Sport Governance and Administration

Transcription

1 Sport Governance and Administration Sample mark scheme January 2016 ICSA 2015 Page 1 of 19

2 Section A Question 1 This question draws on material provided in Module 1, Section A and may draw on elements of Section B. Answers need to define the meanings of governance and management and provide examples of how this should manifest itself with the way a typical sports club operating in the not-for-profit/voluntary sector is structured. The differences between governance and management should then be discussed. Answers should use theories of governance and focus on the principles of good governance, explaining why these principles are relevant to a sport organisation operating in the not-forprofit/voluntary sector of the sport industry and how such principles can be applied with limited resources. Any examples provided should highlight the typical situation in voluntary sport organisations and discuss how understanding the differences between governance and management ensures that organisational structures are established to overcome these differences by enabling the board to strengthen its role in setting strategic direction and in particular effectively monitoring and evaluating the progress of activities dictated by the organisation s strategic plan. Answers could include the following content Definition of governance and management Defining governance and management and the differences between them. Governance Governance involves establishing the systems and processes by which an organisation defines and achieves its mission and objectives. The board is selected by the membership to govern the organisation. A governing board primarily sets the strategic direction of the organisation, makes strategic decisions and ensures that goals are achieved in the best interests of the members. The board then facilitates, monitors and evaluates the implementation of strategy by managers as they make day-to-day operational decisions and carry out actions that meet established objectives. In particular the board: o ideally does not undertake management tasks o reports accurately on the use of organisational funds and assets o ensures that the constitution is upheld at all times and evaluated periodically o operates according to best practice in good governance o understands the need to place the organisation before board members personal interests. Principles of good governance in any sector include fairness, accountability, responsibility and transparency. Comprehensive understanding of organisational structures, the role of the board and the contribution it makes to the sports body. Consideration of board evaluation which can highlight the effectiveness, or lack thereof, of board and management functions and performance. ICSA 2015 Page 2 of 19

3 Question 1 (cont ) Management Management is responsible for implementing operational, day-to-day processes to achieve outcomes established by the board and approved by the members. Management may be carried out by paid staff or either specialised or non-specialised volunteers. Management responsibilities are delegated by the board to specific individuals such as appointing a coach or to a committee such as a selection committee or an events committee. Understanding that board members or those involved in governance roles may undertake a management position in the organisation but in doing so must make certain provisions at board meetings to declare their conflict of interest on specific issues where that is the case. The implications of not effectively separating governance and management For example: difficulties in managing conflicts of interest disenfranchisement/unhappiness of the members setting aside of good practice in governance in order to meet urgent management priorities lack of checks and balances and oversight of strategic direction disaffected managers due to excessive board member interference breakdown in trust and professional relationships between board and management creating apathy throughout the organisation and its members the annual General Assembly may become ineffective as members lose interest and faith in the board operational tasks carried out by the board may lack appropriate scrutiny and this in turn reduces the transparency and accountability of decisions and actions taken by the board, creating opportunities for self-interest to predominate and corruption. A discussion around structuring the organisation to recruit more people who take responsibility for implementing strategy may be included, thus recognising that, by forming working groups or sub-committees, it is possible for the board to delegate managerial functions effectively and foster a sense of inclusivity and affiliation throughout the organisation. Using governance theory Theoretical frameworks which guide the establishment of systems of governance. For example: organisational theory agency theory stakeholder theory and other theories such as: o managerial hegemony theory o institutional theory o legitimacy theory o resource dependence theory o stewardship theory. Examples or evidence of how such models have been applied in sports organisations may be used to illustrate answers. In addition, evidence of where sports bodies rely wholly on volunteers as board members and operational leads, governance theory can support effective separation of duties. ICSA 2015 Page 3 of 19

