RESEARCH PROJECT

An Evaluation of the Quality of Corporate Governance in Bamenda Police
Co-operative Credit Union LTD (BA...
DEDICATION

TO

My parents, my wife and my friends

An Evaluation of the Quality of Corporate Governance in Bamenda Police...
ACKNOWLEDGEMENTS

Thanks to my project mentor (MR BARFOUR ADDO) for guiding me through this project
and for his relentless...
TABLE OF CONTENTS

INTRODUCTION…………………………………………………………………………6
CHAPTER ONE: PROJECT OBJECTIVES AND RESEARCH APPROACH
1.1 RAT...
3.6 BOARD AND COMMITTEE REMUNERATION…………………………….23
3.7

FINANCIAL REPORTING, INTEGRITY AND INTERNAL CONTROL …..23

3.8

AU...
INTRODUCTION

The Bamenda Police Co-operative Credit Union LTD (BAPCCUL) Microfinance enterprise
is a savings and loan co-...
CHAPTER ONE
PROJECT OBJECTIVES AND RESEARCH APPROACH
1.1

RATIONALE FOR SELECTING PROJECT TOPIC

The researcher has a part...












1.4

What is the skill and competence of the Board members?
Is reliable and relevant information c...
CHAPTER TWO

INFORMATION GATHERING AND BUSINESS TECHNIQUE
2.0

SOURCES OF INFORMATION AND DESCRIPTION OF THE METHODS USED
...
Interview (Appendix 2): This was designed to obtain further information that could not be
obtained from using the question...
D) Internet: The internet was a valuable information source. The researcher carefully
scrutinized the authenticity of webs...
The (OECD, 2004) principle of governance was introduced in 1999 and has since been the
corporate governance benchmark in i...
The Combined Code of Governance (Combined Code of Governance, 2008) was formerly
the UK corporate governance code that set...
Percentages, bar charts and pie charts are also used in this RAP to present the information
from the questionnaire.
2.6

L...
FINDINGS AND THE EVALUATION OF GOVERNANCE IN BAPCCUL AND THE
IMPACT ON KEY STAKEHOLDERS
3.0
FINDINGS FROM QUESTIONNAIRE AN...
members, 100% of the Board and 80% of the employees indicate there are three Executive
and four Non-Executive Directors. F...
D) CREDIT COMMITTEE: The Credit committee function is to ensure that loans are
granted within the loan policy and that del...
The Board has the following responsibilities:
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
3.4

Oversee the activities of the credit u...
3.5

BOARD STEERING, STRATEGY, SYSTEM AND SUCCESSION

The BAPCCUL has no formal ethical code or conducts written by the Bo...
The majority of respondents from the diagram fell in the “N” category for “NO,” thus
providing the basis for the researche...
The pie chart is drawn based on the Board members’ answers to the questionnaire for Q15,
Q16, and Q17. The chart indicates...
business efficiently and orderly. Questions 18, 19, 20, and 21 of the questionnaire give
understanding of the integrity of...
average of 87% of the respondents indicates that BAPCCUL has an external auditor, thus
corroborating the findings of the C...
(http://www.camccul.org/camccul.org/service), also helps in risk management for all credit
unions under their control. The...
Board members are the most satisfied with the BAPCCUL overall, while the members
followed as second most satisfied, and th...
4.1

EVALUATION OF BAPCCUL CORPORATE GOVERNANCE
(A) BOARD OF DIRECTORS AND COMPOSITION (Total weighting 50%)
Combined code...
B) REMUNERATION (weighting 18.75%)
9

10

11

Remuneration committees
should report activities in the
annual financial sta...
15

16

Directors should have regular
dialogue with institutional
investors.

No institutional shareholders or
dialogue is...
FIGURE 8

BAPCCUL GOVERNANCE WIEGHTS
BAPCCUL GOVERNANCE

relationship with shareholders and
institutional investors

6.25%...
4.2 CONCLUSION OF EVALUATION AND IMPLICATION TO OVERALL BAPCCUL
GOVERNANCE
From the researcher’s perspective and from a th...
The stakeholders influence on the BAPCCUL’s objectives is determined using the
MENDELOW Power-Interest grid as found in (J...
MEMBERS
1)
The Board members chosen by the members might act based on their personal interest
and the interest of those wh...
4.5

LIMITATION OF RESULTS

. The following are the limitations of the result:
1) The questionnaire used as the primary so...
7) CAMCCUL sets the internal control and audits the organization, thus limiting
independence.
8) The credit committee is m...
SECTION TWO

SKILLS AND LEARNING STATEMENT

CHAPTER 1: LESSONS LEARNED FROM MEETING WITH YOUR RESEARCH
MENTOR AND PRESENTA...
CHAPTERS 2: HOW WELL YOU THINK YOU HAVE ANSWERED YOUR RESEARCH
QUESTIONS?

I believe the project questions have been thoro...
CHAPTER 3: HOW HAVE YOU DEMONSTRATED YOUR INTERPERSONAL AND
COMMUNICATION SKILLS DURING THE PROJECT WORK?
I was able to pu...
CHAPTER 4: HOW HAS UNDERTAKING THE RAP HELPED IN
YOUR ACCOUNTING STUDIES OR YOUR CURRENT EMPLOYMENT?
Corporate governance ...
References
A Guide to the Sarbanes-Oxley Act (2006) http://www.soxlaw.com/ (Accessed on 10 July
2010).
Anand. S. (2007) Es...
Rowa. N. (2008) .How to Evaluate a Company’s Corporate Governance:
http://www.helium.com/items/1241817-how-to-evaluate-a-c...
APPENDICES
APPENDIX 1:
QUESTIONAIRES ON CORPORATE GOVERNANCE AND IMPACT ON
STAKEHOLDERS FOR BAPCCUL
I am undertaking a res...
a) Yes

b) No

9) Has the Board adopted a vision or mission statement?
a) Yes

b) No

10) Has the Board formulated corpora...
19) Does the Board explain their responsibilities for preparing the account in the
annual reports?
a) Yes

b) No

20) Are ...
a) In-house

b) Outsourced

30) In case of In-house, how many are members consist the Audit team?
…………………….
31) In case of...
a) Yes b) No
37) Are you satisfied with the way the BAPCCUL is controlled and directed?
a) Yes

b) No

38) If not satisfie...
QUESTION

MEMBERS
Yes
No

NA

BOARD
Yes
No

NA

EMPLOYEES
Yes
No
NA

1
2
3
4
5

80
0

10
70

10
30

100
0

0
80

0
20

60
...
-

-

-

-

-

-

-

-

-

36

80

10

10

80

0

20

70

20

10

37

65

20

15

70

20

10

60

40

0

38

70

20

10

8...
D) MEASUREMENT SCALE FOR MEMBERS ANALYSIS OF QUESTIONNAIRE
SCALE
0
0-5
5-10
10-15
15-20
20-25
25-30
30-35
35-40
40-45
45-5...
Interview questions directed to Board members:
1) What are the conditions for becoming a member of BAPCCUL credit union?
2...
BOARD OF DIRECTORS 2009
PRESIDENT

