Reference no: EM133523484 , Length: word count:1500
Capstone: Accounting and Governance
Assessment - Corporate governance, sustainability and risk management practices
Case study/memorandum and presentation
Your Task
Analyse the corporate governance practices of a given company and identify the challenges in terms of sustainability. Interpret and critically analyse the different positions and views of organisation stakeholders and investors related to plans for business growth and prepare a written memorandum and deliver a presentation that addresses these issues and recommends a way forward.
Assessment Description
As the capstone to Accounting and Governance, this subject requires students to bring together their Accounting and Governance knowledge and techniques developed within prior subjects and throughout this course and apply these to the interpretation, analysis and critique of present-day business and governance practices to identify problems and to propose solutions. Building on the Master's students' in-depth understanding of relevant theories and practices already developed in Accounting and Governance and their proficiency in the tools and techniques, this assessment further develops research, analytical. critical thinking and problem-solving skills demanded by the Accounting profession in the 21st Century.
Specifically for this assessment, using a given case study, students will analyse the corporate governance practices of a company, identify and explain any stakeholder and shareholder issues or concerns, and recommend appropriate actions to address the issues and contribute to the business strategy and goals. Instructions follow.
Assessment Instructions
This is an individual assessment that requires an analysis of a [given' case study/scenario, out of class and the preparation of a memorandum and the subsequent delivery of a 5-minute summary presentation of the memorandum
Following are the general instructions for completing this assessment.
1. Read and analyse the case study, paying attention to the business context and any issues and problems along with the different positions and interests of the stakeholders.
2. Based on the problems identified in the case study, conduct research of academic journals,
professional practitioner literature and recent news releases relating to "best practice corporate governance," "sustainability," and "risk management practices."
3. Based on your analysis, prepare a written memorandum (1,000 words) to the company's Board of Directors that addresses the different views and positions of the stakeholders and investors presented in the case study along the following lines:
a. Provide advice and recommend a minimum of three (3) "good" corporate governance practices which will positively contribute to the business strategy and goals presented in the case study.
b. Provide a summary of the significance, benefits, and challenges of producing a "sustainability report" for the business operating in the specific industry presented in the case study.
Using the memorandum in (3) above, prepare a five (5) minute PowerPoint presentation of no more than ten slides for presentation to the Board and stakeholders. This will be presented in the class of Week 12. General presentation guidelines include the following:
a. Choose a format and structure such that your findings against the questions presented in the case study and in (3) above are clear.
b. Assume the audience to be the Board and other stakeholders who may not have the same level of Accounting and Governance knowledge as you.
c. Identify the sources relevant to the slide deck (e.g., case study facts, journal articles, textbooks. websites, regulatory bodies etc.). At least 3 of these must be academic journal articles, but various sources should be used. You must reference each source as per KBS referencing guidelines.
d. The presentation guidelines of previous Assessment 2 also apply.
ASSESSMENT
The following background relates to Southern Lights Holdings Pty Limited (SLH), who have engaged you as an independent consultant ahead of what they anticipate will be the successful raising of capital, the completion of two major projects, and ultimately, the listing of the company on the Australian Stock Exchange.
BACKGROUND
1. A BRIEF HISTORY
During the 1960s, Harbhajan Ashwin, an accomplished engineer, commenced business in partnership with Rory McGuiness, a master builder, and Nazar AI Sharaf, a prominent architect. Initially trading as Lakeside Residential and Commercial (LRC), the business achieved considerable success in designing and building several apartment blocks and suburban shopping precincts throughout the southern suburbs of Melbourne, Victoria.
Following continued growth, the partners employed and eventually passed the ownership and management of LRC to their family members. Subsequently, the proprietary company Southern Lights Holdings Pty Limited (SLH) was incorporated in 1995 and has continued to complete construction contracts of increasing size and scope. Shares have remained equally held by members of the Ashwin, McGuiness and AI Sharaf families and related entities.
2. CURRENT EXECUTIVES
SLH currently operates with an executive team of 4 as outlined below.
Chlef Executive Offlcer-Yasln Chau
Yasin is the grandson of Nazar AI Sharaf, one of the founders of SLH. Yasin has studied surveying at university and commenced employment in 1997 with SLH as a surveyor and later as a project manager. Yasin was appointed as Chief Operating Officer in 2011 and was ultimately appointed as CEO in 2020.
Chief Operating Officer - Daisy OYooIe
Daisy is also the grandchild of one of SLH's founders. Daisy has studied business and holds an MBA. Following a successful career as a clothing retailer, Daisy joined SLH in 2014. Daisy initially filled the role of General Manager of residential projects before her appointment as COO in 2018.
Chlef Bnanclal Officer - Melissa Parker
Melissa is the great-granddaughter of Harbahjan Ashwin, another of SLH's founders. Melissa, aged 26, completed her CPA exams in 2021 and has fulfilled the role of CFO for just 18 months. Prior to joining SLH, Melissa worked as
a taxation consultant with a small general accounting practice in Lorne and later as an Audit Senior with a Big 4 firm in Melbourne. In addition to her designation as a CPA, Melissa holds a degree in commerce and is also a qualified yoga instructor.
Chlef People - Sarah DI Marchl
While not related to the other members of 5LH's executive, Sarah has fulfilled the role of CPO since 2017 at the insistence of her father, Enzo Di Marchi, who is the principal shareholder of Kingpin Constructions (Kingpin).
Kingpin have been the preferred contractor for several SLH contracts and hold a contract giving them the opportunity to tender for work on all SLH contracts until 2025. Enzo is also actively involved in dealings with several other suppliers and service providers used by SLH. Sarah holds postgraduate qualifications in human resources.
