Corporate Governance and companies Fraud - Myassignmenthelp.Com

Question: Discuss about theCorporate Governance and companies Fraud. Answer: Introduction: The present study is based on the evaluation of the corporate governance practices of Resolute Mining Limited and Whitehaven Coal Limited. Resolute Mining Limited is an experienced ASX 200 gold mining company, which is focused on sustainable development of its long life operations (Grembergen and Haes 2017). The company makes the use of operational expertise gained from more than 25 years of constant gold production of 7 million ounces from more than nine operations conducted separately with the objective of enduring the value of its shareholders. Whitehaven Coal Limited on the other hand, a coal producing company, which approximately produces 20 million tonnes of thermal and metallurgical, coal per annum for exporting the same to the premium global markets (Dallas 2015). Whitehaven Coal Limited is regarded as one of the leading producer of some of the worlds highest quality of coal having operations in New South Wales with the vision of being Australias leading coal company. Critical evaluation of depth of each company in adopting ASX CGC principles and recommendations: The adoption of Corporate Governance Practice for Resolute Mining Limited outlines the functions which is retained by the board and the responsibilities are handed over to the management by demonstrating that the responsibilities of the board is distinct from the management. Critically the adoption of corporate governance practice is aimed at the development of corporate objectives and strategy with the help of management and approving the proposal of major new investment in capital and operating expenditure (Chen and Zhang 2014). The corporate governance principles are aimed at monitoring the actual performance against the defined set of performance anticipations and going over the operation information to understand all the times the current state of the company. Resolute Mining Limited acknowledges the necessity for the better standard of corporate governance and ethical conduct by all the directors and workforces of the company (Tricker and Tricker 2015). Critically evaluating th e depth of ethical standards and code of conduct for Resolute Mining Limited it is found that the company has developed a code of conduct which is entirely endorsed by the board and assures that CGC principles demonstrate the highest standards of professionalism and behaviour to uphold the confidence of the company. Critically, Whitehaven Coal Limited on the other hand, it is observed that the company is dedicated towards attaining the highest standards of corporate governance by safely coordinating the activities in compliance with the applicable set of laws and regulations (Board 2016). The corporate governance principles of Whitehaven Coal Limited on the other hand lays down a foundation for management and board in delegating responsibilities for implementation of performance matrix in measuring the against financial strategies. The company has the code of conduct with the objective of providing directors and employees with proper guidelines on acceptable behaviour. The code of corporate governance principles promotes ethical and responsible decision making by setting out the standards for transparent system of auditing and sustainable reporting of the company financial performance. Overall, the critical evaluation for both the companies provides the notion that the business affairs are conducted lawfully, ethically and under the strict observance of highest standards of integrity. Current practices of corporate governance: The current practices of corporate governance for Resolute Mining Limited reflect that the company CEO and CFO provides the board with necessary certainty in the areas of statutory financial reports in an effort to safeguard the integrity of corporate planning (Shrives 2013). The certainty comprises of meeting the declarations set out under section 295A of the corporation Act 2001 that the monetary records have been maintained appropriately and complies with the appropriate accounting standards. The company has balanced policy of disclosure to its stakeholders with the opportunity to access the externally available information issued by the company. The corporate governance practices highlight that the company complies with the objectives contained in the ASX listings for continuous disclosure requirements. Whitehaven Coal Limited on the other hand, complies with the guidelines set under the ASX corporate governance. The company evaluates the practices against the ASX corporate governance council and principles of corporate governance with the objective of promoting ethical standards (Miko and Kamardin 2015). The CGC of Whitehaven Coal Limited lays down the strong foundations for management and oversight towards strategic leadership actions. The company has set down anti-corruption policy that creates a standard of ethical behaviour and integrity employed in the Whitehaven Group. The CGC practices of respects the rights of the shareholders by identifying and regularly announcing quarterly reports, half-yearly reports and annual reports to keep their shareholders informed. Furthermore, the risk management approach lays down a summary the companys approach in addressing, managing and meeting the objectives of risk management standards. Evaluation of companys performance on adoption of ASX CGC principles: On the adoption of ASX CGC principles, it is found that the Whitehaven Coal Limited delivered better business performance in the areas of both financial and non-financial areas to attain its long-term goals (Larcker and Tayan 2015). The adoption of ASX CGC principles enabled the company in achieving net profit after tax of $20.5 million with a mark of improvement on the net loss of $342.7 million in the previous year. The company produced 15 million tonnes of saleable coal, which stood as 34% increase from the previous year of 25015. With the adoption of CGC principles and recommendations, the Whitehaven has delivered improved business performance with first full year profit since 2012. This helped the business to remain committed to ethical business practices with active stakeholder engagement. Transparency, accountability and integrity elements of approach is found in the corporate governance practices of the company. For Resolute Mining Limited the adoption of ASX CGC principles have resulted in successful completion of divestment of remaining interests in the Tanzania (Towers and Street 2017). This was followed by decommissioning and rehabilitation of Golden Prime Mine. The senior executive team widened with an increase in the direct reports of CEO from three to six. It further strengthened the gold sales associated dividend policy and featured an innovative option for shareholders to receive dividends in gold. In compliance with the best practices, the remuneration and nomination committee is entirely separate and distinct. To conclude with, the adoption of ASX CGC practices have benefited both the companies in achieving both their financial and non-financial parameters of business performance (Soltani and Maupetit 2015). Link between diversity of boards and companies performance: On