B1 - Corporate Governance Cont'd Flashcards
What skill is necessary to be an audit committee financial expert according to the criteria specified in the Sarbanes-Oxley Act of 2002?
Experience with internal accounting controls.
What is the nature of the relationship for the Board of Directors of any company?
Fiduciary
What is the process of assessing quality of internal control performance over time by assessing the design and operation of controls on a timely basis and taking the necessary corrective actions?
Monitoring
When has RISK APPETITE generally been exceeded?
When the likelihood and impact of negative events significantly exceeds residual risks. (If the impact of negative events only exceeds, not significantly exceeds, management will need to carefully evaluate their actions, but they may not have exceeded their RISK APPETITE.)
What are STRATEGIC OBJECTIVES?
Broad, company-wide objectives (not very specific, as opposed to a related operations objective that might be pretty specific).
A DIRECTOR of any company is entitled to:
Rely on information provided by a corporate OFFICER. A corporate DIRECTOR is under no obligation to verify information given to him by management (corporate OFFICERS).
What is the business judgement rule?
The principle that protects corporate directors from personal liability for acts performed in good faith on behalf of the corporation.
What are some goals of an Enterprise Risk Management (ER) Framework?
Providing reasonable assurances that objectives and goals are achieved. Achievement of financial and performance targets. Risk assessment and mitigation of those risks.
What are the five principles related to the Control environment? “C” is from the “CRIME”
“EBOCA”
Ethics, Board Independence, Organizational Structure, Commitment to Competence, and Accountability.
What are the components of Enterprise Risk Management?
IS EAR AIM
Internal Environment, Setting Objectives, Event Identification, Assessment of Risk, Risk Response, Activities (Control), Information and communication, and Monitoring.
Within the COSO Internal Control - Integrated Framework, what component is designed to ensure that internal controls continue to operate effectively?
Monitoring
What are compliance objectives?
Objectives including adherence to the laws, rules, and regulations associated with operations, including tax and financial reporting compliance, workplace safety, environmental regulations, and other laws.
The Enterprise Risk Management - Integrated Framework of COSO is best defined as:
A process effected by an entity’s board of directors, management, and other personnel.
According to COSO, the position or internal entity that is best suited, as part of the enterprise risk management process, to devise and execute risk procedures for a particular department is:
A manager within the department.