MR MUSA SHEY NFOR

VICE PRESIDENT

MRS TUMASANG FLORENCE

MEMBER

MR NKERBU LAMNYAM ELK...
MEMBER

SHEY SANTE AUGUSTINE

MEMBER

MR. NFI JOSEPH LON

EDUCATION COMMITTEE 2009
CHAIRPERSON

MRS TUMASANG FLORENCE

MEM...
Hierarchy Accountability Chart of BAPCCUL

General meeting

Supervisory
committee

Women
committee

Board of
directors

Cr...
GLOSSARY
ACCA: Association of Chartered Certified Accountant.
Audit (n): The examination of the books and accounts of a co...
environment, risk assessment, control activities, information and communications, and
monitoring.
Internet: A computer net...
Strategic risk: Risk due to weak governance, weak leadership, poor strategic relations,
regulatory and administrative reas...
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  1. 1. RESEARCH PROJECT An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders Okwen Kenne Foma Word count: 6,124 An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 1
  2. 2. DEDICATION TO My parents, my wife and my friends An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 2
  3. 3. ACKNOWLEDGEMENTS Thanks to my project mentor (MR BARFOUR ADDO) for guiding me through this project and for his relentless effort in making sure that my project is of great quality. Very special thanks to the project participants. Also thanks to the manager of BAPCCUL for giving interviews and filling out questionnaires as well as for giving me permission to carry out my project in the organization. None of this would have been possible without the continuous support of my mother and my wife. Thanks for the wonderful love and support you both showed me. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 3
  4. 4. TABLE OF CONTENTS INTRODUCTION…………………………………………………………………………6 CHAPTER ONE: PROJECT OBJECTIVES AND RESEARCH APPROACH 1.1 RATIONALE FOR SELECTING PROJECT TOPIC……………………………7 1.2 RATIONALE FOR SELECTING BAPCCUL ……………………………………7 1.3 PROJECT OBJECTIVES …………………………………………………………7 1.4 RESEARCH APPROACH ………………………………………………………..8 CHAPTER TWO: INFORMATION GATHERING AND BUSINESS TECHNIQUE 2.1 PRIMARY SOURCES OF INFORMATION ………………………………….9 2.2 SECONDARY SOURCES OF INFORMATION……………………………..10 2.3 LIMITATION OF THE SOURCES AND METHOD UTILIZED TO OBTAIN INFORMATION ……………………………………………………………………… 10 2.4 ETHICAL ISSUES ENCOUNTERED IN GATHERING INFORMATION …11 2.5 BUSINESS TECHNIQUE AND MODELS……………………………………12 2.6 LIMITATION OF BUSINESS TECHNIQUE AND MODEL ………………….14 CHAPTER THREE: FINDINGS AND THE EVALUATION OF GOVERNANCE IN BAPCCUL AND IMPACT ON KEY STAKEHOLDERS 3.0 FINDINGS FROM QUESTIONNAIRE AND OTHER DATA SOURCES…….15 3.1 BOARD STRUCTURE………………………………………………………..15 3.2 COMMITTEE AND STRUCTURE……………………………………………17 3.3 ROLES AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS IN BAPCCUL………………………………………………………………………………..18 3.4 BOARD SKILLS, COMPETENCE AND KNOWLEDGE ……………………………………………………………………………………………19 3.5 BOARD STEERING, STRATEGY, SYSTEM AND SUCCESSION…………………………………………………………………………..20 An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 4
  5. 5. 3.6 BOARD AND COMMITTEE REMUNERATION…………………………….23 3.7 FINANCIAL REPORTING, INTEGRITY AND INTERNAL CONTROL …..23 3.8 AUDITORS AND AUDIT COMMITTEE………………………………………24 3.9 RISK MANAGEMENT…………………………………………………………24 4.0 RELATIONSHIPS WITH SHAREHOLDERS, INSTITUTIONAL SHAREHOLDERS AND SHAREHOLDER RIGHTS ………………………………25 4.1 EVALUATION OF BAPCCUL CORPORATE GOVERNANCE……………28 4.2 CONCLUSION OF EVALUATION AND IMPLICATION TO OVERALL BAPCCUL GOVERNANCE…………………………………………………………32 4.3 STAKEHOLDERS OF BAPCCUL AND INFLUENCE………………………32 4.4 IMPACT ON OVERALL QUALITY OF GOVERNANCE ON KEY STAKEHOLDERS…………………………………………………………………………33 4.5 LIMITATION OF RESULTS………………………………………………………35 4.6 WEAKNESSES……………………………………………………………………36 4.7 RECOMMENDATION………………………………………………………………37 An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 5
  6. 6. INTRODUCTION The Bamenda Police Co-operative Credit Union LTD (BAPCCUL) Microfinance enterprise is a savings and loan co-operative. BAPCCUL was created in 1969 by the police of western Cameroon with the primary goal to serve only the police force members. It later extended its membership to people outside the police force. Currently, the majority of the members are not police and BAPCCUL is the second largest credit union in the league of credit unions in Cameroon. BAPCCUL has five branches in Cameroon in the following regions: Yaoundé, Bamenda, Douala, Camp, Yabassi, and Bafia. This organization provides the following services to its members: payment of salaries, overdraft facilities and loans. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 6
  7. 7. CHAPTER ONE PROJECT OBJECTIVES AND RESEARCH APPROACH 1.1 RATIONALE FOR SELECTING PROJECT TOPIC The researcher has a particular interest in corporate governance and intends to carry out his graduate and PHD studies in this field to prepare to work as a consultant for organizations and government institutions. This RAP is a stepping-stone for the researcher to become a corporate governance consultant. Corporate governance is an important business topic to politicians, regulators and business scholars. Since the ENRON scandal, many adjustments have been made to organizations’ governance to prevent duplicitous transactions. Writing a research project on this topic will give the researcher first-hand experience of governance and enhance the researcher’s evaluation skills. 1.2 RATIONALE FOR SELECTING THE BAPCCUL The researcher believes BAPCCUL will provide valuable information for the evaluation of corporate governance with respect to international standards as compared to other credit unions, which are smaller and less organized. The members and employees willingly cooperated in answering the questionnaire and interviews issued by the researcher. These employees are qualified and understand the importance of the project to the researcher and to the organization. The researcher believes that targeting the second largest institution in the credit union industry can provide substantial information about the governance of credit union institutions in Cameroon (Innocent, 2007). Information gathered during this research project may be of used to future researchers who are interested in this industry and topic. 1.3 PROJECTS OBJECTIVES The principal objective of this project is to evaluate the quality of corporate governance in BAPCCUL by determining if BAPCCUL governance complies with the Combined Code Principles of the UK and assessing the impact on the key stakeholders. This project will identify weaknesses and make recommendations to enhance the quality of governance in the BAPCCUL. This project intends to discover the following about the BAPCCUL:   How is the Board structured? What is the role of the Board and committees? An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 7
  8. 8.             1.4 What is the skill and competence of the Board members? Is reliable and relevant information circulated for the Board to make informed decisions? How is succession planning carried out in the Board? What are the ethical codes established within the company? How does the company remunerate the Board and committee members? How does the company safeguard integrity in financial reporting? Who are the external and internal auditors and how independent are they? How does the company identify and manage risk? Who are the key stakeholders of the company? How does the company maintain proper dialogue with the shareholders? How does BAPCCUL governance comply with the Combined Code Principles? How does the governance impact the stakeholders? RESEARCH APPROACH The researcher intends to use a simple and logical approach to accumulate, present and evaluate this information in order to meet the project objectives and answer the project questions. Primary sources of information were extensively used to get information since the researcher considers this a valuable form of information. To answer the research questions, permission was requested from the BAPCCUL head office to send out questionnaires to a randomly selected sample of employees, members and Board members. Interviews with the Board members were carried out by the researcher. Thus, much of the evaluation was based on the questionnaires and the interviews. Secondary data was obtained from extensive web research and from textbooks. This helped the researcher to obtain internationally recognized corporate governance codes and principles to assist in evaluating the primary sources of information. Data obtained has been analyzed and presented in tables, pie charts, and vertical and horizontal bar codes, so that the information obtained can be easily understood. Weightings are given to the different areas of the combined code and each area is compared to that of the BAPCCUL so as to assess the implications to the overall quality of governance in the BAPCCUL. This approach highlights the qualitative aspects of the research and helps readers to easily evaluate quality of governance of the BAPCCUL with respect to the international standard, the Combined Code of the UK. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 8
  9. 9. CHAPTER TWO INFORMATION GATHERING AND BUSINESS TECHNIQUE 2.0 SOURCES OF INFORMATION AND DESCRIPTION OF THE METHODS USED TO OBTAIN THIS INFORMATION Primary and secondary sources of information were used to amass information to meet the project objectives. 2.1 PRIMARY SOURCES OF INFORMATION Corporate governance questionnaire (Appendix 1): Questionnaires were sent to a sample of employees, Board and members at the head office in Bamenda. This was the principal source of information for the research. The entire group of employees and Board members was used as the sample due to the low population size, so as to give a better result that represents the population. For the members, the researcher used random sampling techniques to minimize bias, thus ensuring that the sample accurately represents of the population of members. Management Category Board Members Employees Members Total number 13 36 16784 Sample size 13 36 100 Average number of respondent 10 25 80 Respondent base rate 77% 69% 80% The aim was to get a sample representative of each population while minimizing the sample bias. A bias sample is a sample with characteristics different from population (Perry, 2004). An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 9
