INSTITUTE OF CHARTERED

SECRETARIES AND ADMINISTRATORS IN

ZIMBABWE

SUGGESTED SOLUTION : JUNE 2020

APPLIED GOVERNANCE, RISK AND

COMPLIANCE

Applied Governance, Risk and Compliance Marking Guide June 2020 Page 1 of 6
 Introduction- General Guide
Marks are awarded for synthesis, evaluation and offering
practical, advisory and relevant solutions to the Board and other
stakeholders on best practices in corporate governance, risk
management and compliance. Markers should not award marks
for regurgitating principles learnt in study guides and
frameworks. However, where concepts should be reiterated and
interpreted, this may not be termed regurgitating.

QUESTION 1
a). The question tests candidates’ ability to apply corporate governance principles in
a multi-national corporation (Africa Tiles Limited). The candidates should highlight
the illustrious Board and significant foreign and institutional shareholding that should
be able to display corporate governance of highest order. Candidates must display
knowledge of assessing international fraud, how to apply corporate governance
principles to break the backbone of corruption, and the fiduciary duties of Directors.

b). Candidates answering this question should display knowledge of modern

concept of shareholder activism. Africa Tiles Limited is a multi-national
corporation with local, foreign and institutional shareholding with a blend of
different economies and cultures. The candidates should be able to evaluate
and analyse how shareholder activism can benefit AT and other local
companies. Candidates should also show how shareholder activism can
enhance corporate governance. Candidates must propose how positive
engagement and communication with shareholders can be achieved. A logical
argument for or against shareholder activism well stated would earn the
candidate marks.

QUESTION 2
a). Candidates should demonstrate the understanding of non-executive directors’
role in monitoring and controlling the actions of the executive directors of a public
corporation. The candidates should show that the AT Board is responsible for
ensuring the corporate governance concept across the corporation. Candidates
should also analyse how the corporation’s matters that could be decided by the
full Board, in relation to Africa Tiles Limited’s strategic objectives, its size and
external environment of the business and the extent to which the board is
effective. The principle is that, although the Board may delegate certain matters
to board committees and management, it has collective responsibility to decide
on strategic, capital funding, risk management, material matters.

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 b). In part (b), the candidates’ company secretarial practical
knowledge is tested. Candidates must use their local knowledge of
compliance framework to assess the extent to which they positively
or negatively impact on implementation of AT’s business
strategies. The necessity of regular evaluation of the performance
of Boards and employees. Monitoring of Compliance with good
corporate governance code, board charters and codes of ethics.
Candidates should display the mechanisms necessary to ensure
strict compliance by all corporations.

QUESTION 3

The question tests candidates’ ability to apply the agency and stakeholder
theories in assessing whether directors and management of Africa Tiles Limited
are appropriately fulfilling the mandate delegated to them by shareholders. In
answering the question, candidates should highlight the dilemma faced by
principal and agent how they treat goals, risk tolerance, critical evaluation, and
judgement. The question to whom the board of directors is responsible in the
fulfillment of its functions could be considered very important from the corporate
governance perspective. The candidates should express the view that directors
should have in mind the interests of all stakeholders and then shareholders in the
enterprise. Those in charge of governance monitor performance of management
and management monitors that of other employees. The providers of capital
establish whether their invested money is generating expected returns in terms of
growth in equity and profitability and that the business will be able to meet its
obligations.

QUESTION 4
a). Candidates’ Questions should test the internal audit and audit committee
functions and their relationship. Also question the coordination between internal
and external audit. Test whether anti-fraud framework and strategy include fraud
deterrence and detection strategies. Monitoring management’s assessment of
financial report, ERM, appropriate ethics, compliance programs and hotline

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 procedures. Candidates should raise questions on staffing, qualifications,
innovation, and knowledge, use of technology, skills, experience, and
competences. Other questions should be on the internal audit plan development,
scope, findings, recommendations’ implementation, and follow ups.

b). Candidates must show ability to assess company operations,

interconnectedness, and the global operations of AT. Analyze the
benefits and opportunities created by globalization. Highlight how
technological developments have made doing business
internationally much more convenient than in the past. Candidates
should assess the current state of corporate governance within AT
and the corporation’s chances of success in the global market.

QUESTION 5
a). The candidates should discuss the roles of the audit committee and internal
audit in the corporation for effective oversight of matters pertaining to
whistleblower complaints. They should display that the quality of whistle-blowing
outcomes is determined by its independence, freedom, expertise, authority and
diligence. Candidates should show that whistleblowing procedure is an essential
safety valve, important element in a healthy corporate culture, part of internal
control environment, effective assurance and part of good corporate governance.
Highlighting that a higher quality audit committee is associated with the
implementation of stronger whistle-blowing system.

b). Candidates must display their ability to practically establish and

administer a whistle-blower facility in a corporation. Candidates
should state forms of whistleblowing facilities. The need to work with
the company’s core values, rules and regulations, communicate
them and create clear guidelines for employees. Candidates must
propose a structure of a whistleblowing facility tailor-made to AT’s
MNC circumstances.

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 QUESTION 6
a). In this question candidates must evaluate the really pay off and importance of
governance, risk and compliance in the strategic operation of institutions.
Evaluate how GRC issues are increasingly pervading the all operational space,
transcending organisational silos and service management. Display how GRC
programs align institutional activities with goals, identification of risks, leadership
framework development, and complying with rules, regulations and policies.
Candidates are supposed to argue for or against value of GRC to organisations.
The question is whether GRC is an unnecessary burden or a value adding move.
In the analysis, candidates must also consider the size and circumstances facing
the organisation, in determining the level of application it may take or may not
take.

b). Candidates should evaluate the value of risk management what it is

ultimately bringing to AT. By reducing the leakage, improving
performance and creating more ideas this significantly improves revenue
and the bottom line figure. Using their knowledge of risk, control and
compliance frameworks, candidates should be able to competently apply
the concepts to identify, assess and evaluate risks faced by Africa Tiles
Limited. Practical risks faced by AT should be highlighted and not
generic ones. The method(s) of evaluation and criteria applied must be
clearly explained. ERM supports better structure, reporting and analysis
of risks.

QUESTION 7
a) In part a), candidates must display company secretarial knowledge
in advising the Board on the appropriate measures for dealing with
the founding managing director Xia. Candidates should highlight [ 15
that a director should be independent from the company and its
marks]
inner circle. Marks are awarded for appropriate application and
relevancy of points to practical situations facing the organization.

b). In part b), again candidates must display practical knowledge of a company
secretary by advising the Board on the pertinent aspects of the amendments of
the Securities and Exchange (Zimbabwe Stock Exchange Listings Requirements)
Rules, 2019. Customise this to AT how the corporation is affected in the shares
that are trading on the market.
[ 5
marks]
“End Of Marking Guide”

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