Section A – This ONE question is compulsory and must be attempted
The National Football Association (NFA) is the governing body of the game of football in the country of Geeland and is tasked with administering the rules of the game. The NFA is not a listed company and so is not subject to listing rules. However, as the regulator of the game, the NFA is expected to adopt governance arrangements which are in line with best practice for listed companies. Football is the most popular sporting activity in the country of Geeland and all the national league football matches are televised. The right to televise games is also sold to other countries meaning that Geeland football games are seen by many people who enjoy the game around the world, giving the NFA a very high public profile.
The NFA is also responsible for all regulatory aspects of the game of football and one of its core aims is ‘to govern the game effectively and maintain integrity’. The role of the football referee is critical in achieving this aim and being a referee is considered to be a key role by the NFA, as well as being important to the continued popularity of the game of football. A football referee is the person responsible for enforcing the laws of the game during each football match and is the final authority of all decisions on the football pitch, giving the referee a significant amount of discretion as to the interpretation of the laws of the game. The amount of authority and responsibility they have is equivalent to that of senior managers in a listed company. For this reason the referee role within the NFA is full time and prestigious.
The main board at the NFA delegates responsibility for referees to a referee sub committee whose brief is to emulate the role and responsibility of board committees in a listed company. This means the committee is expected to follow best practice governance guidelines relating to the responsibility of the nomination, remuneration and audit committees in governance and apply the guidelines to the recruitment, remuneration and control of football referees and refereeing.
Referees are supported by two assistant referees who are empowered to advise the referee in certain situations such as the ball going out of the field of play. However, the assistant referees’ decisions are not binding and the referee has authority to overrule his assistants. This is one of the reasons why refereeing decisions are sometimes controversial.
Referees have autonomy in their choice of assistants for each game. The NFA believes that working with officials you are familiar with stimulates a better team spirit and the confidence to make the correct decisions and not to let your colleagues down. This should motivate the officials towards better performance during the game. The names of the officials for each match are normally released 28 days before any match takes place and this information is readily available to external parties.
The referee sub committee applies very general guidelines on what is required of a referee, believing that if you have a passion for the game you can become a referee. Referee appointments are often via word-of-mouth recommendations and are influenced by social connections and personal influence rather than meeting objective selection criteria. After an initial induction training course, which is delivered at local level and is not regulated by the NFA, there is no formal on-going training programme. Any changes to the laws or regulations of the game are distributed from the NFA to the local level of the football association whose responsibility it is to make sure individual referees are aware of the updates.
Although the NFA sees the role of a referee as prestigious, this is not reflected in their current pay structure. The reward package of a referee is substantially lower than equivalent senior management in listed companies. Many of the referees have expressed their resentment on the disparities to the NFA, but this has never been addressed. Referees are facing the lowest level of year on year pay increases in Geeland at just 0·1%. Equivalent positions in listed companies, and footballers playing in the national league in Geeland, are expected to receive on average a 15% increase year on year. Referees are paid around one-tenth of the average wage of the footballers playing in the national league. Despite the apparent disparity in earnings, many of the referees live in very expensive houses and live lavish lifestyles, well beyond their apparent means.
The NFA has faced a number of criticisms in the press in recent months. One criticism refers to the corruption of football referees. The referees have been accused of match fixing. Match fixing generally refers to influencing the final result of the game. One form of match fixing is where the referee favours one side throughout the match in exchange for a fee so that the outcome of the game is effectively agreed before the match starts. The referee can influence the outcome by adding on more extra time than justified, awarding penalties unfairly or disallowing legitimate goals. The referee has complete autonomy over the game which means that any decision made during the game is not questioned and the referee’s decision is final. National league football clubs cannot appeal against any decision made by the referee.
