UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF ACCOUNTANCY AND MANAGEMENT

ACADEMIC YEAR 2019/2020

JAN 2020 TRIMESTER

BACHELOR OF ACCOUNTING (HONS)

UKML3043 BUSINESS ETHICS AND CORPORATE GOVERNANCE TUTORIAL

QUESTIONS

TUTORIAL 1
Course Briefing

General Introduction:
1. Ice-breaking session
2. Explanation on course plan
3. Tutorial expectations and participation
4. Team formation for group assignment
5. Explanation of group assignment (requirements and expectations)
6. Open discussion on what is business ethics and corporate governance.

Activity 1
A quick test on your ethical beliefs.
Answer each question following with your first reaction. Circle the number, from 1-4,
that best represents your beliefs, if 1 represents “Completely agree” and 4 represents
“Completely disagree”.

1. I consider money to be the most important reason for working at a job or in an

organisation. 1 2 3 4
2. I would hide truthful information about someone or something at work to save my job.
1234
3. Lying is usually necessary to succeed in business. 1 2 3 4
4. Cutthroat competition is part of getting ahead in the business world. 1 2 3 4
5. I would do what is needed to promote my own career in a company, short of committing
a serious crime. 1 2 3 4
6. Acting ethically at home and with friends is not the same as acting ethically on the job.
1234
7. Rules are for people who don’t really want to make it to the top of a company. 1 2 3 4
8. I believe that the “Golden Rule” is that the person who has the gold rules. 1 2 3 4
9. Ethics should be taught at home and in the family, not in professional or higher
education. 1 2 3 4
10. I consider myself the type of person who does whatever it takes to get a job, period.
1234

Total your scores by adding up the numbers you circled. The lower you score, the more
questionable your ethical principles regarding business activities. The lowest possible score is
10, the highest score is 40. Discuss the results in the class.

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 TUTORIAL 2
Topic 1: Understanding Business Ethics
Question 1
(a) What major ethical issues you face now in your work or student life? What is
ethical or non-ethical about these issues?

(b) What other unethical behaviors at work?

(c) What are the various factors that influence ethical values of an individual?
.

Question 2
The field of business ethics continues to change rapidly as more firms recognize the benefits
of improving ethical conduct and the link between business ethics and financial
performance. Why is it necessary to manage business ethically?

Question 3
Refer to the case study, “The Sands of Time are Running Out” from Khalidah, K. A.,
Zulkufly, R., Lau, T.C. (2014). Business Ethics. Malaysia: Oxford Fajar, Page 30.

Students’ answers to the case study vary. Discuss them in the class.

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 TUTORIAL 3
Topic 2: Moral Reasoning in Business
Question 1
(a) Explain the normative theories of ethics.

(b) Differentiate consequential theories and non-consequential theories.

Question 2
Discuss the four steps framework for ethical decision-making.

Question 3
Debbie, your best friend since college met you last week. She was also an assistant
accountant, just like you in a medium sized audit firm. Both of you have just left college a
couple of months ago. You had a dinner with her last week. During your dinner with her,
you had told her what happen in your work place. Your conversation topics include a more
senior assistant accountant, Mr. James has been on sick leave, and you are due to go on
study leave to complete the last stage of ACCA. You have been told by your department
manager that, before you go on leave, you must complete some of the complicated
reconciliation work. The deadline suggested appears unrealistic, given the complexity of
the work.

You feel that you are not sufficiently experienced to complete the work alone. You would
need additional supervision to complete it to the required standard, and your manager
appears unable to offer the necessary support. If you try to complete the work within the
proposed timeframe but fail to meet the expected quality, you could face repercussions on
your return from study leave. You feel slightly intimidated by your manager, and also feel
pressure to do what you can for the practice in what are challenging times.

i) Discuss the relevant fundamental principles and issues from the short case above.

ii) Who are the affected parties from the above case?

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 TUTORIAL 4
Topic 3: Ethical Framework for Business Environment

Question 1
Explain the stakeholder theory.

Question 2
(a) Identify and elaborate the steps in a stakeholder analysis.

(b) Why is a stakeholder analysis important to organizations?

Question 3
Refer to the case study, “The Conquest of a Giant Retailer” from Khalidah, K. A., Zulkufly,
R., Lau, T.C. (2014). Business Ethics. Malaysia: Oxford Fajar, Page 207-208.

