the company. As per the
representation of the management it is one of the most important policy of the
company is to adhere to all the rules and regulations applicable on the company

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around the world (Stout & Blair, 2017). The company formulates its Standard of
Business Conduct in order to guide its behaviour with its supplier, customers,
business partners, shareholders and all the related community with which the
company is engaged in business.
3) The company evaluates whether the management has established measures in respect
of the acts listed in the article 7 of the Ethical Corporate Management Best Practice
Principle for TWSE/ GTSM listed companies. For the purpose of eradicating any
misconduct the company has put in place several policies and guidelines like the
Standards of Business Conduct, Antitrust and Fair Competition guidelines,
Regulations on insider trading and several rules governing the Management of
Personal Data (Agrawal & Cooper, 2017).

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Review on the independence of the auditor:
The company in its annual report has clearly stated the various enforcement statuses that
regulate or address the issue of ensuring the independence of the auditor. The detailed
procedure or the enforcement statuses applied by the company are as follows:
1) It has specifically assigned the duty of ensuring the independence of the auditors to
the audit committee and the same has been communicated to the shareholders via the
annual report of the company.
2) The Audit committee of the company regularly engages in evaluation of the
independence of the CPAs based on the statements laid down in the CPAs statement
of independence and along with the various stipulations laid down by the relevant
regulations (McCahery et al., 2016).
3) Some of the most important evaluation items of the committee include the following:
a) The capability of the management of respecting the various challenging and
objective audit procedures applied by the auditor
b) It evaluates whether the auditor is rendering any non-audit service to the company
and whether the same is restricting his independence of his auditing procedures.
c) It continuously evaluates whether the auditing firm itself has enacted any
independence rules for itself, its staff and other persons. It is for ensuring the
independence in accordance with the Norm of Professional Ethics for CPA
(Coffee & Palia, 2016). It also evaluates whether it is committed and capable of
prohibiting insider trading and other matters like misuse of material information

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or any related matter which might lead to the misleading of the security of the
company or the capital market.
d) It ensures that mandatory rotation is applied and implemented to the lead auditor
and in addition to this the review auditor as per the guidelines of the relevant
regulations.
Evaluation of whether the position of the chief executive officer and the chairmen of the
company split or it is held by the same person.
The company has the same person as its chairmen and the chief executive officer.
This feature has the following implications:
1) Corporate governance:

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The chief executive officer of the company is responsible for ensuring that the
actions of the company are in conjunction with the objectives and the goals of the
company. In case the company has the same person as its chairperson then the
liability of the adhering to the actions required to be performed fells upon the
same person who is responsible for determining the effectiveness and efficiency
of the decisions and the actions taken (Larcker & Tayan, 2015). This results in the
risk of self-appraisal and may result in higher inefficiencies in the operations of
the entity.
2) Independence of the audit committee:
The statutory requirements lay down that the audit committee must be comprised
of only non-executive directors. The companies put such kinds of guidelines in
place in order to curb the increasing amount of violations in the corporate
governance norms (Samra, 2016). But, the audit committee in the end has the
obligation to report back to the chairperson of the board and in case the chief
executive officer of the company is also the chairperson of the board of directors
the effectiveness of such measures reduce drastically and in some cases they
become nullified.
3) Compensation in respect of the executive members:
In case the chairperson and the chief executive officer of the company are the
same person decision in respect of his remuneration has to be taken by the same
person. This can lead to conflict of interest and loss of profits attributable to
shareholders.
Conclusion:
In the report, it is found that the company has well enforcement status in place that
helps the management to determine the compliance in respect of them. Due to the readily

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available measures of corporate governance the management is focussed on taking adequate
and appropriate steps in this respect. The audit committee makes sure about the conduct of
independent audit by the help of its own prescribed enforcement status. The company has the
same person as the chief executive officer and the chairperson of the board. This may result
in conflict of interest.

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Referencing
Agrawal, A., & Cooper, T. (2017). Corporate governance consequences of accounting
scandals: Evidence from top management, CFO and auditor turnover. Quarterly
Journal of Finance, 7(01), 1650014.
Coffee Jr, J. C., & Palia, D. (2016). The wolf at the door: The impact of hedge fund activism
on corporate governance. Annals of Corporate Governance, 1(1), 1-94.
Dodd, E. M. (2017). For whom are corporate managers trustees?. In Corporate
Governance (pp. 29-47). Gower.
Kraakman, R., & Hansmann, H. (2017). The end of history for corporate law. In Corporate
Governance (pp. 49-78). Gower.
Larcker, D., & Tayan, B. (2015). Corporate governance matters: A closer look at
organizational choices and their consequences. Pearson Education.
McCahery, J. A., Sautner, Z., & Starks, L. T. (2016). Behind the scenes: The corporate
governance preferences of institutional investors. The Journal of Finance, 71(6),
2905-2932.
Samra, E. (2016). Corporate governance in Islamic financial institutions.
Stout, L. A., & Blair, M. M. (2017). A team production theory of corporate law. In Corporate
Governance (pp. 169-250). Gower.