The media has also criticised the lack of use of readily available technology within the sport of football in Geeland. Technology used in many other sports is increasing rapidly but the sport of football has been slow to incorporate the use of technology. The technology could be used to enable the referee to make the correct decisions. The NFA believesthere is no value in technology and suggests that it will reduce the viewing experience for spectators who, it believes, are more concerned about respecting the game’s traditions. A goal decision system is used in other parts of the world to rule on whether the ball has crossed the line when a goal is awarded. This supports better decision making, but this is not currently used in Geeland.
The media highlighted the NFA’s failure to govern the game effectively and its inability to maintain integrity in its operations, which the NFA promotes as core values. In an effort to address the criticisms, the NFA has recently appointed a football regulation and administration director. The administration director will oversee areas of discipline and governance within the NFA, and the game of football, which includes responsibility for football match refereeing. The media believes that as a governing body the NFA is weak and has organisational shortcomings which are leading to control failures and that the NFA is tolerant of breaches in governance and turns a blind eye to corrupt practices. This is contributing to the poor performance of referees and their inability to make the correct decisions.
The new football regulation and administration director went on television to explain that in his new role he would be drawing on his previous experience of board positions of listed companies. This will influence his approach to governance and ethics at the NFA. He said that there appears to be a culture of carelessness at the NFA and that parts of the organisation are too autonomous, without any effective internal or external oversight. He supports the NFA’s view that the role of a referee should be considered as responsible as senior managers of a listed company, due to the great responsibility they bear. He recognised the failings of the referee sub committee and is concerned that it is composed of ex-footballers with little prior management experience. He stated that the NFA could learn from the governance required of listed companies. He believes that more rules related to conduct on and off the field will be needed and that his priority is to review the governance, ethics and internal controls within the NFA and the role of the referee sub committee in overseeing the changes.
Required:
Explain the important role which board committees have in governance and critically assess the governance arrangements of the referee sub committee in recruiting, remunerating and controlling referees.
Importance
Board sub committees are a generally accepted part of board constitution in governance. Committees play an important role in reducing board workload and should allow the NFA board to concentrate on other key responsibilities like the promotion of the game in Geeland to other countries. The committees should play an important role in giving confidence to supporters and other key stakeholders that bribery and corruption is eliminated from the game of football and a positive reputation of the game is maintained.
The NFA should use the inherent expertise of a committee structure to improve decision making in key areas like the control of referees which the committee has been given responsibility for. The structure should communicate to stakeholders that the responsibilities delegated to the committees, like remuneration, are key and are taken seriously by the main board.
Recruitment
The existing criteria for recruitment are based on enthusiasm for the game of football and on social contacts and personal influence. The recruitment of referees should be conducted, and appointments made, on merit, against objective criteria. The referee sub committee has failed to establish detailed recruitment standards against which a potential referee can be assessed and failed to prepare a description of the role and capabilities required for any referee appointment. For example, there is no rigorous professional qualification or training programme for referees as in other professions, such as accountancy.
Referee appointments should be advertised through a range of formal recruitment routes. The current approach is likely to yield a limited pool of candidates, potentially resulting in the NFA not appointing the best possible candidate. This is also likely to mean under representation and a lack of diversity in the people appointed for the role of referee.
With limited recruitment criteria, the committee would be unable to ensure the right person for the role is nominated. The recruitment criteria need to extend beyond enthusiasm and include knowledge of the game, good man management skills including excellent communication skills and the ability to remain objective under pressure.
Remuneration
An important role of the committee is to set fair rewards linked to the contribution and commitment expected of referees. Levels of pay are not reflecting the time commitment and responsibilities of the role. Remuneration is unlikely to be sufficient to attract, retain and motivate the referees for their efforts and responsibilities, since the role is considered a critical and key role at the NFA, but the pay increases do not reflect this importance.
The committee should be looking for comparisons when setting the pay structure for referees. They have not been sensitive to pay and employment conditions elsewhere in football and in the country generally, especially in determining annual salary increases. They could consider benchmarking against payments made to referees in other neighbouring countries and link the percentage increases paid to that of other comparable positions in listed companies and to increases in salaries given to footballers.