3. BOARD OF DIRECTORS
Chair-Yasin Chau
Refer above for a brief history of Yasin*s qualifications and experience.
Company Secretary - Melissa Parker
Refer above for a brief history of Melissa's qualifications and experience.
Director- Enzo ol Marchl
As noted in Sarah's information above, Enzo has owned and operated Kingpin Constructions with over 30 years in the construction industry. In 2005, Enzo was disqualified from appointment as a company officer, a decision that was overturned in Federal Court upon appeal.
Director-Jenni Layton
Jenni is a close friend of the McGuiness/O'Toole family with 24 years of experience as a company director (8 of these as a director of SLH). Jenni‘s experience as a director outside of SLH is with her family's company AI Sharaf Holdings, the exclusive supplier of air-conditioning, kitchen, and bathroom fittings for all SLH projects.
Director-Tara Nguyen
Tara was appointed as a director of SLH in 2015 as she had previously owned and operated fitzroy Developments (Fitzroy), a company that previously tendered for similar projects to those completed by SLH. Tara's appointment
followed the acquisition of Fitzroy's assets and key personnel by SLH in 2015.
There are currently no plans in place to have fixed or maximum terms for directors as the shareholders prefer "business continuity" without any outside interference.
All the directors are happy with the ongoing appointment of Yasin as both Chair and CEO as he has a strong work ethic and "seems to work well" with a mostly female Executive & Board.
4. AUDITOR
SLH has appointed Marshall Withers, a local firm of Chartered Accountants as its auditor since 2002. The engagement has never been put out to tender as SLH are satisfied that the firm "have never caused any dramas" in auditing the financial statements.
5. CURRENT AND PROPOSED PROJECTS
SLH is currently between projects and has two major ventures planned.
The first project features the construction of a 40-storey building in Southbank, the Reflections complex (Reflections).
The project will involve the following:
• Completion of a new 40-storey building including 30 floors of residential apartments, 9 floors of hotel rooms, 2 restaurants, a shared car park and a commercial car wash facility.
• Sale of 80a of the residential apartments
• Retention of 20% of the apartments to be made available for lease
• Disposal of the building management rights
• Disposal of the rights to provide exclusive utility services including internet and electricity
The second project involves the purchase of a partially completed building in Jolimont, the Echoes complex (Echoes). This building has remained in limbo for 2 years following a range of contractual disputes and the insolvency of its owner. The Echoes complex is also subject to concerns relating to the environmental impact of the building's cladding.
Assuming ownership of this project will involve the following:
• Completion of a new 25-storey building including 15 floors of residential apartments, 8 floors of hotel rooms, a restaurant, and a fitness centre.
• SLH intends to retain ownership and operation of all commercial facilities and to dispose of all residential
apartments in the bu il ding
6. OTHER ISSUES
» There are concerns with the cladding used to date in the Echoes project, which has been associated with a major residential fire in an overseas building. Enzo Di Marchi has assured the board that Kingpin Constructions, have safely used the cladding for several years.
» None of the current executive or board have experience in building or operating a car wash. It is noted that there are significant water use limitations applicable throughout Victorian urban areas.
» Completion of these projects is expected to require capital and borrowings of more than $62 million. SLH has a debt covenant with their principal finance provider Bendigo Ban k. The covenant specifies that the current ratio must not fall below 0.7: 1 and the debt to equity ratio must not exceed 2:1. Although the company is not in danger of breaching these requirements, the SLH executive is aware that meeting the future financial needs under the same covenant terms will be difficult. This has influenced several of the accounting practices noted in ear lier information provided.
» The COO, Daisy O'Toole attends board meetings, but is not c urrently serving on the board as she is separated from her h us band Keith with divorce proceedings proving to be hostile. As noted previously, Daisy has intentionally structured her remuneration and bonus shares in a manner that makes it difficult for Keith to successfully seek a divorce settle ment against her interest in S LH.
CLIENT BRIEFING (AMESSMENT REQUIREMENTS)
Part A Memorandum
You are required to write a Memorandum to SLH's Board summarising your views on corporate governance, sustainability and risk management practices. Your Memorandum should not exceed 1 000 words (excluding references).
In your memo, you must address the following three areas:
1. Discuss good corporate governance practices and the importance of good governance
for a large private company such as SLH that wants to transition into an ASX-listed entity. These should address the suitability of the current Executive and Board, including SLH's current practices affecting each.
2. Identify any current conflicts of interest or objectivity issues and outline how good corporate governance may address these.
3. Summarise the significance, benefits, and challenges of producing a sustainability report for SLH, especially for a business within the construction industry.
Within the responses to the above questions, you should refer to:
1. The background provided on members of the Board and Executive, as well as any other relevant matters outlined.
2. Research journals and recent news releases relating to best practice corporate governance & sustainability practice.
Part B (30%) Presentation
You will complete an in-class individual presentationsvmmozisinz/ yaczrMemorandum in the week 12 workshop.
1) Identify the sources relevant to the slide deck (e.g., case study facts, journal articles, textbooks, websites,
regulatory bodies etc.). At least 2 of these must be academic journal articles, but various sources should be used. You must reference each source as per KBS referencing guidelines.
2) Complete in-class presentations during the week 12 workshop. Each student is required to do a presentation of not more than 5 minutes.
3) You are encouraged to be creative with your slide deck. Try to use only a few words on
the slide. Remember - "A picture says a thousand words". Use appropriate pictures/photos that support your talk. You should have at most 10 slides.
4) Your presentation should align with your Memorandum.