Page 17 - OCS Workbook - Day 2 Suggested Solutions (May 2018)

SUGGESTED SOLUTIONS

At present Mansako has no non-executive directors and this should be reviewed as part of our
corporate governance review. Appointing non-executive directors, would allow shareholders to
feel reassured that their interests where being looked after as priority and that the executive
directors would effectively be unable to act only in their own interests, to the detriment of the
shareholders’ interests. Since Mansako have no non-executive directors the shareholders are
missing out on this level of reassurance.

Internal audit

The role of internal audit is to provide independent assurance that an organisation’s risk
management, governance and internal control processes are operating effectively. It is often
seen to be the “control of all controls” and gives reassurance to all stakeholders, not only to the
shareholders. At present Mansako do not have an internal audit department or representative
and so this would need to be created to abide fully by the norms of corporate governance. This
is surprising as a listed company since most listed companies would normally have an internal
audit team however is not compulsory out with the code of corporate governance.

Summary

In summary while to thought to adopt and adhere to a code of corporate governance is
commendable there will be a substantial amount of restructuring and recruiting necessary to
ensure that this is done well. Although the principles-based approach is usually less expensive
than the rules-based approach due to the reduction in legal costs it will still undoubtedly be an
expensive transition.

Ultimately this is not a requirement by the stock market of Lowerland but would give increased
shareholder confidence in light of the recent scandals.

I hope that this has answered your query. If you have any further questions in this area please
do not hesitate to contact me.

Kind regards

Finance Officer
Mansako.

KAPLAN PUBLISHING 73