Case Study

You have been appointed as the first ever auditor in this company's history. This company is a leading package-goods company of South-Africa's most well-known product brands. Its vision is "to be the world's most admired branded consumer-packaged goods company in emerging markets." According to the records in your possession, the company was fined by the Competition Commission for conspiring with other companies to raise the prices of consumer products. The company that in which you are appointed, controlled more than 90% of the market. The fine was in respect of a contravention of the Financial Act and was paid by the company.

For the last few years the company is competed in, was regulated, which meant that the company had its own quota of consumer goods which they had to produce. Good management means the business is operationally effective, but it might still be ineffective in its relationships among shareholders, directors, management and other stakeholders. Corporate Governance puts the super-ordinate goal of business success within the context of the sound shareholder. Corporate failure caused by corporate fraud, accounting irregularities and dishonest management is a global reality. You as auditor, identified the causes of poor corporate governance practices by the organisation regarding the financial fine the company had to pay and a lack of corporate governance framework by the organisation..

The status of internal audits has been greatly elevated by the publication of the King III report. The internal audit function is an integral part of the corporate governance regime of most public companies and a number of private companies. The primary purpose of the internal audit

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function is to objectively evaluate the company's risk management, internal the internal audit function control and corporate governance processes and provide assurance to the board of directors. The internal audit function must, however, be independent from day-to-day operations of the business.

From the information that you have gathered regarding the company, write a report to the board of directors where you outline the shortcomings of the company regarding the benefits of goodgovernance framework, the financial areas laid down by the OECD regarding the financial losses by the company and the importance of having an internal auditor for the company.