Control
The committee should recognise the importance of internal control and control mechanisms and all functions and personnel should be subject to monitor and review. The importance and complexity of the role of a referee makes referees an obvious subject for frequent review and yet there is no recognition of the risks associated with football referees and refereeing.
They have failed to understand the importance of effective internal controls to ensure correct decisions are made by referees. There is a lack of concern for the risks which arise because of their inaction to make a referee accountable for their decisions, and this is exacerbated by the fact that referees can select their own assistant referees, creating a risk of potential collusion. The fact that the names of the referees and the assistants presiding over each match is pre-released 28 days before a match takes place is another example of a weak internal control. The lack of use of technology is another internal control failing, and the available goal decision technology used in other countries is not adopted in Geeland. They are failing to understand the necessity of risk management and control systems to support effective control and correct outcomes of football games.
Governing the game of football effectively and maintaining integrity are two important values for the NFA and the committee is failing to deliver systems and controls which enable those values to be delivered by a referee. It is a key function of the committee to help to maintain a good reputation for the NFA and they are clearly failing in their duty with regard to referees.
There should be qualifications, ongoing assessment and training for all referees, both collectively and individually. The committee should have an oversight role in monitoring the local training and development schemes. There is no requirement for information flows from local associations to the committee. There should be accountability and feedback, with local associations required to report back to the committee on the action they have taken to update referees on changes to the laws and regulations of the game. The committee should act as a counter check confirming that all referees have received the required level of updates and knowledge to ensure understanding, and consequently have the ability to implement the changes when refereeing football games.
Discuss the conditions which currently exist at the NFA which make the referees and their officials vulnerable to corruption.
Conditions
There is a culture of carelessness in the NFA. The tone at the top is one of tolerance of the current practices and not focusing on the core aim of governing the game and maintaining integrity. The NFA is an organisation with weak regulatory controls andthere appears to be a taken-for-granted approach to the refereeing decisions. It is evident from the scenario that the requisite regulation is not in place for such important matters as ensuring the right outcome for a football game.
With the difference in salaries between referees and the players they officiate, there is a motivation for referees to act dishonestly as they feel undervalued compared to the football players and equivalent responsible officers in listed companies. This creates resentment and provides a considerable financial incentive for fixing the outcome of the game. They strive to attain the same lifestyle as a successful footballer and many appear to have obtained the desired lifestyle by some means or other.
Once the lifestyle has been attained, there will be a motivation and a need to continue to fund the lifestyle. Referees can use their discretionary powers to deliver personal enrichment at the expense of the integrity of the game.
Because referees can use this large degree of discretion and autonomy and the fact that their decisions are not challenged presents them with an opportunity for corruption. The referees are not made accountable for their poor decisions and are seen to go unpunished. Referee power is wielded without any effective oversight. There is an opportunity for the NFA to reduce the power of the referee by introducing technology in order to validate controversial decisions made by a referee. The use of already available technology used in other countries is being resisted, leaving the referee with an open opportunity for corruption.
The potential pay-off for engaging in match fixing outweighs any possible disadvantages or penalties, so increasing the readiness of referees to take the risk. The lack of accountability enables gains to be made at least cost to themselves.
The NFA believes referee autonomy for appointing officials increases their motivation to achieve a higher level of performance during the game. The autonomy allowed creates the opportunity for collusion. Referees can appoint allies who may also seek personal enrichment and may be willing to turn a blind eye to any incorrect decisions made by the referee, thus making it easier to enforce unjust or incorrect decisions collectively as a team, rather than be accountable as an individual.
Names of officials are released 28 days in advance of the game. The early advance notification allows sufficient time for corrupt third parties to influence and even bribe referees, meaning the outcome of the game is effectively agreed before the match starts.