4 Level Mark Descriptor 0 No rewardable material. Level A few key points listing the differences between governance and management are identified. However no attempt has been made to discuss the implications for organisations that do not separate these functions. Answers will not refer to principles of good governance. Award up to a maximum of only 5 marks if the answer comprises a list of recalled knowledge on the topic and does not attempt to address the implications of boards that carry out both governance and managerial functions. Level Some key points have been described that demonstrate an understanding of the differences between governance and management. Some attempt has been made to discuss the implications of not separating governance and management functions, for example noting that it is common in small voluntary sector organisations to operate in this way. However, discussion is not always clear and examples given are not fully relevant to the question. Reference to principles of good governance may be made, but they will not successfully inform the implications of not separating governance from management. Level A range of differences between governance and management in voluntary sector sport organisations have been explained and the implications of failing to separate out governance and management functions have been discussed, although the structure of the discussion will not always be logical and clear. Examples of applying principles of good governance used to illustrate the answer may not always be relevant to the requirements of the question, but will demonstrate an understanding of governance and how it differs from management. Examples that draw on contemporary issues widely reported in the media might be used or alternatively an in-depth insight based on experience working in a specific organisation may illustrate the points well. The accuracy of examples is not so important, only that the reference reinforces understanding of the issues surrounding the separation of the functions of governance and management are made clear. Level A detailed range of differences between governance and management have been provided with a clearly structured, logical discussion on the implications to voluntary sector sports organisations of not separating the two functions. The answer is supported by relevant anecdotal examples and reference to governance theory and frameworks that illustrate the importance of separating governance from management and the advantages that this presents when striving to achieve best practice in good governance. Examples that draw on contemporary issues widely reported or an in-depth insight based on experience working in a specific organisation has been used to clearly illustrate the implications of not separating governance from management. The answer is logical, well-articulated, developed, and covers all the requirements of the question. ICSA 2015 Page 4 of 19

5 Question 2 Answers should demonstrate an understanding of the commercial and voluntary/not-for-profit organisations that operate in the sport industry, the issues that they face and the theoretical frameworks that explain organisational behaviour covered in Module 1, Section A.4. Answers should also draw on multiple sources of information that demonstrate an understanding of the governance controls that exist in sport organisations in these sectors. These have been presented throughout Module 1, in material provided in section B.1 (best practice in governance), and B.3 (legislation and regulations) in particular should inform the discussion generated by this question. Section C.1 (codes and reports on governance) may be referred to inform how best practice in one sector may inform the other. Answers could include the following content Comparing the governance controls of sports organisations in the voluntary and commercial sectors: Voluntary sector organisations are answerable to their members and as such it is up to the members to hold the board to account. Where sports bodies have paid staff, they will be accountable to the board, usually through a senior executive or CEO. Some CEOs will also be board members and/or company secretaries. Commercial sector organisations on the other hand, are accountable to their owners and the board of directors may include managerial positions such as a CEO who in some cases may also act as company secretary. Commercial sector organisations are more likely to effectively separate governance from management. Voluntary sectors may develop a more commercial approach to the development of their sport by seeing their sport as an opportunity to provide services and products at a price. Theroretical frameworks Answers should draw from theoretical frameworks. For example: Institutional theory to inform how organisations adopt structures that are accepted or expected by a recognising institution such as government, a national governing body, professional society or international governing body. Legitimacy theory to describe how sport organisations are legitimised by their members or stakeholders according to constitutions or statutes that describe the process of legitimacy. Agency theory to describe the relationship between the principal and the agent and the assumptions that surround it, particularly the agency effect, which assumes an agent will put their own interest before the organisation. Stewardship theory supporting the notion that an elected agent will put the interest of the organisation before the individual. Stakeholder theory to describe the stakeholder approach to governance. Resource dependency theory to describe the relationship that may exist between organisations. How each sector could learn from the other The regulatory nature of corporate governance may be advantageous in the voluntary sector for the following reasons: it can improve efficiency it can be seen by stakeholders as a more professional approach ICSA 2015 Page 5 of 19

