Becker Corporate Governance Flashcards
Primary role of Board of Directors
Safeguard the company’s assets and maximize shareholder return
What are fiduciary duties?
Duties to always act in the best interests of the corporation
Who can the board of directors rely on?
Corporate officers, employees, legal counsel, and accountants
What is the duty of loyalty?
Act in the best interest of the company
Who are officers selected by?
Directors
Are officers required to be shareholders?
No
What are the responsibilities of audit committees?
Responsible for the appointment, compensation, and oversight of the work of the public accounting firm
Who does the auditor report to?
Audit Committee
Who is responsible for resolving disputes between the auditor and management?
Audit Committee
Are issuers generally prohibited from making personal loans to directors or executive officers?
Yes
What percentage of ownership must be disclosed?
10%
What section of COSO refers to the assessment of internal controls?
404
When scheduling reviews, the SEC should consider?
Issued material restatements, significant volatility in their stock prices, largest market capitalization
How long must an auditor retain all workpapers?
7 years
What are the 3 framework objectives?
Operations, Reporting, and Compliance
What does operations objectives relate to?
Effectiveness and efficiency of an entity’s operations
What does reporting objectives relate to?
Reliability, timeliness, and transparency
What does compliance objectives relate to?
Adhering to all applicable laws and regulations
What are the 5 components of internal control?
Control environment, Risk assessment, Information and Communication, Monitoring, Existing control activities
What are the 5 principles related to the control environment?
Ethics, Board Independence, Organizational structure, Commitment to Competence, and Accountability
What are the principles related to risk assessment?
Identify and analyze risks and consider potential for fraud
What is the principle for information and communication?
Relevant and high-quality information
What is monitoring?
Process of assessing the quality of internal control performance
What principles does existing control activities include?
Detective, preventative, and segregation of duties
What are the 2 words relevant to the 5 components of internal control?
Present and functioning
What process is designed to identify potential events and manage risk?
Enterprise risk management
What are the four categories in ERM?
Strategic, Operations, Reporting, and Compliance
What are the components of ERM?
Internal environment, setting objectives, event identification, assessment of risk, risk response, control activities, information and communication, and monitoring
What are the 8 key elements of internal environment?
Ethics, Board oversight, Organizational structure, Commitment to Competence, Accountability, HR
What type of risk requires no action?
Inherent risk
What type of risk exists after management takes action?
Residual risk
What qualities does effective information have?
Timely, Current, and Accurate
