Corporate Governance of TFS Company

Governance and Fraud
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TABLE OF CONTENTS
Part 1..........................................................................................................................................3
(i)............................................................................................................................................3
(ii)...........................................................................................................................................4
(iii)..........................................................................................................................................6
Part 2..........................................................................................................................................6
(i)............................................................................................................................................6
(ii)...........................................................................................................................................8
References................................................................................................................................10
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PART 1
(i)
The strength and weakness of the corporate governance of TFS Company have been analyzed
below in detail manner:
Strengths:
Efficient and effective board structure and management: The management of the company
can be said well-efficient to recognize and manage risk relating to business. Even the board
follows the practice of accomplishing responsibilities and obligations relating to stakeholders
through its corporate governance practices (Quintis Limited, 2018).
Making appropriate attempt to comply with corporate governance principles: The
executive management make efficient attempt to perform their duties with honesty, integrity
care, and due diligence in order to act in the best interest of company which represent the highest
standard of corporate governance operations (Quintis Limited, 2017). With the specified
efficiency only, the company was able to make appropriate investments and provide profitable
results in its half financial year. This shows that the management had a good framework and
management within the semi-financial year. The results represent that company has good as
well as competent board structure. Adequate competence and skills are available with the
board of directors to implement the decision in an appropriate manner. The same has been
proven with the results attained during the semi-financial year 2016 as the profits attained
during specified semi financial period is due to the efficiency of board management.
The effort to regain the lost brand name or image of the company: The element of
continuous improvement can be assessed in management as the company is attempting to
rebrand through providing a new name, i.e., from TFS Corporation to Quintis in the year
2017. The management believes in providing necessary information to stakeholders within
time, and the same was done with the half-yearly result announced on 27th February 2017 so
that the investment opportunities could be available for profitable operations.
Weaknesses:
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Unable to provide true information to stakeholders and investors: Board of directors and
management are responsible for providing accurate information to stakeholders relating to the financial
performance of the company. The accounting practices followed by TFS Corporation were
questionable. As the revenue policy allows the company to recognize revenue before any cash is
received or the contract is executed. Thus, fictitious revenues were generated by the company in order to
gain access to financing through bond arrangements.
Giving acceptance to aggressive accounting policies: It could be assessed that aggressive accounting
policies along with discretionary revenue recognition policy which permitted to book revenue before
cash payment presented the untrue financial performance of the company. Even the company did not
make a sound decision relating to the huge investment made in sandalwood due to which investors
had to face huge losses.
Ignorance of risk of providing details relating to financial performance which is based
on unethical principles: The unethical practices followed by the management overlooked
the risk involved in providing wrong information (without strong evidence or analysis).
Stakeholders have right to attain information relating to business operations, but the company
denied the right to acquire correct information. Even the release of positive predictions for
future growth increased the share market value to great heights, but as the performance
presented in a financial statement was incorrect, the actual position could not be assessed by
stakeholders. Moreover, when the real picture came in front of stakeholders, it impacted the
image as well as the market value of the company negatively. Overall the window dressing
policy complied by the management was the main weakness of the corporate governance of
TFS Corporation.
(ii)
Corporate Governance can be stated as a central and dynamic aspect of every business
(Sadique et al. 2019). The development of strong corporate governance is necessary to
protect stakeholders as well as to assure the maintenance of investors in the company
(Rasheed and Nisar, 2018). The fact cannot be denied that the challenges relating to the
effectiveness of corporate governance are significant irrespective of intent with which the covert
actions are conducted (Tarr, 2016). The three broad categories which motivate the
misgovernance are outright frauds, application of excessive power by retired founders of the
board and undue fortification (Hodgson, Seamer and Uylangco, 2018). The corporate
governance of TFS (Quintis) contributed to the demise of the company as it provided its
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