6 Question 2 (cont ) adopting a more commercial mentality could enhance the ability of the voluntary sector to sustain itself it can encourage people with an interest in the sport and specialist commercial skills to go into specific jobs and board roles rather than relying on interested generalists. The self-regulating nature of voluntary sector organisations may be advantageous in the commercial sector (if implemented correctly) for the following reasons: it could allow a greater delegation of authority across the sector it could reduce bureaucratic processes more recognition of contributions across the organisation and improve the effectiveness of the organisation help to establish a culture of organisation first rather than individuals dominating decision making it could encourage and reward non-financial efforts rather than just commercial success. To access higher marks, answers should include/refer to more than one theoretical framework and accurately provide examples of how applying controls which exist in one sector will enhance the governance and management of an organisation in the other sector. An in-depth understanding of how the legal controls that surround corporate governance may help overcome the problems that are exhibited in the self-regulating system which characterises the not-for-profit/voluntary sector will be described. Level Mark Descriptor 0 No rewardable material. Level A description of governance controls in each sector has been provided rather than a comparison, with little or no reference to relevant theories or suggestions of how each sector can learn from the other. Award up to a maximum of only 5 marks if the answer comprises a list of recalled knowledge on governance in the voluntary sport sector and commercial sector but does not attempt to compare them or suggest how characteristics of one sector might be advantageous in the other. Level An explanation of the differences between the governance controls in each sector has been provided with some attempt at comparison, although the comparison will not be entirely clear. Some attempt has been made to demonstrate understanding of the concepts underlying at least one of the theoretical models and how they might apply to each sector, with a limited attempt made to apply the positive behaviours and characteristics of each sector to the other. Level A detailed comparison of the differences in the governance controls of each sector is provided. A clear understanding of how theory informs the behaviour of people within sports organisations and how relationships are established and maintained should be demonstrated for both the not-for-profit/voluntary sector and the commercial sector. Attempts may be made to refer to relevant theories in the discussion that demonstrate understanding, but the link to understanding the difference between the sectors will not always be clear. Detailed suggestions on how each sector can learn from the other are provided but their relevance may not always be clear. ICSA 2015 Page 6 of 19

7 Level Mark Descriptor Level A detailed and clear comparison of governance controls that apply to not-forprofit/voluntary sector and commercial sector sport organisations is provided, which draws on a thorough and developed understanding of the implications and application of organisational theory. Suggestions on how each sector can learn from the other are supported with clear examples and are presented logically in a manner that is relevant to the requirements of the question. ICSA 2015 Page 7 of 19

8 Section B Question 3 Answers will need to detail the roles and responsibilities of the company secretary as covered in Module 2, Section A and use this material to critically analyse the core duties of the company secretary as they might differ to the role of a secretary in a voluntary sector organisation. Answers should note that voluntary sector sport organisations are essentially self-regulating and under no obligation to establish themselves according to corporate law, but would demonstrate good practice in governance by introducing practices usually associated with corporate governance. Answers could include the following content Roles and responsibilities of a secretary on the board of a sport made up of volunteers. For example: being responsible for all official correspondence on behalf of the organisation disseminating information to the members as required keeping records of all meetings held by the board and organisation on file in an esily retrievable format maintaining a database of members providing practical support to the chair and the other directors ensuring that regulatory requirements are met in the conduct of all meetings providing access to all information needed to make properly informed decisions on all matters under discussion communicating the outcomes of board meetings to members and specifically to those delegated to manage specific operations and activities ensuring that all regulatory and statutory procedures are enforced and maintained with respect to the activities of the organisations and in particular ensuring better communication between the board members and the stakeholders. The responsibilities of a company secretary specifically to the members. For example: being the primary point of contact for the members ensuring that the business of the organisation is carried out according to adopted principles of good governance timely production of documentation for the annual meeting in accordance with the articles of association and a comprehensive annual report which addresses activities agreed at the last AGM ensuring the annual financial reports are provided in a timely fashion coordinating all general and committee meetings as required. The appointment of the company secretary and their powers as enshrined by legislation in the United Kingdom. For example: drafting the agenda for all meetings for the approval of the chair or appropriate board member ensuring distribution of all relevant information and papers in accordance with the articles of association arranging a suitable time and venues for all meetings ICSA 2015 Page 8 of 19

9 Question 3 (cont ) organising general meeting and the Annual General Meeting/Annual Meeting (whichever is appropriate) ensuring minutes are kept of all meetings and that these are made available to members and stakeholders executing instructions made by the board ensuring the board complies with the constitution/statutes and the principles of good governance being responsible for correspondence internally and particularly, externally having custody of the organisation s official seal being responsible for all matters concerning ongoing regulatory requirements ensuring well-kept and accurate records of membership and affiliation. Critical discussion may note that the benefits of introducing a company secretary could result in improved efficiency and communication to and from the board, ensuring that all board decisions are made on a fully informed, transparent and accountable basis, resulting in improved performance of the board in the service of the members. Potentially there may be negative impacts such as increased bureaucracy, inefficiency and duplication which can be noted. Critical analysis may note the importance of establishing trust between board members as well as in their relationships with the organisations stakeholders and note the potential for the company secretary to over manage or micro-manage these processes. Level Mark Descriptor 0 No rewardable material. Level A few key points are listed but no attempt made to relate those to the needs of a voluntary sport organisation or how they might improve its governance. Some general knowledge of the role of the company secretary is demonstrated, but no attempt made to critically analyse why it may be good practice to establish secretarial roles as prescribed by the Companies Act 2006 in a voluntary sector sport organisation. Award up to a maximum of only 5 marks if the answer comprises a list of recalled knowledge on the topic and does not attempt to discuss the benefits and drawbacks of establishing a company secretary to the context of a voluntary sector organisation. Level Some key points are listed with some attempt to describe how they might improve the governance of a voluntary sector sport organisation or a few points described in depth. Most of the points made will be relevant to the situation in the question, but the link will not always be clear. Answers given may focus on one of the benefits or drawbacks of adopting the role of company secretary but lack any critical analysis. Level Most of the key points provided have been explained, or a few key points have been explained in depth, particularly those which are relevant to improving governance in a voluntary sector sport organisation. The majority of points made are relevant to the requirements of the question and there is a clear link to the benefits and drawbacks of adopting the role of company secretary, as prescribed by the Companies Act 2006 within the context of a voluntary sector sport organisation. The critical analysis is presented in a logical format but some minor points might lead to confusion. ICSA 2015 Page 9 of 19

