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    Corporate Governance Assignment 1

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    precious mountains
    Directors have five main roles: 1) attracting, employing and evaluating executives, 2) formulating policies, 3) protecting stakeholders' interests, 4) approving the strategic plan, and 5) providing oversight. Directors are responsible for the overall operation and long-term growth of an organization.

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    Corporate Governance Assignment 1

    Uploaded by

    precious mountains
    10 views5 pages
    Directors have five main roles: 1) attracting, employing and evaluating executives, 2) formulating policies, 3) protecting stakeholders' interests, 4) approving the strategic plan, and 5) providing oversight. Directors are responsible for the overall operation and long-term growth of an organization.

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    CORPORATE GOVERNANCE ASSIGNMENT 1

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    Directors have five main roles: 1) attracting, employing and evaluating executives, 2) formulating policies, 3) protecting stakeholders' interests, 4) approving the strategic plan, and 5) providing oversight. Directors are responsible for the overall operation and long-term growth of an organization.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    10 views5 pages

    Corporate Governance Assignment 1

    Uploaded by

    precious mountains
    Directors have five main roles: 1) attracting, employing and evaluating executives, 2) formulating policies, 3) protecting stakeholders' interests, 4) approving the strategic plan, and 5) providing oversight. Directors are responsible for the overall operation and long-term growth of an organization.

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    of 5

    CHINHOYI UNIVERSITY OF TECHNOLOGY

    INDIVIDUAL ASSIGNMENT

    PROGRAMME: BACHELOR OF SCIENCE HONOURS DEGREE IN


    ACCOUNTANCY

    COURSE: CORPORATE GOVERNANCE AND PROFESSIONAL ETHICS

    CODE: CUACM414

    LEVEL: 4.1

    ASSIGNMENT: 1

    NAME: MAKOMO WADZANAI PRECIOUS

    REG NUMBER: C20142082D

    QUESTION: WHAT ARE ANY FIVE ROLES OR DUTIES OF DIRECTORS IN

    ANY ORGANISATION? [50 MARKS]


    Introduction

    The directors are responsible for the overall operation and stewardship of an organization to
    ensure the long term growth and profitability of an organization and build sustainable value for
    shareholders. The role of a board of directors in the system of corporate governance is to oversee
    an organization’s business and affairs including its management because numerous dispersed
    stakeholders cannot effectively perform that function on their own. Directors owe fiduciary
    duties to stakeholders who elect or appoint them (Grossman,2007). Board responsibilities must
    be clearly outlined in the Board Charter and these include policy formulation, protecting
    stakeholders’ interests, providing an oversight function, approving strategic plan of the business
    and attracting, employing and evaluating performance of executives.

    Definition of terms

    Directors

    A group of people appointed to serve as a think tank for the organization to debate, dissect and
    advise the organization on a wide range of issues in an independent, professional and honest
    manner.

    Organization

    According to Louis Allen (1958), organization is a process of identifying and grouping work to
    be performed, defining and delegating responsibility and authority and establishing relationships
    for the purpose of enabling people to work most effectively together in accomplishing objectives.

    Stakeholder

    An individual or group on which the activities of the company have an impact.

    Shareholder

    A stakeholder group who invest their money to provide risk capital for the company. These are
    the owners of a firm.

    Attracting, employing and evaluating performance of executives

    Recruiting, supervising, retaining, evaluating and compensating the CEO or general manager are
    probably the most important role of the directors. Value added business directors need to
    aggressively search the best possible candidate for this position. Actively searching within an
    industry can lead to the identification of very capable people. Directors must not fall into the trap
    of hiring someone to manage the business because they are unemployed and need a job. Another
    major error of value added business is under compensating the manager. Managerial
    compensation can provide a good payoff in terms of attracting top candidates who will bring
    financial success to the value added business. (Ag Decision Maker File C5-71)
    Policy formulation

    The directors has the responsibility of developing a governance system for the business. The
    articles of governance provide a framework but the directors develops a series of policies. This
    refers to the directors and focuses on defining the rules of the group and how it will function.
    The rules that the board establishes for the company should be policy based in other words, the
    directors develops policies to guide its own actions and the actions of the manager. The policies
    should be broad and not rigidly defined as to allow the directors and manager leeway in
    achieving the goals of the organization. (Ag Decision Maker File C5-71)

    Protecting stakeholders’ interests

    The fiduciary duty of the directors is to promote the value of the organization. In fulfilling that
    duty, directors must exercise their business judgement in considering the interests of various
    stakeholders including shareholders, employees, customers, suppliers, the environment and
    communities and the attendant risks and opportunities for the corporation. Indeed, the directors’
    ability to consider other stakeholders’ interests is not only controversial, it is a matter of basic
    common sense and a fundamental component of both risk management and strategic planning.
    Organizations today must navigate a host of challenges to complete and succeed in a rapidly
    changing environment. For example, as climate change increases weather related risks to
    production facilities or real property investments or as employee training becomes critical to
    navigate rapidly evolving technology platforms. Directors and management team that is
    myopically focused on stock price and other discernible benchmarks of shareholder value,
    without also taking a broader, more holistic view of the organization and its longer term strategy,
    sustainability and risk profile is doing a disservice not only to employees, customers and other
    impacted stakeholders but also to shareholders and the corporation as a whole.

    Approving strategic plan of the business

    It is the directors’ responsibility to monitor the implementation and compliance of a company’s


    strategy and its fundamental objectives. This responsibility usually requires that a strategic
    planning process be adopted, that management’s alternative solutions and strategies be
    continuously reviewed and approved and that results be measured against plans. Involving the
    directors in the strategic planning process achieves three main objectives which are adding
    diverse viewpoints to reinforce the quality of the strategic plan and related decisions, improving
    the directors’ understanding of the organization’s business environment and its sense of
    ownership and accountability and ensuring that the executive team and board members work in a
    collaborative rather than confrontational setting.

    Providing an oversight function

    Directors oversight encompasses many and varied responsibilities. While day to day accounting
    and financial decisions are the responsibility of management, the directors must establish the
    framework in which management operates, creating policies that prevent fraud and error. Such
    policies include:
    Signatures and authorizations

    Similarly, a policy requiring two layers of approval for expenses will reduce the risk of
    embezzlement. Directors should establish policies requiring two signatories on every check over
    a specified amount and two different signatories on every authorization or payment.

    Good governance polies

    It can also be an important role in ensuring the organization’s financial health by promoting a
    culture accountability that will prevent future problems. Such policies include:

     A conflict of interest policy to guard against self-dealing transactions


     A document retention policy to protect against less or inadvertent destruction of
    documents
     A code of ethics to establish conduct guidelines for board management, staff and
    volunteers
     A whistle blower policy that protects staff and volunteers who report unethical or
    unlawful practices within an organization(D.C. Bar Pro Bono Center 2014, 2015,2018)

    Conclusion

    Overall, the directors play a critical role in ensuring that the organization is operating in a
    responsible and effective manner and that it is delivering value to its shareholders and other
    stakeholders.

    References

    1. Ag Decision Maker File C5-71


    2. D.C. Bar Pro Bono Center 2014, 2015,2018 Article
    3. Grossman, N (2007).DIRECTOR COMPLIANCE WITH ELUSIVE FIDUCIARY
    DUTIES IN A CLIMATE OF CORPORATE GOVERNANCE REFORM. Fordham
    Journal of Corporate & Financial Law. April 1, 393-466
    4. Monks, R. A., & Minow, N. (2011). Corporate governance. John Wiley & Sons.

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