  10. 10. Interview (Appendix 2): This was designed to obtain further information that could not be obtained from using the questionnaires while also corroborating the information from the questionnaire. The researcher was not able to interview all the Board members as was intended. This interview targeted questions such as the Board remuneration and criteria for Board membership. Request for information (Appendix 3): This was used to get more information that could not be obtained from interviews and questionnaires, including details about organization structure and the organization’s ethical policies. This request was made to the manager of the BAPCCUL headquarters. Request for the information acted as a corroborative source of information for the questionnaire and interviews. 2.2 SECONDARY SOURCES OF INFORMATION Corporate governance, annual reports, and journals from the BAPCCUL and other management texts provided information for the research project. These texts provided information about general principles and concepts on corporate governance. Most business models used for the evaluation of corporate governance and identification of stakeholders were obtained from management texts and online materials. Online materials: The researcher made use of the internet to gather materials for the research. ACCA, HELIUM, and FRC websites were used to obtain information that was utilized in the evaluation of the corporate governance of the BAPCCUL. 2.3 LIMITATION OF SOURCES AND METHODS UTILIZED TO OBTAIN INFORMATION A) The researcher is aware of the limitations of the questionnaire, though it was the main source of information for the project. Participants might have chosen to respond insincerely; some participants refused to answer the questionnaire though the reason for the project was clearly explained to them. Also designing a questionnaire that covered all information that was needed was not possible due to the problem of time and space. Not all questionnaires distributed were retrieved. The researcher took a lot of time to design, distribute, collect and evaluate the questionnaires in order to obtain a fairly accurate representative sample for the project. One hundred and forty-nine questionnaires were distributed. B) Interview: The interviews were directed mainly at the Board of Directors and committee members. But getting to interview the Board of Directors was difficult since they had lots of work to do. Some Board members tried to make the interview short and it was not possible for the researcher to actually ask all the questions intended. C) Request for information: Not all the information requested by the researcher was provided. Some of this information was considered confidential such as the bonuses and salaries of Directors. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 10
  11. 11. D) Internet: The internet was a valuable information source. The researcher carefully scrutinized the authenticity of websites and the reliability of the material obtained from these websites. E) Books: Obtaining books in the library was a grave problem for the researcher. The local library has very few books on writing research papers and corporate governance. The few books in the library were borrowed by students and were not returned on time. The problem of book scarcity was also due to the lack of many libraries in the researcher’s town. The researcher’s mentor was kind to lend books from his personal library for completion of the project. 2.4 ETHICAL ISSUES ENCOUNTERED IN GATHERING INFORMATION The researcher encountered a number of ethical issues during the process of gathering information. The information requested from the organization was handed to the researcher based on the belief that this was solely for academic purposes and not for any other ulterior motive. Based on the principle of confidentiality, the researcher endeavored not to divulge any information deemed important to the organization’s management. The information obtained was evaluated based on a high degree of integrity. The project mentor also ensured that the information was fair and honest by checking the researcher’s evaluation of the information gathered. No attempt was made by the researcher to deliberately falsify any information. Secondary information from books and articles was properly referenced and permission was obtained to use this information, especially the information from the case study organization. In evaluating the information, the researcher found it imperative to adhere to the principle of objectivity in all judgments. The researcher tried not to be biased or prejudiced and tried not to pay attention to irrelevant material that would render the research not pertinent. 2.5 BUSINESS TECHNIQUES AND MODELS The Anglo-Saxon form of governance was used to evaluate the governance of BAPCCUL. These models include the Combined Code of the UK, Sarbanes-Oxley of the USA and the OECD MODEL as put forth in (Johnson and Scholes, 2008). The model used to evaluate the BAPCCUL governance is the Combined Code of the UK. OECD Model An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 11
  12. 12. The (OECD, 2004) principle of governance was introduced in 1999 and has since been the corporate governance benchmark in influencing the drafting of national codes. The main principles as put forth in (Solomon, 2007) are as follows;  Protection of shareholders’ rights  Ensuring the equitable treatment of all shareholders  Recognition of rights of shareholders and employees  Ensuring timely and accurate disclosure  Ensuring the strategic guidance of the company. SARBANES–OXLEY The Sarbanes-Oxley (SOX) Act of 2002 as found in (Anand, 2007) was created as part of the corporate scandals that occurred late in 1990s and early 2000s.The act was passed so as to restore and enhance investors’ confidence in the US public financial market. One of main objectives of the act was to establish clear accounting and reporting practices for publicly traded companies in the U.S. Public companies and their subsidiaries both in and out of USA comply with the act. MAIN SECTIONS OF THE SOX From (Soxlaw, 2006), the main sections of the SOX codes are;  Sarbanes-Oxley Section 302  Sarbanes–Oxley Section 401  Sarbanes-Oxley Section 404  Sarbanes-Oxley Section 409  Sarbanes-Oxley Section 802 The SOX is a rule-based approach to corporate governance, see (Campbell, 2008b) COMBINED CODE OF THE UK An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 12
  13. 13. The Combined Code of Governance (Combined Code of Governance, 2008) was formerly the UK corporate governance code that set standards of good governance practices for listed companies. It’s based on principles rather than rules and companies are required to comply or explain otherwise (Campbell, 2008b). The Combined Code is made up of four main areas: 1) Directors (responsibilities of Board, Chairman and Chief Executive Director (CEO), Board balance and independence, appointments, information and professional development, re-election). 2) Remuneration (remuneration policy for directors). 3) Accountability and auditing (financial reporting, internal control, auditors and audit committee). 4) Relationship with stakeholders (dialogue with institutional stakeholders, constructive use of governance) and institutional stakeholders (dialogue with companies, evaluation of governance, shareholder voting. 5) 1T-7S model This model by (Rowa, 2008) looks at different areas to evaluate a company’s board. These areas include: 1) Steering: Does the organization have a mission and ethical code? Does everyone understand the mission? 2) Structure: How are the Board and committees set up? Is the board the right size and are the committees appropriate? 3) Skills: Does the Board receive training needed to carry out their job? 4) System: Are materials distributed in advance of meetings? How is communication between members of Board? 5) Strategy: Does the company have a long-term plan? 6) Succession planning: Is there always a pool of candidates for Board member and Chief Executive Officer (CEO) positions? Is the Board qualified to pick the CEO? 7) Stakeholders: How is the Board’s relationship with stakeholders? 8) Teamwork: Does the Board work as a team? Do they communicate as a team? An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 13
  14. 14. Percentages, bar charts and pie charts are also used in this RAP to present the information from the questionnaire. 2.6 LIMITATIONS OF BUSINESS TECHNIQUES AND MODELS Percentages, bar charts and pie charts are based on the underlying data from which they are constructed and can only be accurate if the underlying data provided is also accurate (Doane and Seward, 2008). The Combined Code of Corporate Governance is a model used in the UK as a benchmark for corporate governance best practice. This model is based on the dynamic market orientation, extensive internationalization and fluid capital investments in the UK (Johnson and Scholes, 2008). Using this model to evaluate organization governance in a developing country does not accurately represent the organization because of poor fluid capital investments, poor educational background, poor governance awareness, different business cultures and the size of the BAPCCUL compared to multinational companies listed in the London Stock Exchange. The 1T and 7S model might not contain all the different attributes needed to describe and evaluate a Board in a developing country since its assumptions are based on business culture in the USA, which might be different from the practices in Cameroon. CHAPTER THREE An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 14
  15. 15. FINDINGS AND THE EVALUATION OF GOVERNANCE IN BAPCCUL AND THE IMPACT ON KEY STAKEHOLDERS 3.0 FINDINGS FROM QUESTIONNAIRE AND OTHER DATA SOURCES The questionnaire was designed to assess the extent of corporate governance in the BAPCCUL. The findings of the questionnaires and the other data are reported based on the project questions using the 7S and 1T model to describe the Board. 3.1 BOARD STRUCTURE Board structure according to (Rowe, 2008) is how the Board and its committees are set up. Is the Board the right size? Are the committees appropriate? The Board of the BAPCCUL is made up of individuals, called members, who own the credit unions. To become a member according to (The Union, 2005), the individual must meet the following criteria a) Fill a standard membership application form b) Pay a registration fee of 3000 FCFA c) Buy at least 50 shares at 1000 FCFA per share. These shares are refundable upon withdrawal of membership d) Save at least 1000 FCFA e) Acquire a loan policy and by-laws f) Submit two passport-size photograph and a copy of birth certificate or identity card g) Pay a building contribution fee of 5000 FCFA. TABLE 1: Yes or No Analysis for Questions 1-5 of the Questionnaire Q 1 2 3 4 5 Members Yes No 80% 10% - 70% NA 10% 30% Board Yes 100% - No 80% NA 20% Employees Yes No 60% 20% 80% NA 20% 20% From the analysis of the question 1 of the questionnaire, 70% of members, 100% of the Board and employees indicate that the Board is made seven members. For question 2, 70% of An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 15
