Governance and Fraud TFS Case Study 2022

Running head: GOVERNANCE AND FRAUD
Governance and Fraud
Student’s name
University
Author’s note:

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GOVERNANCE AND FRAUD
1.(i) Corporate Governance is the system by which companies are governs and controls their
conduct. A good corporate governance consists of a transparent set of rules and strict controls
which ensures that shareholders, directors and executives have the same benefits and
incentives. Most companies strive to obtain a high standard of governance, for poor
corporate governance could raise apprehension on a company’s reliability, integrity or its
obligation to shareholders. These negative impacts could seriously affect the company’s
status. TFS has clearly adopted some bad decisions that led to a poor corporate governance
resulting in their bankruptcy. Hence, it is important to reflect and analyse the strength and
weakness in their corporate governance, so we could avoid repeating the same mistakes that
TFS made.
Strengths
The most important aspect of Quintis’s performance was that the company identified the risks
and managed them carefully. With adequate information, the managerial authority was able
to develop better investment decisions. Nonetheless, TFS performed quiet well in its semi-
fiscal year. This indicates that the management had a strong framework within the couple of
quarters. The said structure definitely helped to evaluate the risks and the investment
opportunities available for profitable operations (Fernando, 2013). The company had a strong
structure comprised of a proficient board of management. The board had the required
expertise and was able to implement its resolutions properly. This expertise and commitment
of the management that resulted in decent performance during the semi-fiscal year. The net
profit of the company after tax and the revenues were higher than their previous performance,
which reflected a strong financial position for the company (Fernando, 2013).

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GOVERNANCE AND FRAUD
The management had been investing their effort to rebrand the company. It organization
changed its name from Quintis to TFS Corporation. In order to endorse the company’s image,
it invited celebrities in their social functions and welfare activities. They also utilized the
media to communicate their probable future developments to the public. Through such
actions the company made effective interactions with investors as well (Fernando, 2013). It is
the responsibility of the management to ensure that the financial reports are prepared and
communicated to the stakeholders on time. The TFS did communicate their financial
performance to its shareholders at its half year financial year (Fernando, 2013). They even
made timely disclosure of information.
Weaknesses
The management of a company is responsible for setting the objectives and goals that are
achievable for the organization. Also, they are responsible for disclosing financial
information to all the stakeholders of the company that is accurate and timely. However, the
TFS management did not conduct enough research on their investment and therefore it could
not make sound decisions before investing in sandalwood (Labelle, 2013).
The company activities were quiet unethical and it seemed to be irresponsible towards its
stakeholders. It is the obligation of every company to carry out its operations with utmost
integrity and honesty. On the contrary, the company released false information to its
stakeholders as well as to the public. Moreover, the management did not consider the
consequence of releasing wrong information to the public either. It also denied it shareholders
their right of obtaining the right information. Every organization is entitled to provide the
stakeholders with the appropriate information so that they are able to make sound decisions
on investments. TFS investors were denied that right, which was unacceptable and

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GOVERNANCE AND FRAUD
outrageous. When investors are given misleading information they are discouraged from
investing in the same company (Labelle, 2013)
1.(ii) According to the ASX good governance principles and regulations, an organization
ideally has to maintain certain stipulations. ASX prescribes 8 principles in this regard. They
are as following:
Lay solid foundations for management and oversight
It indicates that a listed organization should clearly define the respective responsibilities and
roles of its management and directors. Also, their performance should be regularly monitored
and reviewed.
Structure the board to be effective and add value
The directorial board of an organization should be of an appropriate size. It should
collectively possess the required skills, commitments and knowledge of the functions and
responsibilities of the entity and the industry that it performs in.
Instil a culture of acting lawfully. Ethically and responsibly
The guidelines suggest that a listed company should promote and continuously reinforce a
culture of ethical practices and responsible actions among its employees. Abidance to law and
adherence to moral behaviour hold primary importance in the governance of an organization
Safeguard the integrity of corporate reports
According to this regulation, a listed organization should have an appropriate and fair process
to authenticate the integrity and validity of its reports
Make timely and balanced disclosure