part

below.

Explanation:

A basic response would include:

- What a Corporate Governance Framework is - the system of rules, practices and processes which

directs and controls a company. Corporate Governance refers to the way in which companies are

governed and to what purpose.

- Impact this has on policies and processes – means the procurement department follows regulatory

mechanisms (e.g. financial regulations, Codes of Practices), has a checks and balances system (such

as auditing), uses e-procurement technologies, vets staff and suppliers, has a clear segregation of

duties etc.

This is a very open question and there are so many correct answers. In fact, it’s quite hard to give a

wrong answer to this question – as long as your response explains a policy or process that a

procurement department can have that ensures they’re following Corporate Governance – that’s

right!

A good response may mention:

- Corporate governance is in essence a ‘toolkit’ that allows an organisation to effectively manage

itself, ensuring that it’s policies and procedures are compliant with legislation and are ethical. It also

ensures that the company meets its objectives.

- The impact Corporate Governance has on the procurement department will be in mandating the

ways in which goods and services are procured and in the general ways of working of the

procurement department.

- In your response you should mention 5 (ish) different ways Corporate Governance would impact on

how procurement do their job. Examples include:

- Ethical Conduct – corporate governance ensures that the company is operating in a legal and ethical

way. This influences the processes Procurement will do and the type of suppliers they will engage

with. This may also be in their approach to relationships and negotiations- seeking out collaborative

relationships with suppliers rather than looking to exploit them. For example, an organisation that

does not have a Corporate Governance structure may look to take advantage of suppliers and

achieve the lowest cost possible at the expense of the supply chain and local community. An

organisation that has strong Corporate Governance would work with suppliers, developing the

relationships and thinking long-term about the impact on the local community. The organisation may

therefore prioritise standards such as Fair Trade over price, and this would be reflected in the way

tenders are evaluated by the procurement department.

- Use of Checks and Balance system- Corporate Governance ensures strong financial controls are

implemented throughout the organisation. For the procurement department this may result in

purchases being made to strict budgets (rather than just spending whatever they want), and business

cases being written up and approved before the organisation spends a large amount of money on a

single item. Another impact may be in the use of audits. For example, peer reviewing tenders and

contract awards to ensue all members of the Procurement Team are following internal processes

correctly.

- Anti-fraud prevention mechanisms. An important area of Corporate Governance is ensuring the

organisation is free from fraud and corruption. This impacts on Procurement’s policies and processes

as it will mean scrutinising tenders and who is being awarded contracts. It may result in high levels of

Due Diligence being completed on suppliers before entering into contracts and providing a whistle-

blowing service for staff to report issues.

- Security measures- this will be to protect the organisation from risk. It may include the

procurement department vetting new staff by completing background checks. It may also involve the

segregation of procurement duties so that no individual has too much power. E.g. one person raises

the requisition and another person approves the purchase. Security may also be in ways of working

such as password protecting documentation and limiting access to confidential information.

- Use of a Purchasing Policy Manual – this provides operational guidance on procurement policies

and procedures to all staff members. It may detail things like who has permission to order what, who

the Delegated Purchasing Authority (DPA) is and the roles and responsibilities of the team.

An excellent response may also include

- Reasons why Corporate Governance Frameworks impact on procurement policies and practices.

This could include reasons of accountability, reputation and risk management, procurement’s links

with other departments.

- You could also look at what processes would look like with Corporate Governance compared to

without it (with CG = rule driven, autocratic but organisation is protected from risk. Without CG =

laissez-faire, everyone does whatever they like, very risky)

- You could also provide further examples, either real life or hypothetical. Investopedia has some

great information and examples you could use: Corporate Governance Definition: How It Works

(investopedia.com)