QUESTION 3 Read the following scenario and answer the question. CORPORATE GOVERNANCE ROLE IN FINANCIAL REPORTING Zabihollah Rezaee 16 January 2009 Abstract Reported financial scandals have galvanized considerable interest in and discussion on the role of corporate governance in the financial reporting process. Many factors, including high- profile financial scandals, well-publicized restatements of financial reports, and concerns over auditors' independence have resulted in loss of investor confidence in financial reports. The Sarbanes-Oxley Act of 2002 (the Act) was passed in response to these financial scandals to reinforce corporate accountability and professional responsibilities, and to rebuild investor confidence. The SEC has issued more than 20 rules to implement provisions of the Act. Other professional organizations (AICPA, AMEX, Conference Board, NASDAQ, NYSE) have issued standards and corporate governance guiding principles to restore public trust in corporations, the capital markets, and the financial reporting process. Mere compliance with these measures may not be adequate in rebuilding investor confidence and thus public companies should improve their corporate governance structure. This paper introduces a corporate governance structure consisting of seven interrelated mechanisms of oversight, managerial, compliance, audit, advisory, assurance, and monitoring functions. A well-balanced functioning of these seven interrelated functions can produce responsible corporate governance, reliable financial reports, and credible audit services. Source: CORPORATE GOVERNANCE ROLE IN FINANCIAL REPORTING - ScienceDirect Required 3.1 King IV introduced the concept of apply and explain which is contrary to the previous King reports. Discuss the significance of this concept and why you think it was introduced. (8) 3.2 The abstract above highlights the need for corporate governance in financial reporting, due to the significant number of scandals that have rocked the corporate world recently. Write a paper explaining the role of the King IV Report for Corporate Governance in South Africa 2016 ("King IV") for responsible reporting at a company level. (17) [25 marks]