For the past two decades, the issue of corporate governance has been the focus of increasing attention from both the accounting profession and the relevant regulatory authorities. Particularly with the occurrence of various corporate scandals in US, both accountants and governments see an urgent need to address the problem so that the global financial markets can be developed in an orderly way and a fair playing field can be ensured for all market participants.

a Explain why corporate governance is needed.

b Audit committees and independent non-executive directors are common practices of corporate governance which can be seen in the listed companies of Hong Kong. With reference to the local situation, do you consider these to be effective corporate governance practices for protecting the interests of shareholders?

c The enterprise risk management (ERM) framework was developed by COSO to provide managers with a formalized methodology to evaluate risk in their business. Explain how management would use the ERM framework to manage business risk.

d Global Communications is a media and telecommunications industry giant. There are ten directors, all paid executives. The chief executive officer, also the chairman of the board of directors, is known to be a very ambitious person. He is very popular in high society and occupies honorary positions in a number of charitable organizations. In recent years, the group has expanded rapidly through takeovers and other merging activities. The group's main manufacturing activities are based in developing countries. Financially, the group has high gearing and the accounting policies are aggressive. Therefore, the group's auditors have been issuing unqualified audit reports. Suggest practices of corporate governance that would be considered relevant to this case.