Please help me in this assignment. Case study on Knight Transportation Inc. Knig

Question

Please help me in this assignment.

Case study on Knight Transportation Inc.

Knight Transportation, Inc. (KTI), recognised by Forbes for its low operating ratios in the United States trucking industry, is setting standards in corporate governance.

To comply with the listing standards in New York Stock Exchange (NYSE), the company has put in place written charters for selection of independent directors, voting requirements for their election, and limiting executive compensation packages. The case talks about what role the Board of Directors can play in ensuring corporate governance standards during the growth of the company. The case examines in detail the corporate governance practices undertaken by the Board Committees and the strict adherence to the Generally Accepted Accounting Principles while preparing financial statements. Mandatory personal assurances by the top executives on the fairness of financial statements are also complied with. With stricter corporate governance standards, KTI is expecting to realise higher returns for its stakeholders.

Extract from   IBS - Case Developmentcentre

http://www.ibscdc.org/Case_Studies/Corporate%20Governance/GOV0024B.htm - 20.08.2018

Questions:

1. The setting of standards in Corporate Governance by Knight Transportation Inc might prevent potential conflict of interests. Using examples, discuss the benefits firms get by adopting practices of good governance. (30 Marks)

2. In Knight Transportation Inc, the need for strict adherence to the Generally Accepted Accounting Principles while preparing financial statements has been highlighted.   The Financial Reporting Act 2004 provides for the establishment of a Code of Conduct for all Professional Accountants which is consistent with the principles contained in International Federation of Accountants’ (IFAC) Code of Ethics. Professional Accountants are required to adhere to the fundamental principles enshrined in the Code of Ethics. Discuss the application of the fundamental principles of a Code of Ethics. (20 Marks)

Explanation / Answer

Some of the good governance practice indicators are as below:
1. Clear lines of responsibilities and a strong system of accountability in all phases of a company's operations British American Tobacm is known forits Board effectiveness, audit/risk accountability a. topped the good governance index in 2016 2. Board Independence and succession planning: Company's Board mud be independent rather than an affiliate of the management. Infosys featured sem. time for its Board evaluation, leadership experience a. succession planning insp.°, the .ssle between the co-founder a. the executive officer. 3. Code of Ethics:Unilever is known for its good corporate governance practices for code of ethics and business principles in the countries, that they operate 4. Pelf-Evaluation: General Electric established governance principles to guide not only its managers and Mard of directors in their activities and deciion-making, but. serve as a benMmark by which their performance may be evaluated.

Benefits of good corporate governance practice:
• Builds trust among public and world-wide for their transparent and effective praOices • Enhances sustainability of the company's performance • Encourages positive behavior among employees • Bankers and financial institutions willingly le. to such companies for their business ethics, thus can get funds/capital at better rates/lower cost • Checks mismanagement: Unlike Enron, which came into news for its accounting malpractices, good corporate governance makes the company have guidelines to check on such fraudulent activities a. allows Board to work for the best interest A the stakeholders
Code of Ethics for professional accountants:
• Integrity: Professional accountant (PA) to be straight forward antl honest in Al business practices • Objectivity: PA should not allow for bias, conflict A interest, undue influence of others to override professional or business judgments • Professional competence and due care: PA has to maintain corfinuing duty to provide client, a competent professional service based on current developments in practices • Confidentiality: OA must maintain confidentiality A information acquired as a result of professional and business relationships • Professional behavior: PA should comply with relevant laws and regulations, and should avoid any action that discre . the profession.

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