Question

Shaan Goods LLC is a leading manufacturing and trading company. They have a diverse business of Polyester, Chemicals and Life Sciences. The company’s diversified business & product portfolio caters the needs of every industry in the country. Shaan Goods LLC has a strong reputation for excellent quality & customer service. They have laid solid foundation for future growth, with major expansion projects and investments across its diversified portfolio in all of their products. The annual results for Shaan Goods LLC is also encouraging. They are able to deliver resilient performance in year 2018-19. The Company’s net turnover increased by 19% to OMR 82 Million. Net turnover of more than OMR 40 Million is a new milestone for the company and reflects its status as the partner of choice for its valued customers.

The Company has taken all necessary steps to ensure good governance. The management of the company are pleased to follow the code of governance. The financial statements prepared by the management of the company present fairly its state of affairs, the results of its operations, cash flows and changes in equity. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. The system of internal control is sound in design and has been effectively implemented and monitored. As per International Financial Reporting Standards, best practices have been followed in preparation of financial statements and any deviation from these has been adequately disclosed.

Shaan Goods LLC also wanted to play an important part as a responsible corporate citizen. The company recognizes that CSR initiatives in the communities where it operates creates positive impact for the people and improves their lives. As a part of its commitment, the company support the initiatives by providing vocational training and higher education to communities. Considering the growing pressures on environment, the company continues to participate in tree plantation drives and utilizes biodegradable envelopes for the mailing of the official documents. The company has started a campaign to provide safe clean water in the rural areas, more than 100

reverse osmosis plants have been fixed in the last 5 years.

a. During the current pandemic COVID 19, economies are under severe financial stress. Economies have limited resources and unable to provide the basic necessities to their people. In your opinion, how Shaan Goods LLC, with a baggage of huge net worth, can be a good example of corporate social responsibility? Relate their CSR activities to the current scenario created due to COVID 19.

b. Establishing and implementing good governance practices is the most useful activity an

organization can do to create a higher functioning of management, while building the right

foundation for achieving an organization’s vision and mission. Based on your understanding,

evaluate good governance practices followed by Shaan Goods LLC

Answer 1

1. CSR activities undoubtedly has emerged as a real possibility of companies giving back to the society from which they obtain all the necessary resources. The Company has been engaged in the CSR activities for past 5 years or more and have been bringing change in the local area where it operates.

The Company with significant networth could spend a certain amount of money to help alleviate the problem being faced by the people by supplying foods, water and medical equipments to local hospits. These measures would go a long way in helping the Company earn a long term goodwill.

2. Following are the goods corporate governance measure being followed-

a. Board follows the code of governance

b. Appropriate accounting policies have been consistently applied in preparation of financial statements.

c. Accounting estimates are based on reasonable and prudent judgment

d. Internal control testing is performed

e. Deviation in following accounting standards adequately disclosed

f. Company follows CSR policy

The Company could consider following as good governance practice-

a. Ensuring independent director is chairman of the Board

b. There is audit committee and remuneration committee in place

c. Whistleblow policy could be laid down

d. Seperate Internal Audit team be set up