  16. 16. members, 100% of the Board and 80% of the employees indicate there are three Executive and four Non-Executive Directors. For question 3, 80% of members, 100 % of the Board and 100% of employees indicate that the Chairman is from the Executive Board. Question 4 responses indicate that the President of the Board acts as the Chairman of the Board and the CEO of the organization. There are no clearly defined functions differentiating the CEO and the Chairman positions based on the response to question 5 of the questionnaire with 77% of respondents indicating “No” to the question. According to (BAPCCUL, 2010), members can become part of the Board of directors if they meet the following criteria: they must save at least 12 times per year, have at least 1 million FCFA in their account, and have no loan delinquencies. The Directors are voted-in every five years by the members during the general meeting. Each Director stays in office for only two terms, but can wait for another five years to get re-elected. The Board is headed by the President, who is voted-in by members through a 51% majority. The President then elects a Vice President who acts as his deputy in the Board. The daily management is delegated to the Manager of the credit union who participates in the Board meetings but is not considered a Board member himself. This person is under the supervision of the Executive Board of Directors, headed by the President (Appendix 2, Interview Questions 3.2 COMMITTEES AND FUNCTIONS The committees, according to (BAPCCUL, 2010), carry out the following functions: A) SUPERVISORY COMMITTEE: This committee is made up of three members of the credit union and reports directly to the general assembly. Their main function is to ensure that the accounts are properly kept by the manager and also to ensure that the control activities in the organization are appropriate and adequate. They carry out cash counts, inventory inspections, and asset evaluations to ensure the safeguard of the credit union assets. These members are not part of the Board. B) WOMEN’S COMMITTEE: The Women’s committee function is to help enhance the participation of women in the organization. They work to increase the number of female members of the BAPCCUL and also to participate in the Board and committees of the organization. This committee reports directly to the general assembly. Members of this committee are not part of the Board. C) EDUCATION COMMITTEE: This committee helps improve members’ knowledge in all areas concerning the management of their credit union. They also ensure that the Board members and Committee members enhance their knowledge so that they can be able to make sound decisions for the going concern of the organization. This committee brings experts to organize seminars and ensure that members attend the seminars. Members of this committee are made up of Executive and Non-Executive Directors. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 16
  17. 17. D) CREDIT COMMITTEE: The Credit committee function is to ensure that loans are granted within the loan policy and that delinquency rates are minimized. This committee reports directly to the Board members and is made up of non-Executive Directors. TABLE 2: Committees and Number of Members Committee Supervisory committee Women’s committee Education committee Credit committee Number of Members 3 3 3 3 Percentage 25% 25% 25% 25% Based on the information received from the Manager, there are seven Board members and six other individuals who are not Board members acting in the Supervisory and Women’s committees of the organization. The Education and Credit committees are made up of Board members. (See Appendix 3, Request for Information). 3.3 ROLES AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS IN THE BAPCCUL An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 17
  18. 18. The Board has the following responsibilities: a) b) c) d) e) f) g) h) i) j) k) 3.4 Oversee the activities of the credit union Review the financial and operational performance of the company Discuss loan investments that are above the management and credit committees Recruitment and dismissal of staff Motivation of staff and Board members Endorse the financial statement produced by the management of the company Set the strategic direction of the company Arrange acquisition of land and the leases of premises and property Establish and monitor delegated authorities Decide the level of remuneration for employees and members of the Board Identify principal risk and review the risk management policy (Appendices 1 and 2) BOARD SKILLS, COMPETENCE AND KNOWLEDGE Skill is the ability to do something well while knowledge is fact, information and skill acquired through experience or education (Oxford dictionary, 2008). Based on question 6 of the questionnaire, 75% of respondents indicate that no skills or knowledge is required to become a Board member. On average, 87% indicate “Yes” on question 7, that educational courses are offered by the company. The interview (Appendix 2) reveals that only two workshops were held based on microfinance performance and regulations. The table and chart below is based on questions 6 and 7 in the questionnaire. TABLE 5: Average Responses to Questions 6 and 7 Question Q6 Q7 Average Yes 0% 87% Average No 75% 0% Average NA 25% 13% FIGURE 2: Diagram Showing Responses to Questions 6 and An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 18
  19. 19. 3.5 BOARD STEERING, STRATEGY, SYSTEM AND SUCCESSION The BAPCCUL has no formal ethical code or conducts written by the Board of Directors. This conclusion is based on the findings from the questionnaire and interview. The bar chart indicates the percentage of responses from question 8 of the questionnaire. FIGURE 3: Column Showing Responses (%) to Question 8 of the Questionnaire An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 19
  20. 20. The majority of respondents from the diagram fell in the “N” category for “NO,” thus providing the basis for the researcher to conclude that no formal ethical code exists in the BAPCCUL. Based on question 9 of the questionnaire, an average of 63% of respondents indicate that no mission statement or vision statement exists in the organization and further investigation from the request for information proved this to be true. With respect to the strategies formulated and announced, an average of 87% of the respondents indicates that the Board formulates and announces all significant strategies (Appendix 1: question 10 of questionnaire). An average of 77% of the respondents selected “Yes” for question 11 of the questionnaire, indicating that the Board has ensured and implemented an effective internal control. Based on question 12 of the questionnaire, an average of 80% of the respondents chose “Yes,” while further interviews with the Board members showed that significant matters are brought to their attention at the relevant time for deliberate decisions to be made. Twelve Board meetings have taken place over the past two years, based on the answers to question 14. The researcher only considered the answers given by Board members on questions 15, 16 and 17. The answers are presented as follows: TABLE 6: Responses to Questions 15, 16, and 17 of the Questionnaire Yes Board Q15 Board Q16 Board Q17 Average No N A 100% 70% 60% 77% 0% 20% 30% 17% 0% 10% 10% 7% FIGURE 4: Average Yes, No and Not Applicable Responses to Questions in Table 6 An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 20
  21. 21. The pie chart is drawn based on the Board members’ answers to the questionnaire for Q15, Q16, and Q17. The chart indicates that the Board members are satisfied with the notice sent to them before meetings. The Directors are also satisfied with the way in which minutes are reported and distributed in a timely manner. The interview (Appendix 2) with the Board and Manager reveal that there is no succession planning for the Board of Directors or the Committee members. Each member of the Board serves five years in office and can later be re-elected (BAPCCUL, 2010). To become part of the Board requires a political process whereby members rally with colleagues and other members to gain support to be elected. 3.6 BOARD AND COMMITTEE REMUNERATION Based on the interview with Board members, the Board members are paid salaries, and have an advantage in getting loans from the company, with discretionary lending above an undisclosed amount. The level of Board member salaries was also undisclosed to the researcher. No written document was given to the researcher to corroborate the remunerations of the Board members and Committees. 3.7 FINANCIAL REPORTING, INTEGRITY AND INTERNAL CONTROL According to (Hussey, 1999), internal control system is a system of controls for both financial and non-financial information set up by the management of a company to carry out An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 21
  22. 22. business efficiently and orderly. Questions 18, 19, 20, and 21 of the questionnaire give understanding of the integrity of the financial reporting of the BAPCCUL. Answers from the following questions are as follows: TABLE 7: Answers to Questions 18, 19, 20 and 21 of the Questionnaire Q 18 19 20 21 Board members (Yes) Employees (Yes) Average (Yes) Members (Yes) 60% 30% 40% 30% 100% 50% 60% 100% 70% 30% 40% 100% 77% 38% 47% 77% On average, 77% the members, the Board and employees believe that the Board gives a balanced and understandable report about the financial position and performance of the company. An average of less than 50% indicates that the Board gives them adequate information about the going concern of the company and about their responsibilities to the preparation of the financial statements. Concerning information given to regulators, 77% indicate that the required information is accurately provided. Further information obtained from the interview (Appendix 2) indicates that the Board openly provides information about major performance indicators in the company. These indicators include personnel growth, branch expansion, and budgets. (BAPCCUL Annual Report, 2010). The supervisory committee gives reports about examination of records and office assets. They also make an analysis about the performance of the company. An average of 73% of respondents to question 22 indicates that the Board reviews the internal control of the organization. 3.8 AUDITORS AND AUDIT COMMITTEE From question 23 of the questionnaire, an average of 87% of respondents indicate that no Audit committee existes in BAPCCUL, so the researcher did not consider the other question on the questionnaire concerning the Audit committee. Based on the interview with the Board members, there are no internal auditors in the BAPCCUL; their auditing services come exclusively from their umbrella organization. According to the (Banking Commission for Central African States, 2002), the umbrella organization (CAMCCUL) audits and regulate the accounting policies of the affiliated credit unions. The external auditors come from the umbrella organization, the CAMCCUL (http://www.camccul.org, 2010) which controls all the credit unions in the region. An An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 22
  23. 23. average of 87% of the respondents indicates that BAPCCUL has an external auditor, thus corroborating the findings of the CAMCCUL’s role (question 32). Also an average of 85% indicates that the external auditors are present during general meetings (question 33). An average of 67% of the respondents indicate that the auditors are independent (question 34). Reasons given by those who think auditors were not independent are following: a) The auditors set up the accounting system of credit unions and audit the system b) Most of the external auditors are close friends of Board members and the Manager c) Some of the auditors are bribed to overlook material misstatements. 3.9 RISK MANAGEMENT Risk, according to Griffiths, is the chance that an event or action will affect an organization’s ability to achieve its objectives and successfully execute its strategies, while risk management is the process by which risk is identified, evaluated and controlled (Griffiths, 2005). The following risks are faced by the credit union: Liquidity risk: This is the risk arising from a credit union’s inability to meet its obligations when they are due without incurring unacceptable losses. Transaction risk: This is the risk to earning ability or capital arising from problems with services and product delivery, also known as operational risk. Strategic risk: The risk to earning ability or capital arising from adverse business decisions or improper implementation of business decisions. Reputation risk: The risk to earning ability or capital arising from negative public opinion. This affects the ability to continue servicing existing relationships or establish new relationships. Compliance risk: The risk to earning ability or capital arising from violations of, or nonconformance to laws, rules, regulations or prescribed practices by the COBAC and the CAMCCUL. Interest rate risk: The risk to earning ability or capital due to changes in the interest rate. Credit risk: risk arising from the possibility that the borrower will default payment (Mishkin, 1998). This is the main risk targeted by the credit unions in Cameroon, due to the high loans outstanding. Based on interviews conducted, BAPCCUL has a loan committee that helps to control, monitor and report the credit risk of the organization to the Board and members. The Loan Officer identifies the delinquent loans in the organization and helps in the recovery of the loans with the credit committee. The CAMCCUL, according to An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 23
  24. 24. (http://www.camccul.org/camccul.org/service), also helps in risk management for all credit unions under their control. They work with the credit committee to mitigate credit risk for their affiliated credit unions. 4.0 RELATIONSHIPS WITH SHAREHOLDERS, INSTITUTIONAL SHAREHOLDERS AND SHAREHOLDER RIGHTS On question 35, 77% of the respondents selected individuals as the main shareholders of the BAPCCUL. From the questionnaire, an average of 80% indicated that all shareholders have equal rights in the BAPCCUL (question 36). Based on satisfaction and participation in the general meetings (question 37), the following data was obtained and is represented in the chart below: TABLE 8: Responses to Question 37 of the Questionnaire Respondent Group Members Yes 65% No 20% NA 15% Board members 70% 20% 10% Employees 60% 40% 0% FIGURE 5: Diagram of Table 8 An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 24
  25. 25. Board members are the most satisfied with the BAPCCUL overall, while the members followed as second most satisfied, and the employees are the least satisfied. Based on question 38 of the questionnaire, the following data indicates the Board’s, the members’ and the employees’ satisfaction level with the way the organization is controlled and directed: TABLE 9: Table of Responses to Question 38 of the Questionnaire Respondent Group Members Board and Committee Yes 60% 80% No 30% 0% NA 10% 20% Employees 50% 40% 10 % FIGURE 6: Chart of Table 9 An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 25
  26. 26. 4.1 EVALUATION OF BAPCCUL CORPORATE GOVERNANCE (A) BOARD OF DIRECTORS AND COMPOSITION (Total weighting 50%) Combined code BAPCCUL GOVERNANCE Points 1 Every listed company should have an effective Board. The BAPCCUL is headed by a Board of Directors. 6.25% 2 The positions of Chairman and CEO should be separated. The President is both the Chairman and CEO. 0% 3 There should be at least as many Non-Executive Directors as Executive Directors. The Board is composed of three Executives and four NonExecutive Directors. 6.25% 4 Appointments to the Board should take place in a formal and transparent process. Appointments to the Board are based on majority votes. 6.25% 5 Information should be provided to the Board. Necessary information is provided to the Board. 6.25% 6 There should be a regular assessment of Board performance. There is no assessments of Board performance. 0% 7 The Board should submit themselves for re-election after three years. Board members submit themselves for re-election after five years. The Board should comprise of both Executive and Non-Executive Directors. The Board is comprised of both Executive and Non-Executive Directors. 8 Total 0% 6.25% 31.5% An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 26
  27. 27. B) REMUNERATION (weighting 18.75%) 9 10 11 Remuneration committees should report activities in the annual financial statement. There is no remuneration committee and no report in the annual financial statement. 0% Directors should not determine the remuneration. President of the BAPCCUL determines the salaries and bonuses of Board members. 0% Proportions of bonuses should be based on performance. Proportion of bonuses is not based on performance. Total 0% 0% C) ACCOUNTABILITY AND AUDIT (weighting 18.75%) 12 13 14 The Board should maintain sound internal control. The Board and auditors maintain sound internal control. The Board should present a balanced assessment of entity performance and position. The Board presents a sound assessment of entity position and performance. 6.25% The Board should make arrangements for maintaining a good relationship with auditors, including the establishment of an audit committee. No audit committee exists and the supervisory committee has very little dialogue with the auditors. 0% Total 6.25% 12.5% D) INSTITUTIONAL STAKEHOLDERS AND RELATIONSHIP WITH STAKEHOLDERS (Weighting 12.5%) An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 27
  28. 28. 15 16 Directors should have regular dialogue with institutional investors. No institutional shareholders or dialogue is in general meetings. Directors should encourage participation of all shareholders in annual general meeting. Members’ participation in general meeting is high and they make good use of their votes. Total 0% 6.25% 6.25% FIGURE 7 The Combined Code weighting as in Figure 7 is based on the different items that constitute the four main areas in the Combined Code. The Board and composition get 50% weighting because they have eight out of the sixteen items in the Combined Code and thus are most important to overall quality of corporate governance of the BAPCCUL. While remuneration and accountability has three items each out of the sixteen items and finally relationship with shareholders constitutes two out of the sixteen items, making it least important. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 28
  29. 29. FIGURE 8 BAPCCUL GOVERNANCE WIEGHTS BAPCCUL GOVERNANCE relationship with shareholders and institutional investors 6.25% 12.50% accountability and audit 0.00% remuneration 32% Board and composition FIGURE 9 BAPCCUL VS COMBINED CODE BAPCCUL POINTS COMBINED CODE WEIGHTINGS 6.25% 12.50% relationship with shareholders 12.50% 18.75% accountability and audit remuneration Board and composition 0% 18.75% 31.50% 50% An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 29
  30. 30. 4.2 CONCLUSION OF EVALUATION AND IMPLICATION TO OVERALL BAPCCUL GOVERNANCE From the researcher’s perspective and from a theoretical point of view, good governance means complying with all the sixteen items in the Combined Code. With respect to the evaluation above, Board and composition gets the most weighting and the BAPCCUL complies with five out of the eight items in the area (Figure 7 & 8) giving it a 31.50% out of 50% weighting, which is good in relation to the overall quality of governance in the organization. Remuneration and accountability comes second with a 39% weighting in total, with the BAPCCUL having 0% compliance in remuneration and 12% compliance in accountability, producing a total of 12% weighting out of 39%, which is bad to the overall quality of governance. Concerning relationship with shareholders and institutional shareholders, the BAPCCUL scores 6.25% out of the 12% which ranks average for overall quality of governance. 4.3 STAKEHOLDERS OF BAPCCUL AND INFLUENCE Stakeholders include any group or individual that can affect or be affected by the achievement of the organization’s objectives (Freeman, 1984). The following are the stakeholders of the BAPCCUL: 1) COBAC: French acronym for “The Banking Commission of Central African States.” This body sets the regulations for all banks and microfinance institutions in central African states see (Banking Commission for Central African States, 2002). 2) CAMCCUL: The umbrella organization based on the COBAC microfinance regulations to control all the credit unions. This organization acts mainly as the supervisory and control organ of the credit union. This organization sets the internal control and accounting norms for all credit unions (http://www.camccul.org/camccul.org). 3) NON-BOARD MEMBERS: The individuals who have accounts and are eligible for loans. Members are the main owners of the credit union and participate in general meetings of the organization. 4) COMMUNITY: The non-members of the credit union who are affected by the activities of the credit union. 5) EMPLOYEES: The people paid to carry out the operation of the organization, including the Manager. 6) BOARD AND COMMITTEE MEMBERS: The members elected to sit on the Board to protect members’ investments and ensure the going concern of the organization. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 30
