Module 3 Part E

Question 1

Family owned business

Answer 1

Distinctive principles of family owned business
1. Longer term prospective
2. Focus on succession
3. Unique culture linked to founder values

Issues
1. Risk of conflict between family members
2. Cost of compliance-cost in running the business if family members don’t have the knowledge, skills and expertise
3. successful growth

To fix
Use a family council- structure family engagement
Establish board of directors

Question 2

Not-for-profit organisation

Answer 2

2 categories
1. Charities
2. other NFP organisation that are not charity

Focuses on social issues
Different forms
-foundation
-trusts
-associations and special types of companies

Accountable to stakeholders

Similarities with objectives and principle between profit sector and NFP
-maintain solvency
-strategy, accountability, performance
-committee structure
-same director’s liabilities

Question 3

Not-for Profit organisation Issues

Answer 3

-surplus funds are reinvested in organisation and not for benefit of employees or owners
-securing ppl with appropriate skills and experience
-resources are extremely short supply and funds should carefully managed
-loss and misallocation of funds is a serious issue

Question 4

Guidance for NFP

Answer 4

• ACNC
• AICD
• ASIC

Question 5

ACNC guidance to NFP

Answer 5

This guidance is for charity.
2 types of charity
- charity operating in Australia
- charity operating outside Australia

Charity should meet ACNC governance standards to register as a charity and comply to those standards to retain the registration

Standards
-Purpose and not for profit nature
-Accountability to members
-compliance with Australian laws
-suitability of responsible people
-Duties of responsible people
-Maintaining and enhancing public trust and confidence in Australian not-for profit sector

Question 6

Public sector enterprise

Answer 6

Implement cost-effective programs in accordance with government legislation and policy
3Es-Economy, efficiency and effectiveness should be the heart of public sector governance
Must satisfy a complex range of political, economic and social objectives
Accountable to stakeholders
Public sector collects and redirect public money for greater social good
Issues
-Unclear boundaries in their delegation
-lack of clarity in their relationship with ministers and portfolio department
-lack of accountability in exercise their power

Solution
-use of committee to enhance effectiveness
-annual board reviews
-appropriate experienced directors
-set terms to ensure rotation of directos