Corporate Governance: JB-Hi-Fi Case Study and Analysis Report

This report, prepared for a Diploma in Accounting course (FNSACC506), examines corporate governance principles and their application within organizations, using JB-Hi-Fi as a case study. It defines corporate governance, outlines its principles (fairness, accountability, transparency, responsibility, sustainability, integrity, leadership, and capability), and analyzes how these principles are applied. The report assesses financial delegation and accountabilities, including expenditure and investment approvals, and corporate governance requirements. It identifies the need for new corporate governance procedures, details internal control processes, and discusses the monitoring of these processes. The report also analyzes variations in corporate governance and concludes with a discussion of corporate governance recommendations and compliance within the business context, specifically referencing JB-Hi-Fi's practices. The report highlights areas where JB-Hi-Fi's corporate governance structure may be lacking, such as the absence of a nomination committee and independent directors, and suggests improvements to align with best practices. The report aims to provide a comprehensive understanding of corporate governance, financial delegation, and internal control procedures for accounting students.

Running head: DIPLOMA IN ACCOUNTING
Diploma in Accounting
Name of the Student
Name of the University
Authors Note
Course ID

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Table of Contents
Assessment 1:.............................................................................................................................2
Corporate Governance:..............................................................................................................2
Assessment 2:.............................................................................................................................9
Reviewing the financial delegation and accountabilities inside the company:..........................9
Expenditure or investment approvals:........................................................................................9
Corporate Governance Requirement:...................................................................................10
Loan and Lending Approvals:..............................................................................................11
Sign-off Authorities:............................................................................................................11
Determination of the timeframes:............................................................................................12
Completing inside the agreed timeframes:...........................................................................12
Complying with the deadlines of the legislative requirements:...........................................12
Part 2:.......................................................................................................................................13
Need for New Corporate Governance Procedure to meet the organization requirement:.......13
Detail Internal Control Process for meeting the needs of Corporate Governance:..............14
Discussion of the efficient monitoring of process:..............................................................15
Variations in Corporate Governance:...................................................................................15
Assessment 3:...........................................................................................................................17
Purpose of Corporate Governance Recommendations:...........................................................17
Discussion of corporate governance and compliance with policies and recommendations in
business:...................................................................................................................................18

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Corporate governance examples in JB-Hi-Fi:..........................................................................18
Reference List:.........................................................................................................................20

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Assessment 1:
Corporate Governance:
Corporate governance refers to the process, mechanism and the relationship through
which the businesses directs, manages and implements control on the operational activities.
The principle and the structure of the organization identifies the delegation of responsibilities
and rights between numerous forms of participants in the organizations1. It includes the
procedure and the rules used in decision making in compliance with the corporate affairs.
Corporate governance includes the process through which the organizational objectives is
created and hence pursued in the regulatory aspects of the social and business environment.
The procedure of corporate governance includes the regulation of actions policies, procedure
and decision that are considered by the organizations2. The corporate governance practices
are effected by the attempt to remain in line with the stakeholder’s interest. The interest
observed in the corporate governance practice in the present companies is particularly in
respect of the business responsibilities.
Research suggest that modern firms requires corporate governance framework to
monitor or maintain the effective operational activities as this helps in maintaining the
competitive advantage3. There are companies that look to meet the needs of the related
1 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and
practices. Oxford University Press, USA, 2015.
2 Davies, Adrian. Best practice in corporate governance: Building reputation and sustainable
success. Routledge, 2016.
3 Arjoon, Surendra. "Virtues, Compliance, and Integrity: A Corporate Governance
Perspective." Handbook of Virtue Ethics in Business and Management. Springer Netherlands,

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stakeholders as the increase in need of stakeholder’s satisfactions helps in the development of
the proper and effective functional activities. All the organizations and their respective
management is required to address the roles of governance through which an understanding
of the board, its structure, directors roles and other managerial personnel can be addressed,
The corporate governance includes the understanding of necessary board functions which is
includes the observing, compliance, networking and decision making4. The efficiency of the
board is better understood through corporate governance. Improving the process of board of
directors is better understood through the corporate governance procedure. An assertion can
be bought forward by stating that the policies of corporate governance is necessary for every
organizations and therefore these strategies should be implemented in the organizations to
enhance the operational activities and hence meeting the needs of related stakeholders.
The corporate governance aspects that are selected is applicable to the JB-Hi-Fi
objectives since it is viewed that company is looking to improve the functional activities
through which the company is maintaining the competitive advantage5. Organizations are
required to create the policies through which it can observe and regulate numerous forms of
activities that helps in maintaining the effectiveness. Maintaining such strategies is
2017. 995-1002.
4 Soltani, Bahram, and Christian Maupetit. "Importance of core values of ethics, integrity and
accountability in the European corporate governance codes." Journal of Management &
Governance 19.2 (2015): 259-284.
5 Crane, Andrew, and Dirk Matten. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press, 2016.

