AA Chapter 3 : Corporate Governance

Which of the following best defines Corporate Governance?

• The importance a company attaches to systems and controls

• The means by which a company is operated and controlled

• The extent to which a company is audited both internally and externally

• An appraisal activity as a service to the entity

Which 2 of the following are functions of an audit committee :

• Planning the annual external audit

• Reviewing the effectiveness of Internal controls

• Reviewing and monitoring the external auditor's independence

• Processing year-end journal adjustments to the financial statements.

ABC co does not currently have an internal audit function. Which of the following summarises the requirements of Corporate Governance regulations in respect of internal audit ?

• The audit committee must review the need for an internal audit function on an annual basis

• The audit committee must establish an internal audit committee as soon as possible

• There must be either an audit committee or internal audit function in place but there is no requirement to have both

• The Finance director must review the need for an internal audit function and should make a request to the audit committee if it is decided that an internal audit function would be beneficial

Which of the following is the main purpose of a remuneration committee

• To ensure that the costs of the company are kept under control

• to ensure no director is involved in setting his own pay and the pay that is set is at an appropriate level

• to ensure decision making power for the company is not concentrated in the hands of one individual

• to ensure executives' pay is not performance related to reduce the risk of manipulation

Which of the following is a duty of the secretary of a listed public company ?

• Maintaining order at board meetings

• Clarifying the terms of reference of the board meeting

• Ensuring that all directors contribute fully to discussions at board meetings

• Reporting to the board on operational performance for the last quarter

The board of directors of AAA company has decided to increase the basic salary of its CEO by 20% in order to bring her pay into line with those occupying similar positions in the industry.

This action will achieve which of the following purposes :

• Improve the prospect of retaining the CEO

• Increase the productivity of the CEO by atleast 20%

• motivate the CEO to achieve long term targets

• Create greater job satisfaction for the CEO

Elements of an Effective Corporate Governance System are

• Accountability

• Transparency

• Regulatory framework

• Business ethics and social responsibility

Choose the right answer for the benefits of a company that apply corporate governance in their companies

• Give positive impact on the share price.

• Ensures organization in managed in a manner that fits the best interests of all

• Good corporate governance ensures corporate success and economic growth

• Significant problems arise when the flow of information within the governance structure falters or if employees are not held

What is the main functions of Audit Committee?

• Reviews issues of accounting policy and presentation of external financial reporting

• Monitors the work of the internal function

• Ensures that an objective and professional relationship is maintained with the external and internal audit

• Ensures organization in managed in a manner that fits the best interests of all.

What is the advantages of having an audit committee in a company?

• Good audit committee ensures corporate success and economic growth.

• Strengthening the independence of the internal audit function.

• Ensures organization in managed in a manner that fits the best interests of all.

• Better monitoring of compliance with standards, laws and regulations.