Question 1

Confidence in company reporting depends on the effectiveness of the internal controls and risk management processes that directors put in place and oversee. High-profile firm failures where weak internal controls and poor risk management have been evident have eroded that confidence.

Required:

i) Explain the need for strengthening the internal control framework for Fijian businesses? What would you see as the principal benefits of stronger regulation of internal controls?

ii) Should External audits of the internal controls be mandatory for Fijian businesses. Explain your answer.

Question 2 Paying a dividend leaves a company with fewer assets with which to meet its liabilities to creditors and meet other demands for capital. For this reason, there are legal constraints on the amount a company can distribute in dividends such as a requirement that they cannot be paid out of capital but only paid from a companys accumulated realized profits less its accumulated realized losses.

Required: Explain 2 ways for strengthening the distribution of dividends payment for the future solvency of a company?