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fundamental in developing the organization strategies and JB-Hi-Fi has been extensively
making strategies to improve the extent of corporate governance.
There are eight forms of corporate governance principles and each of the principles is
explained to understand the effectiveness of the corporate governance:
Fairness: This can be defined as the equal treatment of the shareholders and hence
organizations should take the measures of safeguarding the rights of the shareholders6. The
shareholders are provided with the opportunity of gaining effective description of violations
of their rights and authorities.
Accountability: There are numerous codes that assigns the responsibilities to the Board of
directors to act as the guidance for the shareholders to take the decisions and providing
supervision to the management activities7.
Transparency: The organizations are under the obligations of offering accurate and in time
explanation of the information regarding all the facts and information’s related to the
functional activities of financial, environmental and social parameters to provide information
to all the shareholders.
6 Du Plessis, Jean Jacques, Anil Hargovan, and Jason Harris. Principles of contemporary
corporate governance. Cambridge University Press, 2018.
7 ArAs, GülEr. A handbook of corporate governance and social responsibility. CRC Press,
2016.

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Responsibility: Organizations are better able to recognize the powers and rights of all the
interested parties and are allowed by the relevant people or company for development as well
as their own financial stability8.
Sustainability: It is the board’s duty that help in developing or guiding the business so that it
can create value and hence assign in the fair way by redistributing and reinvesting the
stakeholders which is inclusive of the customers, directors and employees.
Integrity: The role of the board of directors is to lead the company so that it can maintain the
business integrity in the transparent manner and this manner it can endure the assessment that
are made for shareholders.
Leadership: For an organization it is necessary to have the board that carries out the
management activity of the company9. The companies are required to satisfy the business
purpose which would be helpful in meeting the long and short term plans.
Capability: For the organizational boards to possess the appropriate combinations of skills,
independence and experience to help the members in discharging their accountabilities in the
effective way.
All the necessary principles that are addressed should be included into the corporate
governance structure of the organization. This is because all the principles would be
8 García-Sánchez, Isabel-María, Luis Rodríguez-Domínguez, and José-Valeriano Frías-
Aceituno. "Board of directors and ethics codes in different corporate governance
systems." Journal of business ethics 131.3 (2015): 681-698.
9 Davies, Adrian. The globalisation of corporate governance: The challenge of clashing
cultures. Routledge, 2016.

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supportive in the creation of efficient and better plans and the strategies through which JB-
Hi-Fi can achieve the pre-determined goals and objectives.
Including all these requirements would result in positive effect on the organizational
growth. The development of the JB-Hi-Fi is related with the management effectiveness. It is
noteworthy to denote that the concerned organization is reliant on the management
effectiveness and the management of the JB-Hi-Fi is looking forward to incorporate changes
in the organizations corporate governance strategies10. Applying the corporate governance
principles is helpful in creating the numerous committees and such committees would
consider placing emphasis on the different forms of actions and activities in order to improve
the operational activities. Applying the corporate governance principles would be helpful in
creating a better future for the creation the business functions. These corporate governance
standards are helpful in creation of stronger relationship between the organization
management and shareholders. Applying the corporate governance standards even results in
creation of the better management structure and hence such kind of committee can be created
through which companies would be able to establish different operational aspects11.
The organization has placed their process of internal control and following the
assessment of the internal control process of JB-Hi-Fi and their framework of corporate
10 McCahery, Joseph A., Zacharias Sautner, and Laura T. Starks. "Behind the scenes: The
corporate governance preferences of institutional investors." The Journal of Finance 71.6
(2016): 2905-2932.
11 Mason, Chris, and John Simmons. "Embedding corporate social responsibility in corporate
governance: A stakeholder systems approach." Journal of Business Ethics 119.1 (2014): 77-
86.