  31. 31. The stakeholders influence on the BAPCCUL’s objectives is determined using the MENDELOW Power-Interest grid as found in (Johnson and Scholes, 2008) and (Campbell, 2008a). Power (P) is the stakeholders ability to influence the objectives of the organization while interest (I) is the willingness to influence the objectives. LOW I HIGH  HIGH  COBAC Keep Satisfied CAMCCUL  Board and committee  Members Key Players P LOW  Community Minimal Effort  Employees Keep Informed Although it is a very important framework, the issue with this framework is that it is very hard to find ways of effectively measuring the stakeholder’s power and interest. Also the grid depicts their position as static, positions can change with respect to circumstances in the business environment (Campbell, 2008a). 4.4 IMPACT OF OVERALL QUALITY OF GOVERNANCE ON KEY STAKEHOLDERS From the grid, the members, the Board and CAMCCUL are the key stakeholders due to their high interest and power to influence the BAPCCUL’s objectives. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 31
  32. 32. MEMBERS 1) The Board members chosen by the members might act based on their personal interest and the interest of those who voted them into their position, therefore potentially causing animosity among other members in the credit union. 2) The lack of sufficient information about the company’s going concern inhibits the members from evaluating the company’s viability. 3) Lack of transparency of the Board’s remuneration is detrimental to the savings and deposits of the members since these Board members might potentially approve exorbitant salaries for themselves. 4) The governance structure gives members the opportunity to run the organization by choosing their own members to head the Board and the committees. BOARD AND COMMITTEE The BAPCCUL’S governance gives the Board the opportunity to represent their fellow members, run the organization for their interest and reduce the agency problem in the organization. Poor governance could create animosity between the members and the Board, thus leading to serious problems in electing new members in the long run to manage the organization. Board members might also lose their integrity, thus leading to high scrutiny of their activities by the government and regulatory bodies of credit unions. CAMCCUL As the umbrella organization for all credit unions, governance of the credit unions has a serious impact on the performance and public image of the CAMCCUL. The BAPCCUL is the second largest credit union in Cameroon (Innocent, 2007) and poor governance in this organization will increase doubt in the credibility of their umbrella organization to control the industry. This may lead them to face serious sanctions from the COBAC and the government. Good governance will enhance public image and performance. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 32
  33. 33. 4.5 LIMITATION OF RESULTS . The following are the limitations of the result: 1) The questionnaire used as the primary source of information has many disadvantages as aforementioned; this limited the response because respondents might have given insincere responses or incomplete questionnaires. 2) Access to some information was not possible since it was considered confidential or not available. 3) Absent members and Board members during the interviews and disruptions during the interviewing process made it difficult to collect reliable information for the research. 4) There may be some bias in the organization based on the responses of the employees or members who are not happy with the Board and other aspects of the organization. 5) There might also be the possibility that the Combined Code model is not suitable for the evaluation of a small microfinance enterprise in a developing country for the researcher to make his evaluation, due to the different reasons aforementioned. 6) The limited number of publications on the BAPCCUL’s governance made it difficult for the researcher to get other perspectives, compare conclusions or gather more information conducted outside of this project. 7) The 1T and 7S model might not be the best possible model to describe the Board since it may not contain all the specifications needed to describe a Board in Cameroon. 8) The use of software such as Atlas.ti to thoroughly analyze data was not available to the researcher in Cameroon. 4.6 WEAKNESSES 1) The President of the BAPCCUL Board acts as both the Chairman and the CEO of the organization. 2) There are no remuneration, audit or nomination committees in the BAPCCUL. 3) Board members’ term of five years in office is long compared to the three-year term required by the Combined Code. 4) There is no policy on evaluating Board performance. 5) The President of the Board may influence the granting of loans for himself and his friends since he has a lot of power to control the Board and the day to day running of the organization. 6) The BAPCCUL has no clear mission statement or ethical code to guide the employees of the organization. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 33
  34. 34. 7) CAMCCUL sets the internal control and audits the organization, thus limiting independence. 8) The credit committee is made up of Board members who may overlook or intentionally disregard loan procedure in giving out loans to their friends. 9) Directors are involved in the determination of their salaries and bonuses. 4.7 RECOMMENDATIONS 1) The positions of CEO and Chairman of the Board should be given to two separate individuals. 2) The Board should bring in outside directors who can help improve the Board’s independence and skills. 3) Nomination, remuneration and audit committees should be created. 4) The Board’s performance should be evaluated yearly with an evaluation policy drafted by the committees and CAMCCUL. 5) The Board should provide reports on their salaries and other benefits. 6) CAMCCUL should act as the internal auditor while letting the credit unions appoint their external auditors to give an independent report on the financial status of the company. 7) CAMCCUL should not set up the internal control or audit the credit unions. These activities impair their independence as external auditors. 8) The Education committee should organize more seminars and workshops for Directors and members so as to enhance members’ skills and ensure good succession planning. 9) More disclosure should be provided in the financial reports of the credit union for members to analyze the company’s performance and financial position. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 34
  35. 35. SECTION TWO SKILLS AND LEARNING STATEMENT CHAPTER 1: LESSONS LEARNED FROM MEETING WITH YOUR RESEARCH MENTOR AND PRESENTATION While meeting with my mentor, I had the opportunity to practice and learn many valuable skills for my professional development and the RAP. The skills learned are as follows: 1) COMMUNICATION SKILLS: The meetings with my mentor enabled me to enhance my listening, speaking and non-verbal communication skills. During the course of the meeting, I learned to establish a rapport with my mentor by listening carefully and attentively to ensure that my mentor’s suggestions became part of the RAP. I learned to present my own ideas to my mentor while being mindful of my body language, attentive to professional discourse, and demonstrative of proficient English. 2) PLANNING SKILLS: Planning was one of the greatest skills I obtained during the course of my meetings with my mentor. Based on my mentor’s tight schedule, I had to ensure that the time for the meeting was well planned and that the scope and quality of the discussion was organized before the meeting so as not to waste my or my mentor’s valuable time discussing matters not relevant to the project’s success. 3) IT SKILLS: I learned to demonstrate to my mentor the knowledge of Microsoft Office EXCEL, PowerPoint, and Word programs. PowerPoint was used to present the work to my mentor, thus enabling me to show the mastery of how to design and summarize materials in slides that can be easily understood by professionals in all fields. I also demonstrated my ability to import data from one application to another and how to design charts in EXCEL. 4) SELF REFLECTION SKILLS: Meeting with my mentor enabled me to examine my performance carefully, identifying weaknesses in my project and ideas. The meetings also helped me to reflect on other skills such as communication, IT use, and planning in order to understand my weaknesses and strengths for future improvement. 5) Finally, I understood the importance of values such as patience, self-discipline, and frustration mitigation. My mentor was busy most of the time, which left me to wait several hours to discuss the project. Many times, meetings were cancelled and rescheduled which conflicted with my schedule. With patience and discipline, however, I ensured that meetings ended successfully and both parties were satisfied. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 35
  36. 36. CHAPTERS 2: HOW WELL YOU THINK YOU HAVE ANSWERED YOUR RESEARCH QUESTIONS? I believe the project questions have been thoroughly answered based on the information gathered from the questionnaire and other data sources utilized. I distributed 149 copies of the questionnaire to different individuals in BAPCCUL (employees, Non-Board members and Board members) based on the samples chosen by category. A majority of the questionnaires were “Yes” or “No” questions and these were analyzed to get percentages of the answers (Appendix 1). Though not all the respondents answered the questions, the non-responding group and blank answers was taken into consideration to demonstrate ignorance, complacency or refusal to answer the questions. Questions 24 to 30 of the questionnaire were ignored in the analysis of the questionnaire responses since 90% of respondents to question indicated “No” to the existence of an audit committee. Based on the low response rate on question 23 and the poor response rates in other questions, I did not consider these responses while answering the research questions on audit committees. Interviews were a very important source of information in answering the research questions. I mostly targeted Board members in the organization. These questions investigated Board system and Board succession planning among other things. The President of the Board and two other Board members did not make it for the interview since they were busy. The other interviewees responded well, however, and provided valuable information for the research question. The request for information was principally to provide corroborative evidence for the questionnaire and the interview. This information included the organization structure of BAPCCUL, articles of microfinance regulation, names of Directors, committee members and the different committees, etc. The request for information provided evidence on the number of Directors, the members in the committee and also brought to limelight the presence of key stakeholders such as the COBAC and the CAMCCUL that are involves in the regulation of the credit union. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 36
