AUE2602 Assignment 2 of 2021
Tutorial letter 001-2021
Question 1.1
Governing body
Mr. Hulk, the chairman of the board is not an independent non- executive director since
he owns more that 5%equity interest in the company and also a friend to the company
CEO.
Mr. Thor, the CEO, is not the chairman of the board which is in accordance with the King
iv report
The board should comprise a balance of power with a majority of non-executive
directors who should be independent. The bboard ha only three non-executive directors
as compared to five executive directors and moreover amongst the three only one of
them is independent and the company is not complying with the King.
At least the chief executive director and finance director should be appointed to the
board. Avengers does comply with king since there is Mr. Black Panther the CFO.
Appointments to the board should be a matter for the board as a whole, assisted by the
nominations committee and not by an individual member of the board, Avengers does
not comply with the king since the CEO was appointed by Mr. Hulk alone.
There should be a minimum of three members in the board committee, avengers do
comply since there are nine members.
Term of office is not stipulated by the King but re-election and rotation of members can
be only determined by performance of members in the board when carrying out duties.
There should be also balance of power, gender equality within the governing board,
Avengers does not comply since there is only one lady in the board.
b) Governing body (chairperson)
chairman of the board should be an independent non-executive director. Avengers does not
comply with the King since Mr. Hulk is not independent because he holds equity interests in the
company.
He holds more than 5% equity interests in the company therefore he is not an independent
director.
He also belongs to the Superhero club which they formed with directors with influential
positions in the company directors which will give rise to familiarity threat thereby affecting his
independence.
c) Audit Committee
All members should be independent non-executive directors. Avengers does not comply since
Mr. Hulk is not independent because of equity interests he has in the company.
The chairman of the board should not be the chairperson of the audit committee. Avengers does
not comply since MR Hulk is the chairperson of both committees.
CEO should not be the member of the audit committee and also the company does not comply
since Mr. Thor is the member of the audit committee.
, There should be a minimum of three members. Avengers does not comply with the King since
there are only two members in the Audit committee.
d)nominations committee -all members should be independent non-executive directors .Avengers
does not comply since Captain America is the CEO of avengers Significant suppliers.
e) the company secretary should not be a member of the governing body since he is not a director
of the company.
1.2 duties of the Audit committee
Oversee the integrated reporting
Make sure that combined assurance model is applied
Oversee the internal audit process es and systems
Report to the board and shareholders on how it has discharged its duties
Recommend the appointment of the external auditor and oversee the external audit
process
Should be an integral component of the risk management process
1.3. Mr. Black Panther acted diligently with due care in the best interest of the company since could
result in losses to the company as a result of bad reputation and background of the company. The
section states that the director should not knowingly enter into contracts that will harm, defraud the
company itself, any stakeholders of the company and its officers.
1.4 Mr. spiderman he is a non-executive director who is independent, does not have interest in the
company which may affect is objectivity when it comes to decision making in the remuneration
committee.
1.5 control procedures to ensure accuracy and completeness of internal orders are generated for all the
orders received from customers.
Confirm with the customers of the details of the order to check on any missing information.
Orders should be sequentially numbered
Ticking off of generated internal orders against the customer orders for every order generated
to avoid duplication and omission of orders.
Keeping of customer orders in written form to ensure completeness of the details of the order.
Compare and reconciliation of the customers orders received and the internal sales orders
generated to ensure accuracy of the details of the orders.
Separation of orders on which internal orders have already generated from those which have
not generated to avoid duplication of internal sales orders.
Filing of all records concerning customer orders.
Matching of the customers’ orders and the internal sales orders to ensure accuracy.
Limited Restrictions to access to internal sales and customer orders to authourised personnel
Segregation of tasks between the receiving of orders and generation of internal sales order to
ensure accuracy.
1.6 weakness 1-No segregation of duties
Tutorial letter 001-2021
Question 1.1
Governing body
Mr. Hulk, the chairman of the board is not an independent non- executive director since
he owns more that 5%equity interest in the company and also a friend to the company
CEO.
Mr. Thor, the CEO, is not the chairman of the board which is in accordance with the King
iv report
The board should comprise a balance of power with a majority of non-executive
directors who should be independent. The bboard ha only three non-executive directors
as compared to five executive directors and moreover amongst the three only one of
them is independent and the company is not complying with the King.
At least the chief executive director and finance director should be appointed to the
board. Avengers does comply with king since there is Mr. Black Panther the CFO.
Appointments to the board should be a matter for the board as a whole, assisted by the
nominations committee and not by an individual member of the board, Avengers does
not comply with the king since the CEO was appointed by Mr. Hulk alone.
There should be a minimum of three members in the board committee, avengers do
comply since there are nine members.
Term of office is not stipulated by the King but re-election and rotation of members can
be only determined by performance of members in the board when carrying out duties.
There should be also balance of power, gender equality within the governing board,
Avengers does not comply since there is only one lady in the board.
b) Governing body (chairperson)
chairman of the board should be an independent non-executive director. Avengers does not
comply with the King since Mr. Hulk is not independent because he holds equity interests in the
company.
He holds more than 5% equity interests in the company therefore he is not an independent
director.
He also belongs to the Superhero club which they formed with directors with influential
positions in the company directors which will give rise to familiarity threat thereby affecting his
independence.
c) Audit Committee
All members should be independent non-executive directors. Avengers does not comply since
Mr. Hulk is not independent because of equity interests he has in the company.
The chairman of the board should not be the chairperson of the audit committee. Avengers does
not comply since MR Hulk is the chairperson of both committees.
CEO should not be the member of the audit committee and also the company does not comply
since Mr. Thor is the member of the audit committee.
, There should be a minimum of three members. Avengers does not comply with the King since
there are only two members in the Audit committee.
d)nominations committee -all members should be independent non-executive directors .Avengers
does not comply since Captain America is the CEO of avengers Significant suppliers.
e) the company secretary should not be a member of the governing body since he is not a director
of the company.
1.2 duties of the Audit committee
Oversee the integrated reporting
Make sure that combined assurance model is applied
Oversee the internal audit process es and systems
Report to the board and shareholders on how it has discharged its duties
Recommend the appointment of the external auditor and oversee the external audit
process
Should be an integral component of the risk management process
1.3. Mr. Black Panther acted diligently with due care in the best interest of the company since could
result in losses to the company as a result of bad reputation and background of the company. The
section states that the director should not knowingly enter into contracts that will harm, defraud the
company itself, any stakeholders of the company and its officers.
1.4 Mr. spiderman he is a non-executive director who is independent, does not have interest in the
company which may affect is objectivity when it comes to decision making in the remuneration
committee.
1.5 control procedures to ensure accuracy and completeness of internal orders are generated for all the
orders received from customers.
Confirm with the customers of the details of the order to check on any missing information.
Orders should be sequentially numbered
Ticking off of generated internal orders against the customer orders for every order generated
to avoid duplication and omission of orders.
Keeping of customer orders in written form to ensure completeness of the details of the order.
Compare and reconciliation of the customers orders received and the internal sales orders
generated to ensure accuracy of the details of the orders.
Separation of orders on which internal orders have already generated from those which have
not generated to avoid duplication of internal sales orders.
Filing of all records concerning customer orders.
Matching of the customers’ orders and the internal sales orders to ensure accuracy.
Limited Restrictions to access to internal sales and customer orders to authourised personnel
Segregation of tasks between the receiving of orders and generation of internal sales order to
ensure accuracy.
1.6 weakness 1-No segregation of duties