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explains that the numerous elements of corporate governance are not met by the company. It
is noticed that the organization does not have the appropriate nomination committee for JB-
Hi-Fi. It is primarily due to this reason the company does not provides appraise disclosure to
the shareholders. JB-Hi-Fi does not contains the nominations committee and henceforth are
unable to publish the reports at the end of the financial year. The nomination committee has
the responsibility of appointing new managers and personnel as well as the independent
directors and it often noticed that the co
mpany does not have the independent directors inside the management of the
company. Since JB-Hi-Fi lacks nomination committee, therefore the organizations are not
able to provide the evidence and the process the organization takes to provide explanation to
the issues associated to the board successions. This helps in making sure that the board has
appropriate amount of experience, skills, knowledge and diversity to discharge the
responsibilities and duties in the efficient manner12. It is further noticed that JB-Hi-Fi hardly
has the registered entities of the board to be the independent directors with company lacking
the involvement of the independent directors. JB-Hi-Fi needs to maintain the independent
directors so that an improvement can be made in the functional activates of JB-Hi-Fi
business. An important assertion can be bought forward by stating that the JB-Hi-Fi needs to
provide changes in the structure of the corporate governance13. With the help of the new
corporate governance structure it would be helpful for the company in meeting the
12 Ducassy, Isabelle, and Sophie Montandrau. "Corporate social performance, ownership
structure, and corporate governance in France." Research in International Business and
Finance34 (2015): 383-396.
13 McAlister, Debbie Thome, and O. C. Ferrell. "Corporate governance and ethical
leadership." Business ethics: New challenges for business schools and corporate leaders.
Routledge, 2016. 68-93.

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requirement of the company and principles that are corporate governance. This would help in
improving the functional activities and achieving the JB-Hi-Fi company goals in the precise
and timely way.

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Assessment 2:
Reviewing the financial delegation and accountabilities inside the company:
Expenditure or investment approvals:
The Chairman and the Chief Executive Officer of JB-Hi-Fi provides approval for the
expenditure and investment purpose. The chairman of the JB-Hi-Fi stated that the inventory
level is set at the sustainable level and the Chief Executive Officer continues to be confident
that the JB-Hi-Fi future inventory requirement can be funded through the organizations cash
flow14. The chairman and chief executive officer of JB-Hi-Fi believes that the business would
produce stronger amount of revenue by making investment in inventory and marketing. The
results of 2017 was driven by combination of sales growth with constant focus on
profitability growth and lower business expenditure, underpinned by the continuous emphasis
on the customer services. Furthermore, the managing director appointment have resulted in
positive changes both in the business position and future growth.
JB-Hi-Fi states that the opportunities for combined group activities offers both the
company and The Good Guys possess the proud history of delivering greater value of growth
for the everyday customers. The Chairman approves that investment proposals by stating that
it would reinvest in both the businesses in order to strengthen the competitive position for
driving future growth. The chairman considers numerous capital management initiatives.
14 Jain, Tanusree, and Dima Jamali. "Looking inside the black box: The effect of corporate
governance on corporate social responsibility." Corporate Governance: An International
Review 24.3 (2016): 253-273.

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Corporate Governance Requirement:
The corporate governance requirement for JB-Hi-Fi is that it make sure all the
individuals that are employed or indulged in the company under any capacity understand the
ethical and the behavioural standards that are applicable to the company’s daily business
activities15. The standards form the fundamental part in delivering the value to the JB-Hi-Fi
shareholders and building or maintaining the confidence of the group. The code of conduct
lay down the overarching principles that governs the manner in which company perform its
business. The corporate governance requirement includes the procedure handling the actual
or the potential conflicts of interest. The procedure set down declares and approves the gifts,
loans and hospitality. The requirement also states the procedure relating to the reporting
conduct that is not in compliance with the code of conduct.
The corporate governance requirement includes all members to act ethically and
responsibly16. As far as reasonably possible the company aims to provide safe working
environment which is free from the injury and unlawful behaviour at the workplace. The
company aims at protecting and keeping the information of the consumer confidential in
compliance with the law. Furthermore, the corporate governance requirement includes that
the protocols and procedures requires the directors and the employees of the JB-Hi-Fi to
make sure that all the members comply with the company’s obligations for disclosure.
15 Council, ASX Corporate Governance, and A. S. Exchange. "Corporate governance
principles and recommendations . ASX Corporate Governance Council." (2014).
16 Council, ASX Corporate Governance. "CGC principles and recommendations." (2016).