1. “Small business enterprises do not need good governance.” Do you agree? Explain.

No, small business enterprises need good governance.

Practice of good governance although in small business is important and essential inorder to prosper
and grow. Imagine a business that do not practice good governance then the business lacks policies and
procedures to ensure accuracy, consistency and responsiveness to key stakeholders including
customers, shareholders and regulators. This can lead to lower the overall value of the company and
make it more difficult for the company to grow.

2. Does good governance require absolute rules that must be adopted by all organizations?

No, there are no absolute rules that must be adopted by all organizations. As organizations are unique,
“there is no simple universal formula for good governance”. As long as organizations are encouraged to
give appropriate attention to the principles and adopt approaches which are tailored to the specific
needs of an organization at a given point in time.

3. What is the essence of any system of corporate governance?

The essence of any system of corporate governance is to enable management and the board to deal
more effectively with the challenges of running a company. Additionally, to exercise freedom of
management within a framework of effective accountability.

4. Where does the board of directors derive its authority?

Shareholders delegate responsibilities through the elected board of directors. The board derives its
powers from the company particularly as stated in the Articles of Association of the company. They are
bodies of elected or appointed members who jointly oversee the activity of a company.

5. To whom is the board of directors accountable?

The board of directors oversee management and in that role, are expected to protect the shareholders’
rights. So, they are accountable to shareholders for the business operations and corporate governance
in accordance with the management objectives of maximization of shareholders benefit within the
framework of sound business ethics

6. On what aspects do shareholders demand accountability from the board of directors?

The shareholders may demand accountability as to how well the resources that have been entrusted to
management and the board have been used. The shareholders want accountability on such things as;
quality of internal control, composition of the board of directors and the nature of its activities,
including information on how well management incentive systems are aligned with the shareholders’
best interest.

7. What is management’s responsibility as far as financial reporting is concerned?

Management has always had a primary responsibility for the accuracy and completeness of an
organization’s financial statements. For instance, management has a responsibility to provide financial
reports, and in some cases, reports on internal control effectiveness. From a financial reporting
perspective, it is management’s responsibility to choose which accounting principles best portray the
economic substance of a company transactions, implement a system of internal control that assures
completeness and accuracy in financial reporting and ensure that the financial statements contain
accurate and complete disclosure.

8. Describe the broad role of the shareholders in a corporation.

Shareholders make a financial investment in the corporation, which entitles those with voting shares to
elect the directors. Shareholders do not normally have any rights to be involved directly in company
management. Their connection to company management is typically via the Board of Directors as
described above. Also, approval of major initiatives such as buying or selling stocks annual reports on
management compensation from the board.

9. Describe the broad role of the Board of Directors.

The board of directors are the major representative of stockholders to ensure that the organization is
run according to the organization's charter and that there is a proper accountability.

10. What are the specific activities of the board of directors?

Specific activities include overall representation, performance, and compliance. Overall operations
include establishing the organization's vision, mission, values and ethical standards, delegating an
appropriate level of authority to management, demonstrating leadership, overseeing aspects of the
employment of the management team including management remuneration, performance and
succession planning. Performance includes ensuring the organization's long-term viability and enhancing
the financial position, formulating and overseeing implementation of corporate strategy, approving and
monitoring the progress of major capital expenditure, capital management and acquisitions and
divestitures. Compliance includes understanding and protecting the organization's financial position,
requiring and monitoring legal and regulatory compliance including compliance with accounting
standards, unfair trading legislations, occupational health and safety and environmental standards,
approving annual financial reports, annual reports and other public documents in and ensuring an
effective system of internal control exists and is operating as expected