Audit & Assurance Services-T3

The framework for establishing good corporate governance and accountability was originally set up by the

• Nestle Committee

• Rowntree Committee

• Cadbury Committee

• Thornton Committee

Which of the following is not one the underlying principles of the corporate governance Combined Code of Practice?

• integrity

• acceptability

• accountability

• openness

External audit of the accounts of a listed company is required

• at the discretion of the shareholders

• because it is demanded by the company’s bankers

• by the Companies Act 2016

• to detect fraud

Directors’ responsibilities are unlikely to include

• a duty of care

• a duty to keep proper accounting records

• a fiduciary duty

• a duty to propose high dividends for shareholders

A company may become insolvent if it

• makes a loss

• has negative working capital

• cannot pay creditors in full after realisation of its assets

• cannot meet its budgeted level of profit

A director of a limited company may not be liable for wrongful trading if he or she

• introduced into the balance sheet an asset based on a valuation of its brands sufficient to meet any shortfall

• brought in some expected sales from next year into the current year.

• increased the valuation of its inventories to cover any potential shortfall

• took every step to minimise the potential loss to creditors

Fraudulent trading may be

• a criminal offence committed only by directors of a limited company

• a civil and a criminal offence committed only by directors of a limited company

• a civil and a criminal offence committed by any employee

• a civil offence committed by any employee

Why did corporate governance become an issue in the corporate arena?

Who are the key players in the issue of enhancing corporate governance?

Explain the role of the auditor with respect to corporate governance.