Becker Corporate Governance

Question 1

Primary role of Board of Directors

Answer 1

Safeguard the company’s assets and maximize shareholder return

Question 2

What are fiduciary duties?

Answer 2

Duties to always act in the best interests of the corporation

Question 3

Who can the board of directors rely on?

Answer 3

Corporate officers, employees, legal counsel, and accountants

Question 4

What is the duty of loyalty?

Answer 4

Act in the best interest of the company

Question 5

Who are officers selected by?

Answer 5

Directors

Question 6

Are officers required to be shareholders?

Answer 6

No

Question 7

What are the responsibilities of audit committees?

Answer 7

Responsible for the appointment, compensation, and oversight of the work of the public accounting firm

Question 8

Who does the auditor report to?

Answer 8

Audit Committee

Question 9

Who is responsible for resolving disputes between the auditor and management?

Answer 9

Audit Committee

Question 10

Are issuers generally prohibited from making personal loans to directors or executive officers?

Answer 10

Yes

Question 11

What percentage of ownership must be disclosed?

Answer 11

10%

Question 12

What section of COSO refers to the assessment of internal controls?

Answer 12

404

Question 13

When scheduling reviews, the SEC should consider?

Answer 13

Issued material restatements, significant volatility in their stock prices, largest market capitalization

Question 14

How long must an auditor retain all workpapers?

Answer 14

7 years

Question 15

What are the 3 framework objectives?

Answer 15

Operations, Reporting, and Compliance

Question 16

What does operations objectives relate to?

Answer 16

Effectiveness and efficiency of an entity’s operations

Question 17

What does reporting objectives relate to?

Answer 17

Reliability, timeliness, and transparency

Question 18

What does compliance objectives relate to?

Answer 18

Adhering to all applicable laws and regulations

Question 19

What are the 5 components of internal control?

Answer 19

Control environment, Risk assessment, Information and Communication, Monitoring, Existing control activities

Question 20

What are the 5 principles related to the control environment?

Answer 20

Ethics, Board Independence, Organizational structure, Commitment to Competence, and Accountability

Question 21

What are the principles related to risk assessment?

Answer 21

Identify and analyze risks and consider potential for fraud

Question 22

What is the principle for information and communication?

Answer 22

Relevant and high-quality information

Question 23

What is monitoring?

Answer 23

Process of assessing the quality of internal control performance

Question 24

What principles does existing control activities include?

Answer 24

Detective, preventative, and segregation of duties

Question 25

What are the 2 words relevant to the 5 components of internal control?

Answer 25

Present and functioning

Question 26

What process is designed to identify potential events and manage risk?

Answer 26

Enterprise risk management

Question 27

What are the four categories in ERM?

Answer 27

Strategic, Operations, Reporting, and Compliance

Question 28

What are the components of ERM?

Answer 28

Internal environment, setting objectives, event identification, assessment of risk, risk response, control activities, information and communication, and monitoring

Question 29

What are the 8 key elements of internal environment?

Answer 29

Ethics, Board oversight, Organizational structure, Commitment to Competence, Accountability, HR

Question 30

What type of risk requires no action?

Answer 30

Inherent risk

Question 31

What type of risk exists after management takes action?

Answer 31

Residual risk

Question 32

What qualities does effective information have?

Answer 32

Timely, Current, and Accurate