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Subject : Auditing Topic : MIA BY LAWS /LEGAL LIABILITY/GOVERNANCE QUESTION 3 Pakatan Maju...

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Accounting

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Subject : Auditing

Topic : MIA BY LAWS /LEGAL LIABILITY/GOVERNANCE

QUESTION 3 Pakatan Maju Sdn. Bhd is a retail company planning to list on a stock exchange within the next six months, and management has been advised by the company's auditors about the need for compliance with corporate governance provisions. In particular, the finance director is looking to recruit non-executive directors as he understands that Pakatan Maju will need to establish an audit committee. The finance director has two potential non-executive directors whom he is considering approaching to join the board of Pakatan Maju. Ismail is currently an executive sales director of a listed multi-national company; he sits on an audit committee of another company as a non-executive director and is agreeab to being paid a fixed fee which is not related to profits. Sabri is currently a finance director of a small retail company, which does not compete with Pakatan Maju; he has expressed an interest in a fixed seven year contract. Required (a) Briefly explain the function of any TWO (2) principle players in Corporate Governance. (4 marks) (b) Explain THREE (3) benefits to Pakatan Maju of establishing an audit committee. (6 marks)

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