3. Corporate Governance (10% 12 MCQs) Flashcards
Section A - Basic
Org Governance
Principles - Definition
Governance
IPPF: Board’s framework for managing and monitoring activities.
OECD: CG involves management, board, and stakeholders in setting and monitoring objectives.
Section A - Basic
Org Governance
Governance Principles - Influenced by
Governance
- Internal: Charters, bylaws, board, internal audit.
- External: Laws, regulations.
Section A - Basic
Org Governance
Governance Principles, Role, Process
Governance
- Governance Principles:
1. GRC integration.
2. Effective board and structure.
3. Strategy and key policies.
4. DOA and reporting.
5. Ethical culture and audits. - Governance Roles & Process:
1. Board handles oversight and strategic direction.
2. Manages stakeholder expectations.
Section B - Basic
Org Culture Impact on Control Environment (Ind. Engagement)
Board Responsibilities
Governance
Board Responsibilities:
1. Select and remove officers.
2. Manage capital structure.
3. Establish bylaws.
4. Oversee fundamental changes (mergers, acquisitions).
5. Determine management compensation.
6. Evaluate risk and coordinate audits.
7. Decide on dividends.
Risk Committee:
1. Identify,
2. analyze,
3. manage,
4. report, and
5. follow up on risks.
Section B - Basic
Org Culture Impact on Control Environment (Ind. Engagement)
Governance Framework
Governance
- Applies at all organizational levels.
- Governance practices reflect the organization’s unique culture.
- Governance practices vary in form.
- Senior management establishes and maintains culture.
- Company culture influences the control environment.
Section C - Basic
Ethical & Compliance Incident
Ethical Culture
Governance
- Board oversees; management sets examples.
- Everyone promotes ethics.
- Code of Conduct (CoC) guides behavior.
- IA supports and evaluates ethics through compliance, leadership, and reporting based on system maturity.
Section C - Basic
Ethical & Compliance Incident
Role of Internal Audit in Governance
Governance
Performance Standard 2110 - Governance
- Part of internal audit definition - to evaluate & improve effectiveness of risk mgt, ctrl & governance process.
- IA role; Less - Mature (ensure compliance), Mature (Optimize structure & systems)
- Board & Mgt role; design & implementation of governance process.
Section C - Basic
Ethical & Compliance Incident
Role of Internal Audit in Governance
Governance
Performance Standard 2110 - Governance
- IA assesses and improves governance.
Key areas: governance systems, decisions, risk/control, ethics, performance, communication. - IA is responsible for evaluation & improve governance.
- CAE may use consulting.
Consult legal counsel before audits or reports
Section D - Basic
CSR
Corporate Social Responsibilities - Definition
CSR
- Integrate social, environmental, and economic concerns.
- Embed into values, culture, and strategy.
- Ensure transparency and accountability.
- Improve practices, create wealth, and benefit society
Section D - Basic
CSR
Corporate Social Responsibilities - Characteristics
CSR
- Stakeholder Expectations:
* Management of social and environmental impact.
* Engagement with stakeholders.
* Public reporting of results. - CSR Refers To:
* Social responsibility.
* Sustainable development.
* Corporate citizenship. - Archie B. Carroll’s Four Responsibilities:
* Economic.
* Legal.
* Ethical.
* Philanthropic. - CSR is generally a voluntary practice.
Section D - Basic
CSR
CSR Framework
CSR
- Implementation & Managing CSR (ISO 26000)
- Reporting (Global Reporting Initiative - CGI)
- Certification (ISO 14000 Environmental Mgt System)
Section D - Basic
CSR
CSR Responsibility, Risk
CSR
Responsibility
1. Board (overseeing)
2. Mgt (implementation & managing)
3. Auditor (assurance)
4. Employee (success)
Risk
1. Loss of reputation,
2. non-compliance
3. law suites
4. operational failure (environmental effects, stock market, employment market, sales (consumer behaviour).
Section D - Basic
CSR
CSR Business Activity
CSR
- SOP
- Strategies
- Objectives & performance goals
- CSR principles integrating in business decision making, monitoring & benchmarking, engaging stakeholders & auditors
Section D - Basic
CSR
CSR Evaluation & Auditing Element
CSR
CSR – Evaluation and Auditing:
1. Advise on design and implementation.
2. Facilitate self-assessments.
3. Ensure IA competence.
4. CAE assesses CSR risks and controls.
CSR Audit Elements:
1. Governance.
2. Community investment.
3. Social/environmental impact.
4. Anti-corruption.
5. Health and safety.
6. Transparency.
7. Human rights.
Section D - Basic
CSR
CSR Maturity Model
CSR
Compares maturity level with organizational goals.
Level 1: Initial.
Level 5: Optimizing.
