ICAN 2022 Corporate Strategic Management and Ethics | Mixed

Abiodun Farms Limited is a company established to engage in poultry farming. Currently, it owns and runs a poultry farm located at Ota, Ogun State. With five years experience in egg production, the company currently produces 700 crates of egg per day, all of which are sold in Ota. The current demand for eggs in Ota is estimated at 2,000 crates per day. The company’s vision is to become the country’s biggest egg producer within the next ten years. As a growth strategy, Abiodun Farms Limited plans to expand production to 10,000 crates of eggs per day through the installation of more cages and pens on its premises at Ota, acquisition of more chicken and other required inputs. The focus is to serve the market for eggs in selected towns in Southwestern Nigeria all of which have an estimated daily demand of 50,000 crates of egg. Production capacity of all competitors of Abiodun Farms Limited in the market for eggs in the Southwest was estimated at 32,000 crates per day. The company hopes to take advantage of this demand gap through the establishment of distribution outlets across major cities in the region for effective marketing. Aggressive advertisement campaign to stimulate demand for its products will also be embarked upon. The establishment of a new poultry or expansion of the production capacity of an existing one has no legal requirements except for making adequate arrangement for waste management. Capital requirement is high. However, the Central Bank of Nigeria (CBN) recently approved the release of soft loans to all interested poultry farmers as part of the government’s agri-loan scheme aimed at promoting farming. Abiodun Farms Limited intends to fund 60% of its growth plan through the agri-loans scheme which the CBN has approved and is currently awaiting disbursement. For the success of the proposed growth strategy, it hopes to leverage on the following: Knowledge and experience of poultry business acquired in the company’s 5 years of operation; Size of land owned by the company where current production takes place is adequate for the proposed expansion; Strong business relationship with the biggest and most reliable suppliers of poultry inputs, such as point-of-lay chicken, cages, feeds, medicines, egg crates, etc; Growth rate of demand for eggs is currently in tandem with that of the population of the country which is estimated at 3%; The company has access to current technology in eggs production which has not changed in decades. It hopes to install automatic solid chicken waste flushers, egg pickers and sorters. There are also plans to employ 2 in-house veterinarians; The problem of kidnapping has become worrisome in the area where the company operates. Recently, it had to pay a huge ransom to kidnappers for the release of one of its kidnapped marketers. To mitigate this risk, the company plans to engage 5 local hunters to provide security for its employees in addition to those securing the farm premises currently; There is currently no public water supply to the farm location. Hence, the company provides its own water, using a huge borehole it drilled 3 years ago which has the capacity to generate adequate water to meet current and future needs. In the same vein, the company relies mostly on its generating sets for its electricity needs. This is because of the unreliable and epileptic public electricity supply; With increase in production of eggs comes an increase in solid waste generation and air pollution. Therefore, it is envisaged that the increased air pollution could attract some negative reactions from people in the Ota community. The company however has an existing waste disposal system which it hopes to expand to properly dispose all poultry waste; and Required human resources are available within the Ota community.

A supermarket chain recently established more outlets in the city. Due to increased risk exposure occasioned by heightened insecurity in the country, the company saw the need to implement an effective management strategy aimed at minimising attendant risks. The need is made even more apparent due to the introduction of more stringent regulatory requirements on handling perishable food items by the National Agency for Food and Drugs Administration and Control (NAFDAC). To this end, you have been engaged to provide advice to the company on risk management.

There is a growing concern that organisations should act in a responsible manner to ensure sustainability of their environment. To this end, environmental reporting has become an important part of the reporting obligation of firms. Hence, you have been approached for advice by a manufacturing company that seeks to incorporate environmental reporting into its annual reports.

Chief Etido has recently increased his shareholdings in Food Plc, a leading manufacturer of some fast-moving consumer goods (FMCG) in the country, to over 51%. As his close friend, he recently approached you for advice on how to actualise his ambition of becoming both Chief Executive Officer and Chairman of Food Plc as he is in several other private limited liability companies.

A friend of yours who recently lost his job came to you for advice on how to invest his life savings in a way that will minimise the risk of loss of capital.

At the Annual General Meeting of TAIMAKO Nigeria Limited, shareholders expressed displeasure about what they considered to be excessively high remuneration paid to members of the company’s board of directors. Some shareholders believed that board remunerations should be tied to the company’s financial performance. Consequently, a group of shareholders has asked you to advise them on the position of the Code of Corporate Governance on remuneration of directors.

All accountants are expected to act ethically in the discharge of their respective duties. In the light of this, evaluate the following concepts as it applies to professional accountancy practice: