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MBOMBELA LTD Refer to the extract below - NSC Accounting - Question 4 - 2023 - Paper 1
Question 4
MBOMBELA LTD Refer to the extract below. Shareholders of the company were unhappy with reports about the chief financial officer (CFO) and approached the board of ... show full transcript
Worked Solution & Example Answer:MBOMBELA LTD Refer to the extract below - NSC Accounting - Question 4 - 2023 - Paper 1
Step 1
Question 1: Why was the poor control by the Board or Remunerations committee over Donald's appointment?
Answer
Shareholders might question the adequacy of the procedures followed during the appointment of Donald as CFO. They could inquire whether the board verified Donald's qualifications and whether they checked previous employers regarding his experience. This raises concerns about accountability in the hiring process.
Step 2
Question 2: Why did the Board not match the competitor's offer without verifying it properly?
Answer
The board should explain why they did not investigate the competitor's offer concerning Donald's salary properly. Shareholders would seek clarity on whether due diligence was conducted to confirm the legitimacy of the competitive offer and the implications on company profitability.
Step 3
Question 3: Is there any evidence of influence on productivity and profitability in the company?
Answer
Shareholders may want to know if there are any indicators that Donald’s appointment has adversely affected productivity and profitability. They could question whether there have been any internal or external investigations into potential misconduct or conflicts of interest during his tenure.