TUTORIAL 5
Topic 3: Ethical Framework for Business Environment

Question 1
Discussion on articles: Trevino et al (2003): A quantitative investigation of perceived
executive ethical leadership: perceptions from inside and outside the executive suite, Human
Relations, 56(1), pp.5 – 35.

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 TUTORIAL 6
Topic 4: Guidelines of Codes of Ethics

Question 1
Discuss how Corporate Social Responsibility (CSR) affect or relate to the governance of
a company. Give examples.

Question 2
Provide arguments to support the statement that by having a Code of Ethics would
complement the Code of Corporate Governance.

Question 3
Discuss the managerial role in developing ethics program in an organization.

Question 4
Explain the critical elements of a formal ethics programme.

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 TUTORIAL 7
Topic 4: Guidelines of Codes of Ethics

Question 1

Double Standard

After graduation, you obtain a staff position, an Ethics Officer in the Human Resource Department
of a medium-size company. Your job duties include conducting ethics training workshops and
monitoring the organization’s ethics assist line.

The organization’s Code of Ethics emphasizes four values – truth, respect, honest,
communications, and integrity. This month’s workshops is about integrity. The 50 participants
engage in several small group activities and you are pleased with their discussions.

The following day you notice a message on the ethics assist line. “I wanted to point out some
possible hypocrisy with our Code of Ethics during yesterday’s workshop,” the message begins,
“but I didn’t want to offend Sammi, our vice president of sales. According to our Code of Ethics,
it is a violation for any of our purchasing agents to receive a gift from a supplier. But our
salespeople are allowed to offer entertainment gifts to potential customers. The sales department
can give the same gifts that our purchasers cannot receive. That’s not integrity; that’s a
hypocritical double standard. The company doesn’t trust our purchasing agents to receive the gifts
that our salespeople give to their clients.”

You review company records and note that the organization’s Code of Ethics for buyers is a
standard adopted from the Institute for Supply Management, the trade association for purchasers
and supply managers.

Next you approach Sammi about this concern. “you bet I encourage our salespeople to give clients
free tickets to sporting events and art performance at the Civic Center,” Sammi informs you.
“These gifts work. That’s how we get a lot of new business and take care of our existing customers.
Plus we’re supporting community activities. Our major competitors do the same thing. None of
our employees personally gains from this. If my sales employees can’t give gifts, we would lose
a lot of business. Lost sales mean lost commissions. Before you know it, our best salespeople
would quit and get jobs with our competitors. If our revenues decline, it would be your fault!”

Despite Sammi’s adamant policy defence, the ethics assist line issue still bothers you because the
company does seem to have a double standard, one for purchasing agents and another for
salespeople. If it is ethical for your salespeople to give these gifts, then shouldn’t it be ethical for
your purchasing agents to receive them from their suppliers? But then again, the industry
association, which encourages best practices, opposes gift giving.

Source: Adapted from Collins, D. (2012). Ethics Reporting Systems. In Business ethics: How to
Design and Manage Ethical Organizations. (pp. 240). Hoboken, NJ: Wiley.

a) Discuss the ethical dilemma that you face based on the above case.

b) In the stated case, do you think the company should maintain the double standard? Or
should the company change the policy and not let the salespeople give these gifts?

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 TUTORIAL 8
Topic 5: Corporate Governance

Question 1
Read the definitions of corporate governance provided in the Lecture. What would be
your own, preferred definition of 'corporate governance' without losing its keywords?

Question 2
What are corporations? Who are shareholders of a corporation and what powers do
they have?

Question 3
What are the benefits of effective corporate governance?

Question 4
Who are the major participants in corporate governance? What is their role and/or
interests in corporate governance?

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 TUTORIAL 9
Topic 5: Corporate Governance

Question 1
Who are the people involved in the principal and agent in the principal-agency theory?
Explain this theory.

Question 2
Differentiate between the Unitary and a 2-tier Board Structure and what are the
advantages and disadvantages of a 2-tier Board Structure?

Question 3
List and briefly explain some of the advantages and disadvantages of having a single
person holding the offices of Chairman of the board and CEO.

Question 4
How can Independent Non-Executive Directors (INEDs) contribute as a member of a
Board of Directors?

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 TUTORIAL 10
Topic 6: Development of Corporate Governance

Question 1
How does the board of directors use various board committees to enhance their
performance?

Question 2
What is the meaning of independence in terms of non-executive directors?

