Compliance
& Risk
Management
Important note:
These study notes have been compiled
personally based on the module outline
for the 2023 academic year and are
merely a summary of the work. They
may include additional content or omit
certain information relevant to other
academic years. Additionally, please be
aware that the document may contain
some errors and spelling mistakes. It is
important to note that these notes are
intended to serve as a supplementary
aid for certain topics and should not
replace the use of textbooks or other
primary study materials. Students are
strongly encouraged to consult their
prescribed academic sources for
accurate and comprehensive
information regarding the module.
, Learning Unit 1
Corporate governance:
• A system that controls and directs a company.
• Concerned with the structures and processes directed associated with
management, decision-making and control in the organisation.
• Corporate governance was embodied and regulated by company legislation
and common law.
• Includes the:
o Kings report (sets out the principles, practices and outcomes which
serve as the benchmark).
o Companies Act.
o Requirements of the Johannesburg Stock Exchange (JSE).
Key elements of corporate governance:
• Supervising and monitoring management performance.
• Ensuring accountability of management.
King IV defines corporate governance as:
• The exercise of ethical and effective leadership by the board, towards the
achievement of the following governance outcomes:
o Ethical culture.
o Good performance.
o Effective control.
o Legitimacy.
Stakeholders:
• The owners, employees, creditors and customers which affect an
organisation’s activities.
,View on stakeholders determines approach to governance:
• The corporation’s responsibility in the society involves the corporations'
shareholders, stakeholders, like employees and suppliers.
• Larger corporations’ influences the society as a whole and the general public
can be regarded as a stakeholder.
• The state is also a stakeholder in its role as tax collector and as regulator.
• A stakeholder is a party that has an interest in a company and can either
affect or be affected by the business.
• The relationship between the company and its stakeholders and the extent of
a company’s responsibilities to stakeholders will determine the manner in
which corporate governance is approached.
Two different viewpoints:
• The company exists in order to maximise shareholder wealth.
• The company exists to serve the interest of all parties with which it engages.
View on stakeholders determines approach to governance:
• King IV uses a stakeholder inclusive approach.
• This approach requires the that the board takes account of legitimate and
reasonable needs, interests and expectations of all material stakeholders.
• The best interest of the company must be held.
Responsibility for governance in an organisation:
• Corporate governance focuses on the level of top management.
• Concentrates on the activities of those carrying ultimate responsibility for the
success or failure of the organisation.
Ethical leadership:
• Anticipation of the negative consequences of the organisation’s activities and
outputs on the economy, society and environment.
• Characterised by:
o Integrity.
o Competence.
o Responsibility.
o Accountability.
o Fairness.
o Transparency.
, Effective leadership:
• Being result driven.
• Achieving strategic objectives and positive outcomes.
• Includes internal focus on effective and efficient execution.
Responsibility for governance in an organisation:
• Steer strategic direction with regards to:
o The company’s overall strategy.
o The manner in which specific governance areas are approached.
• Approve policy and planning that give effect to the strategy.
• Oversee and monitor implementation and execution of the strategy by
management.
• Ensure accountability for performance.
Government structures:
• Unitary board.
• Two-tier system.
• South African unitary board system.
Unitary board:
• Concept that a company is a legal entity separate from its owners.
• Single unitary board appointed by its members.
• Shareholders appoint independent auditors to report on fairness of the
presentation of financial statements.
• Appointment of full-time executive director and non-executive director.
& Risk
Management
Important note:
These study notes have been compiled
personally based on the module outline
for the 2023 academic year and are
merely a summary of the work. They
may include additional content or omit
certain information relevant to other
academic years. Additionally, please be
aware that the document may contain
some errors and spelling mistakes. It is
important to note that these notes are
intended to serve as a supplementary
aid for certain topics and should not
replace the use of textbooks or other
primary study materials. Students are
strongly encouraged to consult their
prescribed academic sources for
accurate and comprehensive
information regarding the module.
, Learning Unit 1
Corporate governance:
• A system that controls and directs a company.
• Concerned with the structures and processes directed associated with
management, decision-making and control in the organisation.
• Corporate governance was embodied and regulated by company legislation
and common law.
• Includes the:
o Kings report (sets out the principles, practices and outcomes which
serve as the benchmark).
o Companies Act.
o Requirements of the Johannesburg Stock Exchange (JSE).
Key elements of corporate governance:
• Supervising and monitoring management performance.
• Ensuring accountability of management.
King IV defines corporate governance as:
• The exercise of ethical and effective leadership by the board, towards the
achievement of the following governance outcomes:
o Ethical culture.
o Good performance.
o Effective control.
o Legitimacy.
Stakeholders:
• The owners, employees, creditors and customers which affect an
organisation’s activities.
,View on stakeholders determines approach to governance:
• The corporation’s responsibility in the society involves the corporations'
shareholders, stakeholders, like employees and suppliers.
• Larger corporations’ influences the society as a whole and the general public
can be regarded as a stakeholder.
• The state is also a stakeholder in its role as tax collector and as regulator.
• A stakeholder is a party that has an interest in a company and can either
affect or be affected by the business.
• The relationship between the company and its stakeholders and the extent of
a company’s responsibilities to stakeholders will determine the manner in
which corporate governance is approached.
Two different viewpoints:
• The company exists in order to maximise shareholder wealth.
• The company exists to serve the interest of all parties with which it engages.
View on stakeholders determines approach to governance:
• King IV uses a stakeholder inclusive approach.
• This approach requires the that the board takes account of legitimate and
reasonable needs, interests and expectations of all material stakeholders.
• The best interest of the company must be held.
Responsibility for governance in an organisation:
• Corporate governance focuses on the level of top management.
• Concentrates on the activities of those carrying ultimate responsibility for the
success or failure of the organisation.
Ethical leadership:
• Anticipation of the negative consequences of the organisation’s activities and
outputs on the economy, society and environment.
• Characterised by:
o Integrity.
o Competence.
o Responsibility.
o Accountability.
o Fairness.
o Transparency.
, Effective leadership:
• Being result driven.
• Achieving strategic objectives and positive outcomes.
• Includes internal focus on effective and efficient execution.
Responsibility for governance in an organisation:
• Steer strategic direction with regards to:
o The company’s overall strategy.
o The manner in which specific governance areas are approached.
• Approve policy and planning that give effect to the strategy.
• Oversee and monitor implementation and execution of the strategy by
management.
• Ensure accountability for performance.
Government structures:
• Unitary board.
• Two-tier system.
• South African unitary board system.
Unitary board:
• Concept that a company is a legal entity separate from its owners.
• Single unitary board appointed by its members.
• Shareholders appoint independent auditors to report on fairness of the
presentation of financial statements.
• Appointment of full-time executive director and non-executive director.