10 Level Mark Descriptor Level Most, if not all of the key points provided are explained in depth. All points made will be relevant to the requirements of the question and there is a clear analysis made of the benefits and drawbacks for voluntary sector sport organisations that might consider adopting a company secretary in accordance with the guidance provided by the Companies Act There is also discussion of the roles and responsibilities a sports secretary and company secretary have to each of the sport s stakeholders. Answers are well structured, making it easy to follow and understand the critical analysis being presented. ICSA 2015 Page 10 of 19

11 Question 4 Answers need to focus on how applying the principles in the Voluntary Code of Good Governance for the Sport and Recreation Sector (VCGG) can serve as a guide to changing the structure and composition of the board and help the organisation effectively meet its changing needs. This can include looking at the potential benefits of to the organisation of applying the principles in the Code in the context of the roles, functions and structures of governing boards in sport organisations covered extensively in Module 2, Section B with elements of Module 1, Section C and Module 3, Section C. Answers could include the following content The board The role of the board and board members, and their responsibilities as guardians of the sport and governors of the organisation. Consideration should be given to how this might need to change as the organisation grows and adapts to environmental changes, for example public policy and investment. Sports bodies might also develop new formats or specialities to enhance customer choice. This may result in: revision to the roles of specific board members such as the introduction of specific portfolios access to specialist knowledge at board or committee levels, including business expertise such as customer care, marketing or business development improved decision making processes awareness of the need to revise planning priorities. Structure of the board A suggested structure that reflects the type of membership described and the activities that HooplaForever undertakes. For example: a Chairperson deputy Chairperson a Secretary a Treasurer up to six board members, some with a portfolio that reflects the likely strategic function that this organisation might have and their individual skills the establishment of sub-committees that specifically address key result areas detailed in the strategic plan for the organisation. a discussion around the appointment and the role of a CEO and the relationship that the CEO has with the board and in particular, the Chair. role descriptions for all board members, including Chair, Vice Chair and Secretary, which set out the core competencies as well as specific areas of expertise required. once appointed, all board members should undertake a comprehensive induction programme that takes account of their knowledge of the sport, especially if they are independent members who have not previously participated at a personal level. to what extent the roles suggested should be executive (i.e. paid roles) or non-executive (unpaid) and either part- or full-time. ICSA 2015 Page 11 of 19

12 Question 4 (cont ) Board composition The board composition should consist of a mixture of appointments from the membership (which may need to be redefined) and independent directors appointed by the board which have specific skill sets. (For example, given the intense activity base this organisation is built upon, a specialist events or competitions coordinator might be recommended). Good answers will be supported with a clear and concise justification for the specific nature of the board members and whether or not they are selected or elected. Voluntary Code of Good Governance for the Sport and Recreation Sector Principles of good governance from the VCGG that may be discussed could include: Integrity of action, with respect to the organisation, over self-interest. Defining and evaluating the role of the board and its members and the role that it plays in contributing to the organisation. Setting the vision, mission and strategic direction for the organisation, while delegating the delivery of this to a separate management team, either voluntary or professional. Objectivity achieved with a balanced, inclusive and skilled board that may include the appointment of independent directors with specific skill sets not currently available from the membership. Consideration should also be given to the diversity of the board and the degree to which it reflects the HooplaForever community. Standards, systems and controls which are properly documented, monitored and regularly revised. Accountability and transparency to the members and stakeholders that underlines a preparedness to stand up to scrutiny. Understanding and engagement with the sporting landscape and the place of the organisation within that landscape. The principles listed above can be implemented and the benefits to the organisation explained. The thinking around the discussion is more important than the accuracy of identification of the component parts. Accessing higher marks Well-constructed answers may include brief discussion on the following key areas: The need for succession planning. Skills audits to identify strengths and possible skills gaps. Processes for electing/selecting members. Induction and training for board members. Establishment of internal committees such as audit or remuneration committees, as well as technical and business-specific committees that reflect strategic goals. Boardroom ethics and behaviours. Board performance reviews. Risk management practices. An overall awareness of best practice in good governance and the attempts that have been made to establish good governance through both legislation and the establishment of standards and codes of ethics. ICSA 2015 Page 12 of 19

