Chapter 4 Flashcards
what is the process by which company objectives are established, achieved and monitored?
Corporate governance
what ways does the corporate framework in the UK operate?
- Legislation (Companies act 2006)
- Regulation (London stock exchange)
-UK corporate governance code
Who is the head of the audit committee
Non-executive directors
What is an external auditor
if you’re turnover exceed 10 million usually external accounting firm have to review and state if true and fIr
what does an external auditor do
Look at the money in the money out and has been selected by the board
What things do internal auditors look at
Money in the money out, whether underwriting authorities met, whether things are completed
Who do internal auditors report to
Reports to executive director and head of audit committee
2018 uk corporate governance code
division of responsibilities main points?
- chair of the board is responsible for overall effectiveness
- ensure directors get accurate, timely and clear information
- board should have executive and non executive directors
2018 uk corporate governance code
audit, risk and internal control main points?
- board should establish formal and transparent polices to insure independence and effectiveness of audit
- board should establish procedures to manage risk and oversee control framework
in risk would should companies do?
- identify any material uncertainties in their ability to trade
- access their principle risks and explain how they are managed
- state whether they are able to continue in operation
- monitor their risk management polices
what is not part of the legal requirements but is part of the stock exchange listing rules?
compliance with the corporate governance code
what is the Turnbull guidance?
it set out the best practice on internal control for uk listed companies
what code is used when you are a mutual insurance company?
AFM annotated corporate governance code for mutual insurers
what are uk listing rules?
produce half yearly financial reports and annual reports
what does the companies act 2006 include?
company formation
statutory reporting
company meetings
responsibilities of company directors and offices
what is a company secretary?
guides the chairman and board on their responsibilities
ensures good information flows
maintains stakeholder management
monitors changes
administration
what is known as the first line of defence in risk management
front line managers to ensure that risks are identified and controlled
How does a corporate governance framework operate through legislation
Companies act 2006
How does Corporate governance framework work through regulation
Listed companies with a London stock exchange
How does corporate governance framework operate a general principles
Uk corporate governance code which is the responsibility of the financial reporting council
What happens of a corporate governance framework companies are not listed on the London stock exchange
They can adopt equivalent approaches to corporate governance to those that are listed as a UK corporate governance code is considered to represent best practice standards
What is corporate governance
How we govern ourselves
What rules are implemented for corporate governance
Internal rules to implement protocols be put in place such as audits to ensure governing themselves
What must UK companies do To quote on stock exchange
Must follow UK corporate governance however this is a code not a law
How is board leadership and company purpose explained in the UK corporate governance code
Must be headed by ineffective board must be fronted by the CEO and chairperson/executive and non-executive
What is a Turnbull guidance
Set out best practice on internal control for UK listed companies and assisted them in applying the section of the UK Governance code that deals with internal control
Who has published version of the UK corporate governance code for mutual insurance companie
The association of financial mutuals
What are the main role and responsibilities of the audit committee under the FRC guidance on audit committees
They should monitor the integrity of the companies financial statements review the companies internal controls
Monitor and review the effectiveness of the company‘s internal audit function
What act should companies in the US who want to list on a stock exchange adhere to
Sarbanes- oxley act 2002
What are the UK listing rules
For publicly listed companies the rules dictate such matters as a contents of prospectus for a company seeking listing for the first time and ongoing obligations such as a disclosure of price sensitive information and communications
What two documents definitely need to be completed for a limited company to be registered at companies house
- Memorandum of association
2. Articles of association which will often include a quorum
For most companies what will annual accounts include and what can they be known as
- An income statment
- A balance sheet
- A directors report signed
Annual report and finanical statements
If a company is quoted what should the business review include
- trends likely to affect future development
- environmental matters
- company employees
- social and community issues
What must a directors of a quoted company prepare
Directors remuneration report which must be approved by the board of directors
As per the companies act 2006 do public companies have to have a company secretary
Yes although a private company doesn’t
What is the first line of defence
Front line managers to ensure that risks are identified and controlled in keeping with a strategy and control environment
Who formed the second line of defence with the risk strategy
The risk management department
What is the third line of defence for risk strategy
When audit teams audit both the front line operational management and risk management department
What two out of Free things are required to have a full statutory ordered by registered auditor
A turnover exceeding 10.2 million
Net assets exceeding 5.1 million
More than 50 employees
What companies are always subject to a statutory audit in order to To ensure transparency and efficiency
Banks, investment firms, insurance companies and public companies