  37. 37. CHAPTER 3: HOW HAVE YOU DEMONSTRATED YOUR INTERPERSONAL AND COMMUNICATION SKILLS DURING THE PROJECT WORK? I was able to put to use a number of communication and interpersonal skills in the process of undertaking this research. The ability to build trust was a valuable interpersonal skill I gained in carrying out the project. I learned to win the trust of the Manager and Board members for them to be interviewed and for the Manager to provide valuable and confidential information for my project. The project was an opportunity for me to demonstrate professional etiquette as I had to meet Managers and other business professionals. This etiquette was necessary to obtain information for writing a good project. This professional etiquette showed my maturity and professionalism of my work. Handling difficult people and situations was one of the most important interpersonal skills I learned from carrying out the project. Many individuals were arrogant and reluctant to answer the questionnaire or interview questions. Some thought it was a waste of their time, but I persuaded them by explaining the importance of the project to me and to the organization. The project helped me to enhance my negotiation skills since I had to make sure I achieved a win–win situation with my project mentor. I did not want to waste my mentor’s valuable time or my own. I negotiated with the interviewees about the time and place to hold the interview. Making a PowerPoint presentation was a good opportunity for me to put my public speaking skills to the test. I had to ensure that my oratory skills and body language were appropriate for the scenario. I encountered some hurdles during this meeting, like speaking loudly, fluently presenting ideas and demonstrating mastery of the English language. I used my writing and presentation skills in presenting clear and comprehensive information. The project was an opportunity to test my listening skills since I had to listen carefully to the responses of the interviewees to ensure accurate representation in the written project. I discussed and debated some aspects of my research with friends and other professionals interested in the topic. This demonstrated my ability to engage constructively and professionally in intellectual debates. Finally, I learned how to establish a rapport with individuals during first meetings. This skill is important not just for the project but also for my professional development in a business environment. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 37
  38. 38. CHAPTER 4: HOW HAS UNDERTAKING THE RAP HELPED IN YOUR ACCOUNTING STUDIES OR YOUR CURRENT EMPLOYMENT? Corporate governance is a major topic in the business world and accountants should understand how the governance of their organization impacts performance and gives the organization a competitive advantage or disadvantage. Undertaking the RAP was an opportunity for me to understand corporate governance in a specific organization. This understanding enhances my knowledge in this topic and has given me practical experience on a well-debated and contemporary management topic. Undertaking the RAP was an opportunity for me to add more value to my accounting knowledge, giving me the chance to practice my interpersonal skills, information technology skills and planning abilities. All of these skills are valuable in the business environment today. The era when accountants were known to be “number-crunchers” are long gone. Accountants are now expected to participate in major organizational strategies and to communicate their ideas to other professionals in a clear and concise manner. Accountants are expected to have high moral standards. The ACCA emphasizes the importance of ethics in the profession and demands that its members and students uphold high ethical principles. This project was an opportunity for me to uphold high ethical principles such as confidentiality, integrity, and professional due care. I learned to handle confidential information and make judgments regarding pertinent areas in the RAP. Undertaking the research was an opportunity for me to use accounting models in real life situations and question the practicality of these models in different business cultures, thus identifying the limitations of the models. I came to understand the difficulties that accounting scholars face when carrying out research and testing models in different business scenarios. I learned how real life situations can differ from the theoretical concepts that are based on assumptions. Finally, I believe that writing this RAP has improved my ability to write papers concerning accounting and non-accounting topics. I know these skills will help me in my future studies and competitively position me for a successful career in accounting An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 38
  39. 39. References A Guide to the Sarbanes-Oxley Act (2006) http://www.soxlaw.com/ (Accessed on 10 July 2010). Anand. S. (2007) Essentials of Sarbanes-Oxley. New Jersey. John Wiley & Sons. BAPCCUL, (2005).The Union, How to become a Member of BAPCCUL.2nd edition page 8 BAPCCUL (2010) Annual Report. BAPCCUL (2010) Article of Association, Board of Directors and committees’ pages 12 & 13. Banking Commission for Central African States text relating to exercise of microfinance activities, (2002). www.imf.org/external/pubs/ft/scr/2006/cr06321.pdf (Accessed on 12 June, 2010). Campbell D. (Jan. 2008). All About Stakeholders Part 1. ACCA Student Accountant Magazine http://www.accaglobal.com/students/student_accountant/archive/2008/82/30543 Campbell, D. (April 2008). Rules, Principles and Sarbanes Oxley” ACCA Student Accountant http://www.accaglobal.com/students/student_accountant/archive/2008/85/3086513 CAMCCUL (2010). Our Services. Available at: http://www.camccul.org/camccul.org/service. Accessed on (22 April 2011) Cooper, D.R., Schindler, P.S. Business Research Methods. Irwin-McGraw Hill Combined Code. June 2008 http://www.frc.org.uk/corporate/ukcgcode.cfm (Accessed on 14 June 2010) Doane, D. Seward, L.E . (2008). Essential Statistics in Business and Economics 1st edition.USA: McGraw Hill. Freeman, R. (1984). Strategic Management: A stakeholder approach. Boston: Pitman. ISBN 0273019139 Johnson, G., Scholes, K. & Whittington, R. (2008). Exploring Corporate Strategy 8th Edition. UK: FT Prentice Hall. Frederic S. Mishkin. (1998). The Economics of Money, Banking and Financial markets. Fifth edition. USA: Addison-Wesley. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 39
  40. 40. Rowa. N. (2008) .How to Evaluate a Company’s Corporate Governance: http://www.helium.com/items/1241817-how-to-evaluate-a-companys-corporate-governance (Accessed on 8 June, 2010) R Hussey. (1999) Oxford Dictionary of Accounting. Second Edition . Oxford press Perry R. (2004) Statistics Explained 2nd edition Routledge Phill Griffiths, (2005) Risk Based Auditing. England: Gower publisher Jill Solomon. (2007). Corporate Governance and Accountability. 2nd edition. Chichester. Wiley. Tayu Innocent . (2007). Bamenda Police Co-operative Credit Union holds 33rd Annual General Meeting. The Entrepreneur. Available at: http://www.entrepreneurnewsonline.com (Accessed on 27 April 2011) OECD. (2004). Principles of Corporate Governance. Paris: OECD Oxford Advanced Learner’s Dictionary (2011) Available at http://www.oxfordadvancedlearnersdictionary.com/ (Accessed; 15 April 2011) An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 40
  41. 41. APPENDICES APPENDIX 1: QUESTIONAIRES ON CORPORATE GOVERNANCE AND IMPACT ON STAKEHOLDERS FOR BAPCCUL I am undertaking a research project on corporate governance for a Bsc in Applied Accounting at Oxford Brookes University under the ACCA program. This information requires the collection of various data on corporate governance. This questionnaire is an effort toward accumulating such data for the purpose of academic research only. 1) How many directors are on the Board? 2) How many are: a) Executive Directors………………….. b) Non-Executive Directors…………….. 3) The Chairman of the Board has been elected from the: a) Executive Directors b) Non-Executive Directors 4) Is the same individual concurrently occupying the positions of CEO and Chairman? a) Yes b) No 5) Are the functions of the President and the Chairman of Board clearly defined by the Board of Directors? a) Yes b) No 6) Are any particular skills or knowledge required to become a member of the Board? a) Yes b) No 7) Are there any orientation courses or other educational courses in order to improve the Board’s competence and acquaint them with the company? a) Yes b) No DUTIES AND RESPONSIBILITIES OF THE BOARD 8) Has the statement of ethics code been issued and endorsed by the Board? An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 41
  42. 42. a) Yes b) No 9) Has the Board adopted a vision or mission statement? a) Yes b) No 10) Has the Board formulated corporate strategies and announced significant policies? a) Yes b) No 11) Has the Board ensured the implementation of effective internal control? Yes b) No a) 12) Are all significant matters brought to the attention of the Board of Directors, e.g. investments or delinquent loans? a) Yes b) No 13) Please list some of the duties and responsibilities of the Board of Directors: .......................................................................................................................................... .......................................................................................................................................... .....................................…………………………………………. BOARD MEETINGS 14) How many Board meetings have taken place over the last two years? ………………………………………………………………………………………….. 15) Are the minutes of the meetings properly recorded and sent to the Directors in a designated period of time? a) Yes b) No 16) Does the Management ensure that notice is sent some days prior to the meetings? a) Yes b) No 17) Are all significant issues addressed in the Board meetings for the Board’s consideration? a) Yes b) No FINANACIAL REPORTING AND INTERNAL CONTROL 18) Does the Board of Directors present a balanced and understandable report about the position and prospects of the company? a) Yes b) No An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 42
