corporate governance 2 quiz

Which of the following statements is perceived as a disadvantage of a governance code?

(1) Management consultancy, McKinseys, found that global investors were willing to pay

a significant premium for companies that are well governed.

(2) The impact varies depending on the nature of the company and the global viewpoint.

(3) The process is reactionary rather than proactive, responding to major failures in governance

• A (3) only

• B (2) only

• C (1) only

• D (2) and (3) only

Which of the following statements is not a measure introduced by the Sarbanes-Oxley

Act?

• A An independent five man board called the Public Company Oversight Board to be established, with responsibilities for enforcing professional standards in accounting and auditing.

• B All companies with a listing for their shares in the US must provide a signed certificate to the SEC vouching for the accuracy of their financial statements (signed by CEO and chairman).

• C The board should establish formal and transparent arrangements for corporate reporting and risk management and internal control principles and for maintaining an appropriate relationship with the company’s auditor.

• D Restrictions are placed on the type of non-audit work that can be performed for a company by its firm of auditors

Which of the following are recommended by the UK Corporate Governance Code?

(1) The board should appoint one of the independent non-executive directors to be the senior independent director to provide a sounding board for the chairman and to serve as an intermediary for the other directors when necessary.

(2) The board should establish an audit committee of at least 5, or in the case of smaller companies 3, independent non-executive directors.

(3) Except for smaller companies, at least one quarter of the board, excluding the chairman, should comprise non-executive directors determined by the board to be independent

• A (1) only

• B (1) and (2) only

• C (1) and (3) only

• D (1), (2) and (3)

Corporate governance of public listed companies was the subject of various reports

prepared for the Stock Exchange. Which of the following reports dealt predominantly

with director’s remuneration and led to the principle that there should be a correlation

between salary and performance?

(1) The Turnbull Report in 1999.

(2) The Greenbury report in 1995.

(3) The Hampel report in 1998.

• A (1) only

• B (2) only

• C (3) only

• D None of the above

. Boards in many countries operate a unitary structure. Which of the following options

contains two countries that generally use this system?

• A France and Germany

• B UK and Germany

• C USA and Germany

• D USA and UK

German boards often comprise a supervisory and a management board,; which of the

following would not be regarded as the role of the management board?

• A Preparing agendas for meetings

• B Safeguarding the interests of its stakeholders

• C Preparing financial reports for meetings

• D Day to day running of the enterprise

Which of the following statements about The Organisation for Economic Co-operation

and Development is correct?

(1) The OECD has prepared a code of practice for all members of the EU to assist member governments in their efforts to improve corporate governance in their respective countries.

(2) The OECD has prepared a set of principles intended to assist the 34 members to improve corporate governance in their respective countries.

(3) The OECD has prepared a paper to support the global accountancy profession listing 8 drivers of sustainable organisational success to help organisations to achieve sustainable value creation.

• A (1) only

• B (3) only

• C (2) only

• D None of the above

Which of the following statements does not correctly describe one of the eight drivers of sustainable success published in 2012 by the Professional Accountant in Business?

• A Effective leadership and strategy – Deploying effective governance structures and processes with integrated risk management and internal control.

• B Financial management – Implementing good practices in areas such as tax and treasury, cost and profitability improvement, and working capital management.

• C Operational excellence – Supporting decision making with timely and insightful performance analysis.

• D Effective and transparent communication – Preparing high quality business reporting to support stakeholder understanding and decision making.

. Which of the following are reasons why the law needs to be supplemented by an additional body of rules and standards known as Corporate Governance?

(1) The rules of law have not proved watertight and in a number of instances, particularly with regard to Insider Dealing and Bribery, directors have been able to circumvent the law.

(2) Persons and institutions who invest in Public Limited companies usually do so with the aim of achieving good capital growth not because they are interested in how that company is run.

(3) Shares in Public Limited companies are potentially held by thousands of separate investors who are generally united by a common objective other than good returns on their individual investment

• A (1) only

• B (3) only

• C (1), (2) and (3).

• D (1) and (2)

Which of the following statements are TRUE of a two-tier board?

(1) There is a clear separation between the management and the control of the company

(2) Employee representation results in wider stakeholder involvement

(3) There is an implied involvement of NEDs in the running of the company

• A (3) only

• B (1) and (3) only

• C (1) and (2) only

• D (1), (2) and (3)