QUESTION 2 (55 MARKS) Unite Finance Ltd, "Unite Finance" is a very successful public company that provides online money lending services. Unite Finance wants to be Africa's leading and preferred money lending company by 2030. They have 2 subsidiaries, one located in Zambia called Unite Together (Pty) Ltd and one located in Botswana called Unite Stronger (Pty) Ltd. All entities have February financial year ends. Unite Finance earns income from the loan origination and application fees charged and the monthly interest on the loan balances outstanding. You are a Trainee Accountant at ABC Auditors and are currently busy with the 2023 year-end non-assurance engagement of Unite Finance. You were asked to review and comment on the King IV compliance of Unite Finance. The following persons are the members of the Remuneration Committee: You were invited to attend one of the meetings of the Remuneration Committee, and made the following notes: - The Remuneration Committee discussed the remuneration policy and sets the direction regarding how remuneration should be approached. - The policy will include guidance on how to: attract, motivate, reward, and retain human capital. promote the achievement of strategic objectives. - The remuneration policy and implementation report will be discussed with the board of directors during the 2024 financial year since it was last discussed during the 2021 financial year-end. - The Remuneration Committee discussed the content of the remuneration to be disclosed in a separate table in the annual financial statements. Some of the directors suggested that only the total remuneration of all directors should be disclosed and not the remuneration of each individual director. - Mr. Paxton mentioned that his performance review, as in previous years, was already performed. The performance of the board of directors was last evaluated at the end of the 2019 financial year-end. The performance evaluation is performed by the chairman of the board. A recent survey showed that Unite Finance's directors' remuneration is higher than market-related directors' remuneration. The same survey showed employees earn less than market-related remunerations. You had a discussion with Mr. Paxton regarding the internal audit. Below are the notes you made after your discussion with him: - Mr. Paxton appointed the CAE (Chief Audit Executive). The remuneration and employment contract of the CAE was approved and finalised by the remuneration committee. - The Board will actively monitor the internal Audit Department. - The Internal Audit Department will assist the Board by discharging them of their corporate governance responsibilities by: performing an objective assessment of the adequacy and effectiveness of risk management and internal controls. Systematically analysing and evaluating business processes and associated controls. - The Internal Audit Department will oversee the issuance of the integrated report, which is published every two years by Unite Finance. - All bases for determining materiality will be approved by the Internal Audit Department. - The Internal Audit Department will first oversee that the annual financial statements are in line with legal requirements before the draft set is made available to the external auditors. - The Internal Audit Department is responsible for the governance of stakeholder relationships. Required: Identify any contraventions of the King IV Report on Corporate Governance evident from the information. Limit your answer to only information provided in the scenario (55 marks) Marks will be allocated as follow: Composition of the Remuneration Committee 11 marks 19 marks + Remuneration policy * Disclosure of director's remuneration 9 marks Board of directors performance review 4 marks 4 marks \& Internal Audit Responsibility of the board of directors 10 marks