13 Level Mark Descriptor 0 No rewardable material. Level A few of the areas covered by the VCGG are identified but their explanation appears vague and unclear. Key points may be listed but without any discussion on how the principles of good governance might inform a restructure of the board brought about by significant growth in size and scope of activity in a sport organisation. Award up to a maximum of only 5 marks if the answer comprises a list of recalled knowledge on the topic and does not attempt to explain how the VCGG might inform changes to the structure and composition of the board. Level Some areas covered by the VCGG are listed, or a few key points described. Most points made are relevant to a discussion around restructuring the board of HooplaForever. However the rationale is not always clear, particularly with respect to moving the board to a structure that may better fit the needs of HooplaForever as it continues to grow and evolve. Level A range of points covered by the VCGG and their implementation are described, or some points have been explained with enough depth to indicate a good level of understanding. The majority of points made are relevant and there is a clear link to the use of the principles of good governance raised in the voluntary code with suggestions for the board of HooplaForever could be restructured to make it fit for purpose. Discussion covers to a significant degree of depth the need for a board to review its structure and functions in response to changes in its operating environment so that it remains fit for purpose. Level A range of points covered in the VCGG are explained in depth and their implementation discussed. Answers indicate a clear understanding of the principles of good governance described within the Code. All points made are relevant and there is a clear link to the suggestions made for how the board at HooplaForever could be restructured to make it fit-for-purpose to meet the changing circumstances it will find itself in. The need to separate governance from management is described along with the appointment of board members who have specific skills sets that meet the needs of the organisation. A clear and logical argument is made for restructuring the board and its functions that is well written and easy to follow throughout. As such all recommendations provided have a clear basis in evidence to support them. ICSA 2015 Page 13 of 19

14 Question 5 Answers need to demonstrate an understanding of the term going concern statement and its place in the annual report for an organisation. Answers should differentiate between the legal requirements in terms of financial reporting for voluntary sports organisations (i.e. there are few) and the principles of good governance which dictate that boards must go beyond what is expected legally. Material should be drawn from Module 2, Sections C and D which are mostly concerned with financial responsibilities and reporting and the relationship of the board with the members. Answers could include the following content Defining what is meant by a going concern statement For example: It is a legal and professional accounting requirement normally associated with the corporate sector. It presumes that the organisation will remain financially viable for the next 12 months on the basis of the budget that is presented. It recognises that assets are reported and measured on the basis of what the organisation is expected to recover in the normal course of business (i.e. exceptional items of income are not anticipated or budgeted for). It recognises that liabilities are measured and reported on the basis that they will be discharged in the normal course of business, however there has to be some provision for contingency/exceptional risks. The purpose and importance of producing a going concern statement As an annual audited accounts statement, it is considered essential practice for a board to ensure one is produced. Even though not-for-profit/voluntary sport organisation directors are not bound by the UK Corporate Governance Code, it is in the interest of good governance practice to produce a going concern statement in the financial report that includes the assumptions and qualifications as necessary. For example, sport organisations which are dependent upon receipt of grants that are subject to the fulfilment of certain obligations, need to qualify the projected receipt of such funds with details of the conditions under which these funds will be received, or indeed withheld. Reference to self-assurance demonstrates an understanding of the sports councils monitoring processes for funded bodies. Production of the statement usually coincides with the annual report delivered at the organisation s annual general meeting (AGM) which is the primary opportunity for members/ shareholders to scrutinise the activities of the board for the previous 12 months. Producing an annual report and accounts statement provides the main opportunity for accountability and transparency to be practiced. It is through these key reports and the submission of proposals for the following 12 months for approval by the members that the board is held accountable to the members. Good financial management inspires the confidence of members and of the organisation s stakeholders. As a not-for-profit/voluntary sector sport organisation, the organisation may be subject to both international and UK accounting standards. In many cases this may require a properly audited financial statement, signed off by an external auditor. The auditor will confirm that the financial statements can be prepared on a going concern basis. ICSA 2015 Page 14 of 19