Question 3
List the requirements for Directors under the Companies Act, 2016.

Question 4

List the requirements for Company Secretaries under the Companies Act, 2016. What
are the disqualifications to act as Company Secretary?

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 TUTORIAL 11
Topic 6: Development of Corporate Governance

Question 1
Explain the major provisions of the Cadbury Code with regards to the Chairman,
Directors and CEO.

Question 2
State the prescribed qualifications to act as a company secretary under the Companies
Act. Who is the licensed secretary?

Question 3
Refer to the case study, “Dorchester Finance Co Ltd v Stebbing (1989)” from Khalidah, K.
A., Zulkufly, R., Lau, T.C. (2014). Business Ethics. Malaysia: Oxford Fajar, Page 173.

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 TUTORIAL 12
Topic 6: Development of Corporate Governance

Question 1
Why do we need to study the UK Reports and what are the objectives of the Malaysian
Code of Corporate Governance (MCCG)?

Question 2
How important do you think investors in Malaysia support the agenda for corporate
governance reform?

Question 3
List and explain some of the duties and rights of the external auditors in the context of
corporate governance.

TUTORIAL 13
Topic 7: Code on Corporate Governance

Question 1
What do internal and external auditors have in common?

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Question 2
Marks and Spencer plc
Marks and Spencer plc enjoyed an enviable reputation for many years, performing well and
giving its shareholders a good return on their investment. However, there was some criticism
of its corporate governance, in particular that there was a lack of sufficient independent non-
executive directors. This meant that the board lacked a real balance between executive and non-
executive directors, and appropriate questions might not be asked of the executive directors by
the non-executive directors for example, question relating to the strategic direction that the
company was taking and the market it was aiming for.

In the late 1990s, Marks and Spencer found that its plummeting sales and declining profits
resulted in a lot of pressure to reform its corporate governance. In addition to the criticism
regarding non-executive directors, there was also much criticism of the pay-offs made to
departing directors in the late 1990s and early 2000/01. The board now comprises half non-
executive directors with a wide range of experience who can exercise their independent
judgement on key issues. The main board committees of audit, remuneration and nomination,
are comprised of non-executive directors. There is also a Corporate Social Responsibility
Committee to provide an overview of social and environmental and ethical impacts of the
group’s activities.

Given the greater emphasis on corporate governance and the appointment in 2002 of non-
executive directors such as Paul Myners (chair of the of the government-sponsored Myner’s
review of institutional investment), investors can have much more confidence in Marks and
Spencer. Improved corporate governance will help the company to re-establish itself and give
investors the confidence that various viewpoints are heard on issues of strategy, performance,
and resources at board meetings.

Post 2002, this is what Marks and Spencer plc has to say about corporate governance:
‘ For M&S, governance is about making sure that; we are taking the business in the right
strategic direction, the executives are leading and managing effectively and are accountable;
the Group has appropriate controls in place and our risks are managed and we are ‘ doing the
right thing’ for our shareholders and our wider stakeholders.

To succeed, the independent non-executive directors, keep M&S governance under review to
ensure that appropriate safeguards are in place to protect shareholder interests.

Leadership and governance go hand in hand in a successful company. For both to work well
you need a clear plan of what you want to achieve. There are different ways to secure good
governance:
what you achieve in practice is as important as the formal structures;a strong relationship
between management and the Board is important, with trust, challenge, a common goal and
good information flows between them; and it’s not just about the Board – it’s about how
governance is understood and acted on throughout the business – ‘from the boardroom to the
shop floor.

Responsibility is a core part of corporate governance. The Board must meet its accountabilities
to wider stakeholders. And our employees must play their part by acting responsibly at all
times.’

Source: Mallin, C. A. (2007). ‘Corporate Governance’ (2nd ed.). New York: Oxford University
Press Corporate Governance. (2009, August). Retrieved August 5, 2009, from
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http://corporate.marksandspencer.com/investors/corporate_governance

Question 1
According to the case study, describe the improvements made by Marks & Spencer plc
on corporate governance.

Question 2
Explain SIX (6) benefits Marks and Spencer plc could have obtained from the
improvements made on corporate governance.

Question 3
If Marks and Spencer plc was to appoint independent non-executive directors (INEDs),
describe FIVE (5) possible contributions to the board in terms of good corporate
governance.

Question 4
Explain the roles and functions of Nomination, Remuneration and Audit Committees.

TUTORIAL 14
Revision

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