Review of Corporate Governance Principles and Processes

The assignment details a review of corporate governance principles and processes, emphasizing the need for proper management of internal risk within an organization. It discusses the importance of analyzing current corporate governance frameworks, identifying strengths and weaknesses, and setting governance objectives. The document also reviews risk management policies and procedures, highlighting the need for effective controls to prevent errors such as those experienced by BRB Pty Ltd.

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PART 2
Corporate governance refers to the system of rules, principles, regulations, and
processes upon which an organization operates. Reviewing of corporate governance
principles and processes is important to ensure that there is proper management of
internal risk within the organization. This ensures that all the systems and operations
of the organization run smoothly. In order to review corporate governance, it is
important to analyze the performance of the current corporate governance framework.
The strengths and weaknesses of the existing framework are determined, and then the
governance objectives are set. One of the ways of reviewing corporate governance
requirements is analyzing the current operating procedures of the organization to
ensure that they are in line with the national and international standards. A review of
the board charter of the organization ensures that the roles responsibilities and powers
of the board members are clearly defined. The risk management policy and
framework of the organization also need to be reviewed to identify the underlying
gaps in the risk oversight as well as establishing the level of compliance with the
internal control regulations.
1.Karla Johnstone, Chan Li and Kathleen Hertz Rupley, "Changes In Corporate
Governance Associated With The Revelation Of Internal Control Material
Weaknesses And Their Subsequent Remediation*" (2010) 28(1) Contemporary
Accounting Research

The board induction policy and programs of the organization also need to be reviewed
to ensure that there is a smooth transition for the new directors joining the
organization transition smoothly. The communication policies that are being presently
used by the organization should be reviewed and compared to the objectives of the
organization.
The method of communicating the corporate governance framework is by including
the corporate governance report in the yearly report by the company.The framework
can be communicated to the stakeholders during Annual General Meeting. Seminars
and workshops can be organized to train employees. On job training can be done
through continuous observation and practice. The control and operating procedures
need to be designed based on the loopholes identified in the review stage.
Q2.
1)BRB committed an error in the recruitment processes and procedures. The
recruitment procedures did not ensure that the most competent and qualified candidate
was selected. They considered only the academic qualification of the candidate and
did not put much emphasis on the level of experience. The organization also made an
error by failing to do a background check on the documents presented by the
applicants.

2.Belinda Rachael Williams, Simone Bingham and Sonia Shimeld, Corporate
Governance, The GFC And Independent Directors
2)
a)
Lay solid foundations for insight and proper management.This is important in
steering the company to achieve long and short-term objectives
Act ethically and responsibly.The organization should adhere to professional code of
ethics and be responsible for actions and of its stakeholders.
Recognize and manage risk. An organization should identify risks and find ways of
managing them.
b)
The error of recruitment process was due to the failure to advertise the vacancy
properly to attract a large pool of qualified applicants. It is due to this error that the
organization employed a candidate with little experience.
The failure to do background checks on the candidates made it possible for the
candidate to forge academic documents and use them to secure the job.
The error of lack of proper internal control policies made it possible for the employee
to steal partner incentive stock and to receive “back-kicks” from selected distributors.

The principle of laying a solid foundation for insight and good management is very
critical. This is because the insights offer the organization the opportunity to
recognize when things are going wrong to take corrective action. If BRB had a solid
foundation to provide insight on all the activities of the organization, it would have
been easy to avoid the errors.
Adherence to ethics and helps in ensuring everyone in the organization does what is
right and responsibility is taken in case something goes wrong.
3)
a)
The existing system is not strong enough to maintain internal control for BRB Pty
Ltd. This is because the system does not have reasonable procedures for financial
control. This explains why the company paid $10,000 to the distributor without
getting any value in return.
b)Document control. This involves numbering of documents for easier referencing
Adding financial totals and counter checking
Checking validity of payments that need to be made to ensure they are authentic.
Ensuring all agreements entered with third parties are documented and spot checks are
done.
The senior management should monitor and supervise the financial transactions of the
organization.
3.Charles T Horngren, Accounting (Pearson Canada, 2014).

Employees need to be adequately trained on their duties and responsibilities.
c)
BRB Pty Ltd should ensure that no cash payments should be made by the company
and that all the payments are verified and approved by the board. The recruitment and
hiring team need to be changed to improve the staffing function of the business. The
employee who committed the errors should be fired and held responsible for the
mistakes. The board of the organization also needs to take responsibility for their
failure to put in place proper internal control mechanisms. A new internal control
framework needs to be developed within one month.
4.Robert Hiester Montgomery, Auditing (Theclassics Us, 2013).
Bibliography
1.Johnstone, Karla, Chan Li and Kathleen Hertz Rupley, "Changes In Corporate
Governance Associated With The Revelation Of Internal Control Material
Weaknesses And Their Subsequent Remediation*" (2010) 28(1) Contemporary
Accounting Research
2.Williams, Belinda Rachael, Simone Bingham and Sonia Shimeld, Corporate
Governance, The GFC And Independent Directors
3.Charles T Horngren, Accounting (Pearson Canada, 2014).
4.Montgomery, Robert Hiester, Auditing