Describe the general purposes of an internal control system and recommend control measures which could be implemented to ensure the overall control environment and the refereeing of football matches at the NFA is improved.
General purposes of an internal control system
The first general purpose of internal control is to achieve the orderly conduct of business by facilitating effective and efficient operation of an organisation’s activities. In doing this, it must be able to respond appropriately to relevant risks and to configure activities to achieve the organisation’s strategic objectives. The NFA needs to respond to the risk of match fixing which is discrediting the game and the wider reputation of the NFA.
Internal controls should ensure the prevention of fraud and error. The referee is able to circumvent the limited controls in place. Football supporters will lose trust in the ‘honesty’ of the game and may decide to stop watching. It is clear that controls to prevent corruption are weak and need to be addressed.
Internal controls are essential in ensuring the robustness, quality and timeliness of both internal and external reporting. The provision of this information is important in managing internal systems at the NFA which would include feedback from local associations. External reporting will need to reassure supporters that action to improve controls has been taken.
Internal control is necessary to ensure compliance with any external laws, standards or regulations which apply. As regulator of the game of football, the NFA is expected to adopt governance arrangements which are in line with best practice for listed companies. It is clear from the actions of the referee sub committee that governance controls need to be addressed.
Control environment and control measures for refereeing at the NFA
The NFA should start with rebuilding a culture with strong ethical practices in order to restore the reputation of the game for supporters and television broadcasters. Senior members’ attitudes will influence those lower down the NFA ladder, including the referees. In representing the NFA, the ‘tone at the top’ should be one of a zero-tolerance of bribery and corruption so that all employees adopt this perception and are less susceptible to unethical practices.
New policies and codes of ethics should be developed and reinforced on a regular basis helping to keep them deeply ingrained in employees’ minds. They should become an integral part of the NFA’s culture, which will minimise the possibility of an ethical lapse.
Ex footballers have responsibility for the referee sub committee and they appear to be lacking the skills required. Education and training should be undertaken which would help to increase the efficiency and effectiveness of the role of the committee.
The organisational structure at the NFA appears to be decentralised and the quality of the personnel at the local level appears to be inadequate. Increased and regular training and education should be given to referees and those who administer the game at the local levels. Consideration should be given to a more centralised approach so that responsibility for training and the disciplinary process is the responsibility of the referee sub committee.
The foundation of improvements will be in the NFA’s ability to communicate its ethical agenda openly and transparently to its internal and external stakeholders. Referees and other employees should feel confident in their ability to prevent corruption and should know that senior management will support them if they oppose corrupt practices. Procedures for reporting the suspicion of corruption should be established and very clearly explained to staff. This will help to communicate to employees that the NFA takes anti-corruption procedures seriously.
It is important to respond appropriately to risks and perform risk assessments so that the NFA understands the factors which need to be taken into consideration. With referees, this might include the amount of control they have in decision making andthe lack of penalties and punishments to discourage the poor behaviour. The use of technology should be embedded so that a referee does not have the final say in some decisions. Technology would decide on whether a goal should be allowed and perhaps the use of television replays to check other refereeing decisions, including sending off the wrong players, would help prevent other blatant errors.
Appointments of assistant referees to a game should be made by the NFA to try to reduce the opportunity for collusion. Officials will need advance notice of the games they are required to officiate, however, there is no requirement for an announcement of this to the general public. This should reduce the opportunity of external parties approaching the officials and persuading them to accept a facilitation payment.
Prepare briefing notes for the newly appointed football regulation and administration director in readiness for the next board meeting. The notes should:
(i) Explain the importance of independence in refereeing decisions to football supporters. (4 marks)
(ii) Assess the damaging effect any suspicion of bribery and corruption of match officials can have on the NFA and the wider reputation of the game of football. (6 marks)
(iii) Discuss the benefits and contents of a professional code of ethics which could be used by referees at the NFA. (6 marks)
Professional marks will be awarded in part (d) for clarity, persuasiveness, tone and flow of the briefing notes. (4 marks)
(i) Briefing notes:
The importance of independence in refereeing decisions to football supporters
Football supporters are important stakeholders in the game of football. It is important that decisions and actions of referees are based on objective criteria in order to serve their interest in obtaining the fair result.
