AA Lecture 3 questions

Which statement regarding the composition of an audit committee in accordance with the UK Corporate Governance Code is correct?

• All directors must be executive

• All directors must be non-executive

• Some directors may be executive as long as three are non-executive

• All non-executives must have recent and relevant financial experience

Which of the following is NOT a principle of corporate governance?

• Rights of shareholders

• Board responsibilities

• Auditor’s accountability and remuneration

• Risk management and internal control

Which of the following is NOT a provision of the UK Corporate Governance Code?

• There should be a clear division of responsibilities between the leadership of the board and the leadership of the company’s business

• All members of the board, excluding the chairman, should be independent non-executive directors

• Executive director remuneration should be linked to corporate and individual performance

• All directors should be subject to annual re-election

Who do audit committees normally liaise between?

• The internal and external auditors

• The internal auditor and the entities staff

• Executive and non-executive directors

• The auditors and the directors

Who has ultimate responsibility for a company’s risk management and internal control systems?

• The board of directors

• Management

• The audit committee

• A risk management committee

What does the principle of confidentiality require an accountant to do?

• Respect the confidentiality of information acquired

• Disclose information to third parties

• Use confidential information for personal advantage

• Ignore confidentiality in social environments

What must an accountant do to avoid discrediting the profession?

• Comply with relevant laws and regulations

• Make exaggerated claims for their services

• Disparage the work of others

• Ignore professional conduct

What are the categories of threats to compliance with fundamental principles?

• Self-interest threat, Self-review threat, Advocacy threat, Familiarity threat, Intimidation threat

• Financial threat, Personal threat, Professional threat

• Legal threat, Ethical threat, Compliance threat

• None of the above

What is a self-interest threat?

• A threat due to financial or other interests of the accountant

• A threat from a close personal relationship with a client

• A threat from a disagreement about accounting principles

• A threat from external pressures

What should an accountant do if a threat cannot be eliminated?

• Apply safeguards to reduce the threat

• Ignore the threat

• Continue with the professional activity

• None of the above