  43. 43. 19) Does the Board explain their responsibilities for preparing the account in the annual reports? a) Yes b) No 20) Are there any reports by the Directors concerning the going concern of the company and their assumptions? a) Yes b) No 21) Does the company circulate the required information to the government and other regulatory bodies? a) Yes b) No 22) Is there an annual review of the internal control by the Board? a) Yes b) No AUDIT COMMITTEE AND AUDITORS 23) Has an Audit committee been established in the BAPCCUL? a) Yes b) No 24) How many members are Executive Directors……… or Non-Executive Directors …………? 25) Is the Chairman an a) Executive Director b) Non-Executive Director 26) What are the responsibilities of the Audit committee? ............................................................................................................................ ....................................................................................................................……. 27) Who recommends the auditors to the members or the Board ? a) Audit committee b) Others 28) How many meetings of the Audit committee have taken place over the last 12 months? ……………… 29) Is the internal audit An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 43
  44. 44. a) In-house b) Outsourced 30) In case of In-house, how many are members consist the Audit team? ……………………. 31) In case of Outsourced, who is the person responsible as the liaison in the company? a) Audit committee b) Manager c) CEO EXTERNAL AUDITORS 32) Has the External Auditor been appointed? a) Yes b) No 33) Did the Partner attend the last general meeting? a) Yes b) No 34) Is the External Auditor independent in his audit? a) Yes b) No If not, please give reasons: ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… SHAREHOLDER RELATIONSHIP AND VOTING RIGHTS 35) Who are the shareholders of the BAPCCUL? a) Individuals b) Institutions 36) Do the shareholders have equal rights? An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 44
  45. 45. a) Yes b) No 37) Are you satisfied with the way the BAPCCUL is controlled and directed? a) Yes b) No 38) If not satisfied with the control and direction, please state the reason(s): ………………………………………………………………………………………… ………………………………………………………………………………………… ……………………………………………………………………………………… An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 45
  46. 46. QUESTION MEMBERS Yes No NA BOARD Yes No NA EMPLOYEES Yes No NA 1 2 3 4 5 80 0 10 70 10 30 100 0 0 80 0 20 60 0 20 80 20 20 6 7 8 9 10 0 70 0 30 80 60 0 75 60 0 40 30 25 10 20 0 100 0 40 100 75 0 70 60 0 25 0 30 0 0 0 90 0 20 80 90 0 90 70 10 10 10 10 10 10 11 60 30 10 90 0 10 80 10 10 12 70 20 10 80 10 10 90 - 10 13 - - - - - - - - - 14 - - - - - - - - - 15 - - - 100 0 0 - - - 16 - - - 70 20 10 - - - 17 - - - 60 30 10 - - - 18 60 - - 100 0 0 70 - - 19 30 - - 50 - - 30 - - 20 40 - - 60 - - 40 - - 21 30 - - 100 - - 100 - - 22 60 20 20 80 - - 80 - - 23 0 90 10 0 100 0 70 20 10 24 - - - - - - - - - 25 - - - - - - - - - 26 - - - - - - - - - 27 - - - - - - - - - 28 - - - - - - - - - 29 - - - - - - - - - 30 - - - - - - - - - 31 - - - - - - - - - 32 95 0 5 100 0 0 80 0 20 33 75 0 25 90 0 10 90 0 10 34 40 40 20 70 20 10 70 30 0 An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 46
  47. 47. - - - - - - - - - 36 80 10 10 80 0 20 70 20 10 37 65 20 15 70 20 10 60 40 0 38 70 20 10 80 0 20 50 40 10 35 B) MEARSUREMENT SCALE FOR BOARD ANALYSIS OF QUESTIONNAIRE SCALE PERCENTAGES % 0 1 2 3 4 5 6 7 8 9 10-13 0 10 20 30 40 50 60 70 80 90 100 C)_MEARSUREMENT SCALE FOR EMPLOYEES ANALYSIS OF QUESTIONNAIRE SCALE 0 0-4 4-8 8-12 12-16 16-20 20-24 24-28 28-31 31-33 33-36 PERCENTAGES % 0 10 20 30 40 50 60 70 80 90 100 An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 47
  48. 48. D) MEASUREMENT SCALE FOR MEMBERS ANALYSIS OF QUESTIONNAIRE SCALE 0 0-5 5-10 10-15 15-20 20-25 25-30 30-35 35-40 40-45 45-50 50-55 55-60 60-65 65-70 70-75 75-80 80-85 85 -90 90-95 95-100 PERCENTAGES % 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 APPENDIX 2: An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 48
  49. 49. Interview questions directed to Board members: 1) What are the conditions for becoming a member of BAPCCUL credit union? 2) What are the conditions for members to become Board members? 3) When are elections for Board members due? 4) How long can each Director stay in the Board? 5) How can a board member become a President or Vice President of the BAPCCUL? 6) How many committees are present in the BAPCCUL? 7) Can you explain precisely the function of each committee? 8) How many members are present in each committee? 9) How many workshops and seminars have been held in the past two years? 10) What were the workshops about? 11) Did you participate in the workshops? 12) Is there any succession planning for the Board President, Board members and committee members? 13) What information does the company provide to the members apart from the balance sheets and income statements? 14) Does the company have a risk management system for identification and analysis of business risk? 15) Is there any system in place to evaluate the Board’s performance? Who evaluates their performance? 16) How are the directors remunerated? Do they participate in deciding their remuneration? APPENDIX 3: BOARD OF DIRECTORS AND COMMITTEE MEMBERS An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 49
  50. 50. BOARD OF DIRECTORS 2009 PRESIDENT MR MUSA SHEY NFOR VICE PRESIDENT MRS TUMASANG FLORENCE MEMBER MR NKERBU LAMNYAM ELKANAH MEMBER MR NFI JOSEPH LON MEMBER SHEY SANTE AUGUSTINE MEMBER MRS NGU REGINA TIMBONG MEMBER MRS ASANA FELISIA AKWESE BOARD EXECUTIVE 2009 UNION PRESIDENT MR MUSA SHEY NFOR VICE PRESIDENT MRS TUMASNG FLORENCE MEMBER MRS NGU REGINA TIMBUNG SUPERVISORY COMMITTEE CHAIRPERSON SECRETARY MEMBER MRS FORTINGO JUSTINE MR TALLAH JACKSON MRS NEBA SOPHIE EBUDE WOMEN’S COMMITTEE 2009 CHAIRPERSON/SECRETARY MRS MBANWIE NEE GRACE MAH FRIE MEMBER MRS EUNICE BONGKISHERI MEMBER MRS ZENGI DELPHINE CREDIT COMMITTEE 2009 CHAIRPERSON MRS NGU REGINA TIMBONG An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 50
  51. 51. MEMBER SHEY SANTE AUGUSTINE MEMBER MR. NFI JOSEPH LON EDUCATION COMMITTEE 2009 CHAIRPERSON MRS TUMASANG FLORENCE MEMBER MR NKERBU LAMNZAM ELKANAH MEMBER MRS ASANA FELISISA AKWESEH An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 51
  52. 52. Hierarchy Accountability Chart of BAPCCUL General meeting Supervisory committee Women committee Board of directors Credit committee Education committee MANAGER Admin clerk Assistant manager Loan officer Senior accountant Education and PR officer Management IMF system Assistant public relation officer Loan clerk Account clerk Cashier Office clerk An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 52
  53. 53. GLOSSARY ACCA: Association of Chartered Certified Accountant. Audit (n): The examination of the books and accounts of a company. Audit committee (n): A committee of a company’s board of directors that monitors finances, on which the company’s Executives cannot sit. Auditor (n): A person who audits. Board members (n): A group of directors elected by the members to run the company. CAMCCUL: Cameroon Cooperative Credit Union League. COBAC: Commission Bancaire de l'Afrique Centrale. Combined Code: A principle-based approach of corporate governance used in the UK. Community: A group of people living in a particular local area. Corporate governance: The way an organization is run, including the power of the Board of Directors, audit committee, ethics treatment of workers, salaries etc. Credit risk: Risk that a borrower may not be able to repay his loan. Credit union (n): A group of people who pay in regular deposits or subscription, which earn interest, that are use to give loans to others. Director: A member appointed by other members to run the company or sit at the committees of the company. Ethical code: A system of principles governing morality and acceptable conduct. Executive Director: Director that pays full time attention to the work of the company. Foreign exchange risk: Risk resulting from the change in the price of foreign currency. Independent: That all matters relating to the assignment and independence in mental attitude are to be maintained by the auditors. This means freedom from bias, which is possible even when auditing one's own business (independence in fact). It is important that the auditor be independent in appearance (that others believe the auditor is independent). Internal control: Internal control policies and procedures are designed to provide reasonable assurance that specific entity objectives will be achieved. It consists of the control An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 53
  54. 54. environment, risk assessment, control activities, information and communications, and monitoring. Internet: A computer network consisting of computer networks that use TCP/IP protocols to facilitate data transmission and exchanges. Liquidity risk: A risk that a depository institution will not have sufficient cash or liquid assets to meet borrower and depositor demand. Nomination committee: A committee involved in nominating directors for control of the company. OECD: Organization for Economic Cooperation and Development. Population: The complete set of things we want to investigate. Primary source: A document or physical object which was written or created during the time under study. These sources were present during an experience or time period and offer an inside view of a particular event. Random sample (random-number sampling): Identical probability of each population item being selected for a sample. Also, the use of random numbers to select a random sample from a population. Remuneration committee: A committee involved in determining the salary and bonuses of Directors. Respondents: Those who answered the questions in the questionnaire. Risk: A chance of something happening that will have an impact on the business objective. Sample: A subset of the population that is a smaller number of items picked from the population. Sarbanes-Oxley: An act established by the Public Company Accounting Oversight Board that added requirements for publicly traded companies, their officers, boards and auditors. It increased penalties for corporate financial fraud. Secondary source: A secondary source interprets and analyzes primary sources. These sources are one or more steps removed from the event. Secondary sources may have pictures, quotes or graphics of primary sources in them. Shareholder: A person who owns shares of a company. Stakeholder: Someone who can influence or be influenced by a company’s decisions. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 54
  55. 55. Strategic risk: Risk due to weak governance, weak leadership, poor strategic relations, regulatory and administrative reasons. Skills: The ability to do something or make use of knowledge. Non executive board members: Members who are not involved in the daily management of the company but are present in the committees. Operational risk: failure of internal system, processes, technology, humans or external parties. An Evaluation of the Quality of Corporate Governance in Bamenda Police Co-operative Credit Union LTD (BAPCCUL) and Impacts on Key Stakeholders 55

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