Potential corruption of referees, and the conditions which permit this, are not in the wider interest of the game or its reputation. The supporters want consistency in decision making and decisions to be fair so that the outcome of matches is not determined by accidental or deliberate errors.
There is a greater need for impartiality to avoid the referee being unduly influenced by a vested interest. This would provide confidence to the supporters that the referee will not be affected by the influence of others and compromise their professional judgement.
Assurances should be given that the referee will act in the best interest of the game and not in their own interest. Using technology like a goal decision system would ensure that no one team is given favourable treatment and would increase the likelihood that a correct decision would be made, or that an incorrect decision can at least be reviewed and corrected at the time, using appropriate supporting technology.
(ii) The damaging effect which any suspicion of bribery and corruption of match officials can have on the NFA and the wider reputation of the game of football
The risk of corruption puts the very fabric of the game at risk and undermines the integrity of the sport. Suddenly everything will be questioned. Trust is an important part of all professional occupations and referees as professionals in football should apply the same principles. Football supporters and television broadcasters who put their money into the game might see themselves as the victims and choose to remove their support from the game if a professional approach is not adopted.
Given the NFA’s public profile, there will be impacts on the NFA’s reputation. Regulators might intervene which could lead to fines and penalties and affect the overall financial position of the NFA.
Corruption can significantly impact employee morale. The behaviour at the NFA is sending the message that corrupt business practices like bribery are not serious concerns and that everything can be solved with incentives rather than through hard work and building relationships.
The authority and reputation of NFA suffers when the outcome of games is unfairly influenced and referees do not officiate with integrity. More resources might be required to effectively regulate the game of football in Geeland and maintain the current level of operations. Public relations efforts to reassure stakeholders that integrity is still a core aim for the NFA would mean re-routing important resources from other operations and lead to an inefficient use of NFA funds and personnel.
Senior managers will need to spend valuable time and resources to monitor the fallout and reassure stakeholders that the NFA is still capable of governing the sport. When the news about corrupt officials breaks, stakeholders lose respect and trust, requiring reassurance that the NFA is still viable and that the game of football is worth watching and paying for.
(iii) Benefits and contents of a professional code of ethics which could be used by referees at the NFA
A professional code provides a foundation on which referees should base all decisions. Referees should fully understand the expectations of the NFA and the ethical guidelines on which to make decisions. Behaviour in any given situation should be clear and similar disputes can then be resolved on a consistent basis.
Such a code provides transparency and could enhance reputation and develop a new positive brand for the NFA. The code will communicate the professional values of referees to the outside world and key stakeholders, who will then understand the ethical position and know how they should behave in any given situation.
A professional code provides guidelines to help deter unethical practices by placing limits on behaviour and prescribing behaviour in given situations. The code will state the boundaries across which it is ethically inappropriate to pass.
A professional code provides a framework for conflict resolution in the application of fundamental principles. The code of ethics provides guidance on how to resolve the conflict and tries to encourage ethical and professional behaviour in the NFA.
Content of a professional code
The code should include an introduction which provides the background to the code, stating who at the NFA it affects, how the code is enforced and outlines of disciplinary procedure.
The code should define the fundamental principles and values of the NFA. This should include the key principles which must be followed by all referees. Examples might include professional competence, integrity and objectivity for the referees.
Including a conceptual framework would help to communicate how the principles should be applied. It should be recognised that the principles cannot cover all situations and so the ‘spirit’ of the principles must be complied with.
There is a need for a practical and detailed application of the code. This would show examples of how the principles are applied in specific situations, such as how the code might be applied when referees are approached about potential match fixing.