B1 - Corporate Governance Flashcards
What is the corporate opportunity doctrine?
Directors cannot take advantage of business opportunities until the corporation declines
What makes a person a principal stock holder?
Ownership of 10% or more
How many years of imprisonment is given for altering documents?
Not more than 20 years
How many years of imprisonment is given for not retaining documents?
Not more than 10 years
T/F: COSO system of internal controls is a rules-based system
False; it is principles-based requiring management judgment in application
What is the definition of internal control?
A process designed and implemented to provide reasonable assurance the entity will achieve its objectives
What are the three objectives of the COSO internal control framework?
ORC objectives
Operations
Reporting
Compliance
What are the five integrated components of the COSO internal control framework?
CRIME
Control environment Risk assessment Information and communication systems Monitoring Existing control activities
T/F: All five integrated components of internal control under COSO must be designed and implemented
False; all must be present and functioning
What are the four objectives of the COSO ERM framework?
ORCS
Operations
Reporting
Compliance
Strategic
What are the components of the COSO enterprise risk management framework?
IS EAR AIM
Internal environment
Setting objectives
Event identification
Assessment of risk
Risk response
Activities (control)
Information and communication
Monitoring
T/F: Insuring against losses or entering into joint ventures to address risk is known as risk avoidance
False; it is known as risk sharing and is one of 4 ways to deal with risk (avoidance, reduction, sharing, acceptance)
What is the principle that protects corporate directors from personal liability for acts performed in good faith on behalf of the corporation know as?
The business judgment rule