15 Question 5 (cont ) An awareness of corporate governance codes (e.g. the Cadbury Code 1992) and their impact on financial reporting is desirable. For example, the Cadbury Code s recommendation that each board should have an audit committee made up of nonexecutive directors or in the case of a sport organisations, volunteers with no personal or financial ties to board members or the organisation and who have appropriate skills in auditing, financial and assets management. The purpose of an independent external audit of finances and assets and the advantages it brings to performing good governance. Accessing higher marks Within the not-for-profit/voluntary sector, the board is ultimately responsible for producing a credible financial report which provides the basis for the budget to be approved at the annual general meeting. A good answer will include reference to the FRC Guidance on Risk Management, Internal Control and Related Financial and Business Reporting. Answers may also identify tools and resources available to the board that will assist them to confidently produce a going concern statement. For example: a cash flow statement a statement of financial position/balance sheet a statement of income a statement of changes in equity/member funds establishing an internal audit committee engaging an external auditor to scrutinise the accounts and proposed budget for the organisation. Level Mark Descriptor 0 No rewardable material. Level A few key points that relate to financial reporting are identified and a broad definition of a going concern statement may have been provided. The answer is likely to be in the form of a list that vaguely addresses what a going concern statement is and why it should be produced. The points made are superficial and do not address the importance of a going concern statement and the responsibilities of the board in producing it. Award up to a maximum of only 5 marks if the answer comprises a list of recalled knowledge on the topic and does not attempt to explain the importance of a going concern statement and the role of the board in producing it. Level Some key points that define a going concern statement and describe its purpose and importance have been identified. However the description provided may not be fully developed and the importance of the role of the board in producing an accurate annual financial report for the scrutiny of the members may be partially indicated. There may be no mention of the need to understand the assets and liabilities of the organisation as being as important as a balance sheet. Description of the importance of a going concern statement as an integral part of the annual financial report may lack clarity and fails to emphasise the need for the board to voluntarily include this in order to inform the budget for the next financial year. ICSA 2015 Page 15 of 19

16 Level Mark Descriptor Level A detailed definition of a going concern statement is provided, recognising the importance of accurate statements of assets and liabilities including disclosures that might be needed in order to provide confidence in the annual financial report. However, the description may not always be clearly or coherently structured, leading to some confusion. The importance of the going concern statement is highlighted with most of the points provided supported by explanatory statements although the links will not always be clear. Answers may lack clarity in regards to stressing to the new board their responsibilities to not only produce an accurate statement of accounts but in making all disclosures necessary so that the members can make an informed decision when approving the budget for the following financial period. Level The question has been addressed in full and demonstrates clarity of understanding of what a going concern statement is, its importance both legally and morally to the board and the organisation overall with directors demonstrating transparency in their declarations and the evidence on which they have made the statement. The answer provided highlights the moral obligation of the board to properly inform the members of the viability of the organisation to carry out the activities proposed in the forthcoming financial year. The answer will clearly demonstrate an understanding of how the going concern statement has been derived and how it may inform risk management strategies in the event that cash flows are interrupted or that there are unforeseen contingencies that must be addressed. The role of the board in ensuring an accurate going concern statement is produced is described and should include a description of the tools and resources that are available to help ensure that their going concern statement is accurate and based on credible sources of information. ICSA 2015 Page 16 of 19

