11 Corporate governance

Question 1

What does corporate governance mean?

Answer 1

Corporate governance is the means by which a company is operated and controlled.

Question 2

What is the aim of corporate governance?

Answer 2

Is to ensure that companies are run well in the interests of their subsidaries, employees and other key stakeholders

Question 3

What are the advantages of following good corporate governance principles?

Answer 3

Greater transparency 
Greater accountability
Efficiency of operations
Better able to respond torisks
Less likely to be mismanaged

Question 4

How should an audit committee be made up?

Answer 4

Minimum 3 non-executive directors, with one with financial expertise and independant of operational management

Question 5

What are the objectives of the audit committee?

Answer 5

Increase in public confidence, provide financial awareness and strengthen independance

Question 6

What is the function of the audit committee?

Answer 6

Monitor financial statements, review controls, monitor and review internal audit and monitor independance of external auditor.