Corporate Governance Report: ABC International Ltd - Analysis

This report examines corporate governance within ABC International Ltd., detailing the duties, rights, and competencies of directors, with a focus on Y. K. Chan's role as financial director. It explores committee work, particularly the audit committee's functions in reviewing financial reports, ensurin...Read More

Corporate Governance

Table of Contents
INTRODUCTION.......................................................................................................................................3
TASK..........................................................................................................................................................3
Duties, rights and competence of directors..................................................................................................3
Committee work......................................................................................................................................5
Board structure and styles........................................................................................................................6
CONCLUSION...........................................................................................................................................8
REFERENCES............................................................................................................................................9

INTRODUCTION
Corporate Governance is that system of the business organization which concerns with
the rules and regulation of the company within with all the process of the business is needed to
be performed by an organization. The present study is based on the ABC international Ltd. In
which it provides brief information about the duties, rights and competence of the directors along
with the detailed information about the committee work. Further, the assignment also shows the
board structure & styles and information about transparency and accountability of the company.
Furthermore, the study also provides a brief description importance of audit committee and board
of directors of the company in maintaining the accountability and transparency within the
business organization.
TASK
Duties, rights and competence of directors
A director can be defined as who keeps engage in providing directions to the employees
of the company including the senior authorities like managers, leaders, etc. They ensure the
achievement of business goals by the overall business organization.
Directors have a major role in the business organization. They are the key person of the
company that takes the responsibility of each activity of the business (Huebner and Klein, 2015)
. They monitor each activity of the business and develops the most appropriate policies for the
business. Further the major role of the directors in the business is to ensure the proper working in
the company.
Following are the major duties that are needed to be fulfilled by the Y. K Chan being the
director of the ABC international ltd.:
 Y. K Chan need to be exercise all the powers provided by the companies act of the
country.
 A director is also needed to prepare direction plans as to provide success to the company
and provide benefits to the business as well.
Being a director of the company, a person is needed to fulfill a major duty of taking independent
decisions for the company by using the skills, experience and knowledge of directorship( Shi and
Callahan, 2018).
 Further, a director is also needed ensure the elimination of the conflicts in the business.
 A director is one of the key person of the company. In this regard, it is a duty of director
not to make the misuse of any of the assets of the company.

 N addition, to take the responsibility of each business activity of the company is also one
of the most important duty of the board of directors.
Along with the above duties, directors also enjoy various rights in the company as under:
 The major right provided to a director is right of calling extra general meeting for
the purpose of sharing the decisions taken by the board of directors and taking approval
of the shareholders on them.
 Further, as a the company law contains a rule as per which the company is having
a separate legal entity from the runners of business, they are also being considered as
employees of the company. In this regard, a directors also have right to get the
remuneration for the services provided to the company.
 The directors also have right to recommend the amount of dividend to be paid to
company’s shareholders.
 In addition, the directors also have right to choose the chairman and appoint the
managing directors of the company.
 They also have right to frame the policies for the company as per their own
knowledge and skills and run overall business organization as per their own percepective.
Competence of directors of a company:
 A director is needed to have experience and knowledge about the industries.
 A director is also needed to have a attitude and ability to interact with people and
convincing them as well.
 Further, a director is also needed to be skilled as to provide appropriate directions
for the overall performing all the activities of the company as to provide it
sustainable success.
 A directors is also needed to be able frame the policies and take quick decisions
for the company.
 Great communication skills is also being considered as a core competence of the
directors.
In this order, it can be analyzed that Mr. Y. K Chan have several duties, and responsibilities in
company (Fernández-Gago, Cabeza-García and Nieto, 2016)
). Further, as per the provided case study, as Mr. Y. K Chan is a qualified accountant, and
has been posted as a financial director of ABC Ltd., the core competencies of having
knowledge of industries and professionally capable of being able to analyzed the business
structure have been fulfilled.
Committee work
A committee is being prepared by a company by developing a group of some professional
individuals for the purpose of performing some specific work. There are major 4 types of