17 Section C Question 6 Answers will need to demonstrate an understanding of what a risk management system is and the role of the board with respect to its responsibilities for monitoring and evaluation of plans including risk management and internal control emphasising material covered in Sections B.2, B3 and B4 of Module 3. Excellent answers will also draw on Sections B.1, B.8 and B.9 of Module 3 in particular. Attempts to draw on material on governance covered in Module 1 will be considered exemplary if used to synthesise the material covered in Module 3, specifically on risk management. Answers could include the following content Identification and explanation of the risks sports organisations face. A definition of what is meant by a risk management system and the purpose and benefits of creating an effective risk register as a part of that process. A description of the role of the board in monitoring risk, highlighting the responsibilities of the board in both identifying risk and reacting to its eventuality. Address specifically how effective risk assessment informs the development and implementation of strategy. Risk assessment also influences the decision making process undertaken by the board and how decisions are subsequently articulated to key organisational stakeholders. Risk assessment as a key component of monitoring and evaluation. Risk assessment should be applied to all aspects of an organisation s functions, structures and the projects that it is undertaking. Risk assessment strategies indicate a higher level of planning that appreciates the potential impacts of an action or opportunity on all aspects of the organisation. Risk assessments carried out only on a project strategy without consideration of risks to the organisation itself are superficial and indicative of poor governance. A risk management committee, where proportionate and appropriate, should be established with a clear mandate to monitor and evaluate programmes and projects covered in the organisation s strategic plan. An explanation of the role of an audit committee and its relationship to internal and external auditors. Key components of a risk register are explained, including but not limited to: type of risk; time; description of risk, likelihood of occurrence; severity of effect, ownership and countermeasures. Examples of internal control systems that might be used to monitor risk. An awareness of the UK corporate governance framework for internal control as it might apply to sport organisations. Provision of an understanding of common categories of risks faced by sport organisations and how a risk register assists the organisation to manage these risks as a key component of the framework established for effective internal control across the organisation. Identify the basic elements of an effective risk management system with an emphasis on how this system informs the establishment of a risk strategy that is fit for purpose and context specific. Disaster recovery and business continuity planning based on a what if? strategy is a logical outcome of effective risk management and that is central to good governance in a sport organisation. ICSA 2015 Page 17 of 19

18 Question 6 (cont ) The principles of good governance found in Good Governance a Code of the Voluntary and Community Sector, the Voluntary Code of Good Governance for the Sport and Recreation Sector and other relevant codes. These can be drawn on to explain how effective risk management supports elements including: understanding the role of the board; ensuring the delivery of the organisations purpose over personal ambitions; working effectively both as individuals and as a team; exercising effective control while maintaining a high level of openness and transparency; behaving with integrity based on accepted codes of conduct and being accountable to stakeholders. Accessing higher marks The need to provide training for board members on all aspects of risk management should be established and recognition of this need as a key element of good governance practice indicates a high level of understanding. Level Mark Descriptor 0 No rewardable material. Level A few key points relating to risk management are identified, or one point such as establishing a risk register described in some detail, but without any reference to good practice in governance or the role of the board and its responsibilities to ensure that a risk management process is formally established. The answer may take the form of a list in which points made are superficial/generic and little or no attempt has been made to explain how or why establishing an effective risk management system demonstrates good practice in the governance of a sport organisation. Award up to a maximum of only 5 marks if the answer comprises a list of recalled knowledge on the topic and does not attempt to explain how establishing a formal risk management is an example of good practice in governance. Level Some of the key points are identified, but little attempt to discuss how a formal risk management system contributes to good governance practice. This would imply that little effort has been made to recognise the role of the board in risk management and the need for board members to be trained to understand their responsibilities when it comes to the construction, monitoring and evaluation of the organisation s strategic plan. Most points made are relevant to the establishment of a risk management system, but the link to a wider risk strategy and good practice in governance is not clear. Level Most of the key points have been provided and in particular, a connection made between the key risks faced by sports organisations, the elements of risk management (including the construction of a risk register) and good governance practice. An answer that at least provides a description of the common categories of risk that face a sport organisation. The answer will also demonstrate a clear relationship between the board and the risk management process and how this informs decision making. Discussion should cover most of the key points and refer to the responsibilities of the board in keeping up-to-date with good practice through training as well as managing risk and in turn its contribution to good practice in governance. ICSA 2015 Page 18 of 19

19 Level Mark Descriptor Level The range of key points has been explained in depth. At this level an answer will have a full appreciation of the risks sports organisations face, detailed definitions for all components of a risk management system and may include anecdotal examples of how a risk management system, once established, informs and supports decisions made by the board when these are scrutinised by the members/shareholders. The differing roles of the board and executive will be highlighted and answers will consider how practically possible it is for certain sporting organisations to have such a comprehensive approach to risk management. An answer at this level will refer to a relevant and established document/code on good governance and be able to articulate how the risk management system they have defined relates to established principles of good governance. A clear understanding of the components of a risk register and how this assists the board to formulate appropriate disaster recovery and business continuity plans may be demonstrated. ICSA 2015 Page 19 of 19