You are a senior auditor at Goodwill Inc, the registered auditors responsible for GH (Pty) Ltd,...
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You are a senior auditor at Goodwill Inc, the registered auditors responsible for GH (Pty) Ltd, a large sport equipment manufacturer with a public interest score of 600. The board of GH (Pty) Ltd have approached you to assist with various internal controls and governance matters that have arisen throughout the year. GH (Pty) Ltd has a 31 July financial year end. PART A - CORPORATE GOVERNANCE MATTERS GH (Pty) Ltd's largest shareholder, Affleck Ltd is a listed company and requested GH (Pty) Ltd to comply with the recommendations of the King IV Report on Corporate Governance for South Africa (King IV Report). Matt Damond, the chief executive officer (CEO) of GH (Pty) Ltd approached your firm to assist the board of GH (Pty) Ltd in honouring the request. Matt provided you with the following information: Board of Directors The board consists of the following members: . Matt Damond (CEO and chairman of the board) • Robin Wills (manufacturing director) • Bonginkosi Dhlamini (marketing and research director) • Farah Favor (finance director) • Hezekiel Sepeng (non-executive director) note 1 • Mini Driver (human resources director) • Alind Parvej (non-executive director) note 2 • Ally Lane (non-executive director) note 3 Note 1: Hezekiel Sepeng is the major shareholder of Safari Hunters (Pty) Ltd, Good Hunting (Pty) Ltd's largest customer Note 2: Alind Parvej is the former financial director (and deputy chairperson) of Good Hunting (Pty) Ltd who retired at the end of the previous financial year. Note 3: Ally Lane is a partner in the legal practice which advises Good Hunting (Pty) Ltd. Remuneration committee No need for a committee here. Executive remuneration is determined by Matt Damond and Mini Driver who decide on a percentage increase for the year and apply it to all executive directors. Audit committee The audit committee consists of: • Matt Damond, the Chairperson, feels it is important that he knows where there might be issues that require his immediate attention • Farah Favor - has the necessary financial background to perform internal audits and guides the audit committee in their functions • Ally Lane-to assist if there are any legal matters that might crop up. PART A - CORPORATE GOVERNANCE MATTERS With reference to the Board of directors' section: 1. Comment on: b. a. the composition of GH (Pty) Ltd's Board of Directors; and whether GH (Pty) Ltd can appoint the Board committees according to the membership requirements, as recommended by the King IV Report on Corporate Governance for South Africa. (9) (24 Marks) With reference to the Remuneration section: 2. Comment on Matt Damond's contention that no remuneration committee is needed. (6) (4%) With reference to the Audit committee section: 3. Comment on the composition of the audit committee of GH (Pty) Ltd in terms of the King IV Report on Corporate Governance for South Africa. (4%) You are a senior auditor at Goodwill Inc, the registered auditors responsible for GH (Pty) Ltd, a large sport equipment manufacturer with a public interest score of 600. The board of GH (Pty) Ltd have approached you to assist with various internal controls and governance matters that have arisen throughout the year. GH (Pty) Ltd has a 31 July financial year end. PART A - CORPORATE GOVERNANCE MATTERS GH (Pty) Ltd's largest shareholder, Affleck Ltd is a listed company and requested GH (Pty) Ltd to comply with the recommendations of the King IV Report on Corporate Governance for South Africa (King IV Report). Matt Damond, the chief executive officer (CEO) of GH (Pty) Ltd approached your firm to assist the board of GH (Pty) Ltd in honouring the request. Matt provided you with the following information: Board of Directors The board consists of the following members: . Matt Damond (CEO and chairman of the board) • Robin Wills (manufacturing director) • Bonginkosi Dhlamini (marketing and research director) • Farah Favor (finance director) • Hezekiel Sepeng (non-executive director) note 1 • Mini Driver (human resources director) • Alind Parvej (non-executive director) note 2 • Ally Lane (non-executive director) note 3 Note 1: Hezekiel Sepeng is the major shareholder of Safari Hunters (Pty) Ltd, Good Hunting (Pty) Ltd's largest customer Note 2: Alind Parvej is the former financial director (and deputy chairperson) of Good Hunting (Pty) Ltd who retired at the end of the previous financial year. Note 3: Ally Lane is a partner in the legal practice which advises Good Hunting (Pty) Ltd. Remuneration committee No need for a committee here. Executive remuneration is determined by Matt Damond and Mini Driver who decide on a percentage increase for the year and apply it to all executive directors. Audit committee The audit committee consists of: • Matt Damond, the Chairperson, feels it is important that he knows where there might be issues that require his immediate attention • Farah Favor - has the necessary financial background to perform internal audits and guides the audit committee in their functions • Ally Lane-to assist if there are any legal matters that might crop up. PART A - CORPORATE GOVERNANCE MATTERS With reference to the Board of directors' section: 1. Comment on: b. a. the composition of GH (Pty) Ltd's Board of Directors; and whether GH (Pty) Ltd can appoint the Board committees according to the membership requirements, as recommended by the King IV Report on Corporate Governance for South Africa. (9) (24 Marks) With reference to the Remuneration section: 2. Comment on Matt Damond's contention that no remuneration committee is needed. (6) (4%) With reference to the Audit committee section: 3. Comment on the composition of the audit committee of GH (Pty) Ltd in terms of the King IV Report on Corporate Governance for South Africa. (4%)
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