evaluating the link between diversity of boards and gender management it is found that Whitehaven identifies that the people are the more important asset. The company is committed towards maintaining and promoting diversity at workplace. Diversity generates the ability of the group to attract, retain and develop the best talents by creating an engaged workforce so that the business is able to deliver highest quality service and continue to expand the business (Sultanaand Mitchell 2015). The board of Whitehaven has undertaken the guiding principle of diversity, which illustrates the companys aspirations for diversity and lays down lowest amount of anticipations to be met by the group on labour force diversity. The recruitment and selection procedure adopted by the company makes sure that no form of gender discriminatory occurs at the time of selecting staff and managerial personnel. The remuneration committee supervises the policy of diversity at board level. The company believes that an inclusive workforce brings together men and women from diversified backgrounds that reflects diverse backgrounds. This helps in reflecting diversity of gender, culture, experience and skills (Swan 2014). This helps in strengthening the performance of the company through exchange of ideas, opinions and skills of individuals selected from the widest pool of talent available. Whitehaven diversity policy is reported in conformity with the Workplace Gender Equality Act 2012. The financial year of 2016 has reflected a good progress to increase women participation in workforce. The company has welcomed 32 new females with 15% increase in the role of operations management. The board level executive also contains two women as the non-executive directors of the company. Resolute mining on the other hand, acts ethically and responsibly with best governance policy in establishing diversity policy. This includes the review of diversity within the company by taking into the considerations the composition of board, executive composition and employee composition by gender (Kanget al. 2013). Resolute diversity policy is applicable to all the employees and comprises of recruitment and selection process. The diversity policy includes the terms and conditions of employment together with pay, promotion, work assignment, training and other aspects of employment. The diversity policy lays down the foundation of growth of the company by promoting a high performance culture that draws diverse and significant experience, skills, expertise, perspective and unique personal attributes of the board members and employees (Jia et al. 2016). The proportion of women and men in the resolute workforce level is based on three levels in the organization and benchmark against the relevant industry wherever ever possible and remuneration by gender. However, despite promoting gender equality at work, Resolute Mining Limited lacks Workplace Gender Equality Act 2012. Resolute major recruitment policy continues to remain focussed on offering employment to best-qualified applicant irrespective of their age, gender or ethnicity. The diversity policy of the company consists of goal to contribute positively in the success of the company. Performance benchmark for remuneration: On benchmarking the performance of both the companies, it is observed that the remuneration policies governs the remuneration and nomination committee. The committee reviews annually and reassesses the policy each year for appropriate discharge of board responsibilities for assessing the performance of the business (Safari, Cooper and Dellaportas 2016). For both the companies the remuneration committee is responsible for determining and reviewing the policies of compensation in compliance with the procedure outlined by the remuneration and nomination committee. Remuneration and board composition: Whitehaven has a remuneration committee whose role is taking into the considerations the companys remuneration policy and strategy. The remuneration report is in agreement with the section 308 (3C) of the Corporation Act 2001 (Tao and Hutchinson 2013). The company annually reviews the total fixed remuneration and benchmarking it against the closely examined companies influenced by the performance and experience. 30% of the short term incentives is delivered into the rights to receive shares in the company, which is subject to meeting services based on the conditions vesting for 12 to 24 months. The long-term incentives provide the committee of remuneration with the flexibility of determining natural terms and conditions of the grant every year. The remuneration of Whitehaven is benchmarked against the correct market comparator group undertake by the board. The remuneration and incentive patter of Whitehaven is stated below; Particulars 2012 2013 2014 2015 2016 Revenue 1164.4 763.3 755.4 622.2 618.1 EBITDA 224.1 130.3 90.4 171 149.2 Attributable Profit 20.5 -342.7 -38.4 -88.7 62.5 Basic Earnings per Share 2.1 -33.3 -3.9 -9 10.9 Diluted EPS 2.1 -33.3 -3.9 -9 10.9 Incentive pattern of Whitehaven TFR STI LTI Managing Director Chief Executive Officer 40% 20% 40% Executive General Manager-Operations 42% 21% 37% Other Executive KMP 43% 22% 35% The board reviews the composition with the objective of ensuring the benefits from an appropriate balance of skill and expertise. The composition of board is stated below: The remuneration report of Resolute Mining Limited lays down the remuneration of executive and directs in accordance with the Corporation act 2001. The remuneration policy of board identifies the performance of the executives and quality of the directors (Li, Munir and Kilgore 2015). In order to achive its financial and operating activities the organization should attract, motivate and retain the highly skilled directors. In compliance with the best practice the remuneration of non-executive directors and senior executive is separate and distinct. The board comprises of 4 non-executive directors for RSG including the chairman and one executive director being the CEO (Thirarungrueang 2013). A total of 5 directors is appointed by the board and in terms of the office, the company constitution specifies that at least one third of the directors with CEO should retire from office each year and are also eligible for re-election. Conclusion: To conclude with the report has successfully highlighted the CGC policies for both the companies and it can be said that the companies follow the principles in accordance with the corporate governance standard listed in the ASX. The gender diversity program for the companies promotes gender equality with fair remuneration and opportunities for growth. Overall, there is an association between the diversity and performance of the organization. Reference: Board, S.C.G., 2016. The Swedish Corporate Governance Code. Retrieved 2017-02-09. Chen, J.J. and Zhang, H., 2014. The impact of the corporate governance code on earnings managementEvidence from Chinese listed companies.European Financial Management,20(3), pp.596-632. Dallas, G., 2015. Japan's Corporate Governance Code: A distinctive character.Governance Directions,67(9), p.567. Exchange, A.S., 2014. Corporate Governance Council, 2014.Corporate Governance Principles and Recommendations. 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