committees in a business organization namely, audit committee, standing committee, joint
committee and special committee.
Working of major committees of the ABC Ltd. Can be analyzed as under:
Audit committee: A key process of an audit committee is to review the financial reports
of the company. Further they are also expected to ensure the fulfillment of all the requirements.
They also perform a task to analyse the internal control system of the company. In this order, the
audit committee also ensures the compliance of each law in the business organization.
Furthermore, the audit committee of ABC international Ltd. Uses their professional skills
and knowledge with the view to analyse the overall business properly and obtain the appropriate
results of the performance review of company (Turel, Liu and Bart, 2017)
In this order, an auditor is needed to have a better understanding over the management system
of the business as to have more appropriate analysis of the company.
The audit committee of ABC international Ltd. Is also responsible for the appointment
and working of the auditors of the business. The committee is also responsible for paying the
appropriate remuneration to auditor of the company.
In addition, the audit committee is also responsible for the working of the auditors. In this
regard, it analyse and reviews the results of the auditors and ensures the creativeness in the
results analysed by the auditors. Committee is also required to ensure the fulfillment of all the
legal requirements by the auditor while performing the auditing functions. Further, it is also
required to analyse, monitor and control financial reporting system, operational management,
etc. of the company.
Talking about the interacting with the external auditors of the company, an audit
committee communicates all the information and matters of the company with the external
auditors in order to provide an overview about the working of the company.
A separate meeting is being conducted between the audit committee and the external
auditors. In this meeting they discuss all the private matters of the company (He and et.al., 2017
). Being an international company, as ABC international Ltd. Also conducts internal audit
periodically. In this regard, all the reviews and results of the internal auditors are also discussed
in the meeting with the external auditors.
Furthermore, with the view to interact with the external auditors, the committee also
approaches both internal and external auditors of the company and performs its task as to
coordination between them.
In this regard, it can be analysed the committee is an essential part of the business
organization, as it concerns with monitoring and controlling various core activities of the

company. Further, the committee also ensures the preparation of all the financial activities of the
company properly and compliance of each law by the business organization.
Further, the company also ensures the compliance of law while performing the auditing
activity by the business organization. The audit committee of ABC international Ltd. Also
performs a major task of coordinating and communicating with the external auditors as to help
them in performing their auditing functions and having a complete analysis of the company in
more better way.
Board structure and styles
Board structure
Board structure can be defined as a design as per which the flow of working of the board
of directors are being processed in the company. The structure of the board directors directly
affects the working and management of the business( Liao, Luo and Tang, 2015)
. In this regard, the ABC international lt. needs to design its board structure in the most
appropriate way so that the business performance can be performed with a view to achieve the
business goals and objectives.
There are some structures of the board according to which the company can design and
set the flow of processing of the functions of board of directors like:
 Independent NEDs: NEDs are the non executive directors of the company. These
directors do not become a part of executive members of the company. They do not direct
the daily operations of the company but they gets involved in the core operations of the
directors like formation of policies, planning various activities of the business, etc.
Further, these directors does not take responsibility of the performance of daily
operations of a business organization. But, they keeps responsible for the
monitoring and execution of appropriate plans and performance of the overall
business organization and achievement of the business goals and objectives as
well.
 Board committee: A board committee is that kind of board structure which includes
both executive and non executive board of directors. The board committee keeps engage
in framing various policies for the betterment of the company, monitoring daily
performance of the whole company and taking appropriate decisions for the business as
to provide proper direction to the company. Each group and team of the company reports
their working to the committee with the help of which it can have a complete and proper
analysis of the business organisation
Further, the boar committee involves each responsibility of the organization. They
are responsible for the daily operations of the company along with the formation
of policies for the company, monitoring performance of the company along with
analyzing the daily working of the business as well.

