CH4

Question 1

The two most important elements of corporate governance are?

Answer 1

Transparency and accountability

Question 2

The five areas of the UK corporate governance code are…

Answer 2

• leadership
• effectiveness
• accountability
• remuneration
• relations with shareholders

Question 3

What are the other 2 areas of the UK corporate governance code?

Answer 3

-going concern, risk management and internal control
-comply or explain

Question 4

Under the UK corporate governance code, with regards to risk management and internal control, companies should?

Answer 4

-identify any material uncertainties in their ability to trade as a going concern

-asses their principal risks and how they are being managed

-state whether they are able to continue in operation and meet their liabilities

-monitor their risk management and internal control systems at least annually

Question 5

With regards to the comply or explains section of the UK corporate governance code, what does this mean?

Answer 5

-Compliance with the code is not a legal requirement, but it is part of the London stock exchange listing rules.
-Companies are required to state in their annual report whether they are in compliance with the code, or if not fully compliant to derail, explain where they are not complaint and the reason for this.

Question 6

The turnbull guidance sets out…

Answer 6

Best practice for internal control for UK listed companies, and assists them in applying the section of the UK corporate governance code that deals with internal control.

Question 7

In September 2014, the FRC published a revised guidance of the turnbull guidance called…

Answer 7

Guidance on risk management, internal control and related financial and business reporting (the risk guidance)

Question 8

What is the purpose of the FRC guidance on audit committees?

Answer 8

-Assist company boards when implementing the sections of the UK corporate governance code.
-Dealing with the audit committees and to assist directors serving on audit committees in carrying out their role.

Question 9

The main roles and responsibilities of the audit committee include:

Answer 9

-Monitoring the integrity of the company’s financial statements

-reviewing the company’s internal financial controls

-making recommendations to the board, for it to be put to shareholders for their approval in the general meeting, in relation to the appointment of the external auditor And to improve the remuneration and terms of engagement of the external auditor

-reviewing and mo irony the external auditors independence and objectivity and the effectiveness of the audit process

-developing and implementing policy on the engagement of the stern all auditor to supply non audit services, taking into account relevant ethical guidance regarding the provision of non audit services by the external audit firm.

-to report to the board, identifying any matters where it considers that action or improvement is needed, and making recommendations as the steps to be taken.

Question 10

The FRC’s guidance on board effectiveness relates primarily to leadership and effectiveness of the board. The institute of chartered secretaries and administrators developed guidance on the FRC’s behalf and it deals with the following topics:

Answer 10

-role of the board and directors
-board support and role of the company secretary
-descion making
-board composition and succession planning
-evaluating the performance of the board and directors
-audit, risk and remuneration
-relations with shareholders