In this regard, it can be analysed the structure of the board affects the monitoring of the
business performance. The type of structure effects the responsibility and functioning of the
board of directors in the company. In this regard the board structure have a huge effect over the
business organization.
Board style
Board style shows the way of performing the roles and responsibilities of directors by the
board of directors of the company. Involvement of board is the most common board style.
Working with this style of the board, the board of directors keeps involved in performing various
activities of the company( Samaha, Khlif and Hussainey, 2015)
Their major involvement in the business is in the formation of policies and strategies for the
company as to enhancement of probability of achieving the goals.
Style of the board depends upon the type of director and the board structure of the
company as well. These elements effects the roles and responsibility of the directors in a
company which have direct effect over the performance of tasks in the company and style of
working adopted by the board of directors as to manage and perform their core activities in the
business.
Further, the directors of the ABC international ltd. Also keeps involved in the policy
formation of the company with a view to enhance the capacity and capability of the business
organization. They also performs a major activity of mentoring the daily working of the
company.
Transparency and accountability of the company
Transparency and accountability of the company refers to amount of relevant information shared
by the business with its shareholders and other users of the company as to maintain a trustful
relation with them. on the other hand, the accountability refers to the accuracy of the business in
maintaining various financial and other records of the company.
Maintenance of both accountability and transparency in the business is the most important task
for the ABC international ltd. It helps the business in retaining the shareholders of the company
and gaining their trust towards the company as well. Further, it also leads in making the task of
raising funds for the company quite easy.
From the analysis of present case study of the ABC international ltd. Have created a a
transparent working with in the overall business organization (Audit Committee Role and
Practices, 2019 )
. The company has created its flow of working in various layers. This system of the company
reduces the risk of fraud in the company. The company also conducts periodically internal audit

in the business and external audit as well. The conduction of audit results in maintenance in the
accountability of the company along with a sort of transparency in the firm as well, as auditors
identifies all the non transparent business activities to the committee through which it can take
the most appropriate decisions in this regard.
Further, the company also have designed a audit committee with the organization. This company
ensures the working of the business. Further, it also concerns with the performance of the
auditors of the company as well. It helps in the ABC international ltd in maintaining the
accountability in the various activities of the firm specially the financial activities.
In addition, the ABC international ltd. Also have involved corporate governance within the
business. It helps the company in maintaining accountability in the business organization. The
company also conducts its general meetings timely as to discuss all the major aspects of the
company and taking their opinion in that regard as well. It helps in generation and maintenance
of the transparency in the overall business activities.
CONCLUSION
From the analysis of the above study it can be concluded that the ABC international ltd.
Company have an effective business management system. The board of directors plays a vital
role in the business operations. Further, they also some rights that can be enjoyed by them in the
business. The audit committee of the company helps the business in preparing more effective and
accurate audit report of the business oprations. In addition, the committee also helps the firm in
maintaining coordination between the internal and external auditors as to ensure the performance
of overall functions in an appropriate way. The ABC international ltd. Also has developed and
maintained an appropriate board structure and board styles in the company. It has helped the
business in providing proper directions and guild lines for the business organization. The study
has also concluded that with the help of strong strategy and policies of the company the company
has become able to maintain the transparency and accountability in whole business organization.

REFERENCES
Books and journals
Huebner, M.S. and Klein, D.S., 2015. The Fiduciary Duties of Directors of Troubled Companies.
AM. BANKR. INST. J., 34, pp.18-18.
Shi, W. and Callahan, C., 2018, July. You Shall Not Pass: Duties and Outcomes from Unique
Insiders on the Board of Directors. In Academy of Management Proceedings (Vol. 2018,
No. 1, p. 17270). Briarcliff Manor, NY 10510: Academy of Management.
Fernández-Gago, R., Cabeza-García, L. and Nieto, M., 2016. Corporate social responsibility,
board of directors, and firm performance: an analysis of their relationships. Review of
Managerial Science, 10(1), pp.85-104.
Turel, O., Liu, P. and Bart, C., 2017. Board-level information technology governance effects on
organizational performance: The roles of strategic alignment and authoritarian
governance style. Information Systems Management, 34(2), pp.117-136.
Liao, L., Luo, L. and Tang, Q., 2015. Gender diversity, board independence, environmental
committee and greenhouse gas disclosure. The British Accounting Review, 47(4),
pp.409-424.
Samaha, K., Khlif, H. and Hussainey, K., 2015. The impact of board and audit committee
characteristics on voluntary disclosure: A meta-analysis. Journal of International
Accounting, Auditing and Taxation, 24, pp.13-28.
He, X. and et.al., 2017. Do social ties between external auditors and audit committee members
affect audit quality?. The Accounting Review, 92(5), pp.61-87.
Online
Audit Committee Role and Practices. 2019 [ONLINE] Available through:
<https://www.cfainstitute.org/en/advocacy/issues/audit-committee-role-practices>
2019 [ONLINE] Available through: <>
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