Chapter 4

Question 1

what is the process by which company objectives are established, achieved and monitored?

Answer 1

Corporate governance

Question 2

what ways does the corporate framework in the UK operate?

Answer 2

• Legislation (Companies act 2006)
• Regulation (London stock exchange)

-UK corporate governance code

Question 3

Who is the head of the audit committee

Answer 3

Non-executive directors

Question 4

What is an external auditor

Answer 4

if you’re turnover exceed 10 million usually external accounting firm have to review and state if true and fIr

Question 5

what does an external auditor do

Answer 5

Look at the money in the money out and has been selected by the board

Question 6

What things do internal auditors look at

Answer 6

Money in the money out, whether underwriting authorities met, whether things are completed

Question 7

Who do internal auditors report to

Answer 7

Reports to executive director and head of audit committee

Question 8

2018 uk corporate governance code

division of responsibilities main points?

Answer 8

• 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

Question 9

2018 uk corporate governance code

audit, risk and internal control main points?

Answer 9

• 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

Question 10

in risk would should companies do?

Answer 10

• 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

Question 11

what is not part of the legal requirements but is part of the stock exchange listing rules?

Answer 11

compliance with the corporate governance code

Question 12

what is the Turnbull guidance?

Answer 12

it set out the best practice on internal control for uk listed companies

Question 13

what code is used when you are a mutual insurance company?

Answer 13

AFM annotated corporate governance code for mutual insurers

Question 14

what are uk listing rules?

Answer 14

produce half yearly financial reports and annual reports

Question 15

what does the companies act 2006 include?

Answer 15

company formation
statutory reporting

company meetings
responsibilities of company directors and offices

Question 16

what is a company secretary?

Answer 16

guides the chairman and board on their responsibilities
ensures good information flows

maintains stakeholder management
monitors changes
administration

Question 17

what is known as the first line of defence in risk management

Answer 17

front line managers to ensure that risks are identified and controlled

Question 18

How does a corporate governance framework operate through legislation

Answer 18

Companies act 2006

Question 19

How does Corporate governance framework work through regulation

Answer 19

Listed companies with a London stock exchange

Question 20

How does corporate governance framework operate a general principles

Answer 20

Uk corporate governance code which is the responsibility of the financial reporting council

Question 21

What happens of a corporate governance framework companies are not listed on the London stock exchange

Answer 21

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

Question 22

What is corporate governance

Answer 22

How we govern ourselves

Question 23

What rules are implemented for corporate governance

Answer 23

Internal rules to implement protocols be put in place such as audits to ensure governing themselves

Question 24

What must UK companies do To quote on stock exchange

Answer 24

Must follow UK corporate governance however this is a code not a law

Question 25

How is board leadership and company purpose explained in the UK corporate governance code

Answer 25

Must be headed by ineffective board must be fronted by the CEO and chairperson/executive and non-executive

Question 26

What is a Turnbull guidance

Answer 26

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

Question 27

Who has published version of the UK corporate governance code for mutual insurance companie

Answer 27

The association of financial mutuals

Question 28

What are the main role and responsibilities of the audit committee under the FRC guidance on audit committees

Answer 28

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

Question 29

What act should companies in the US who want to list on a stock exchange adhere to

Answer 29

Sarbanes- oxley act 2002

Question 30

What are the UK listing rules

Answer 30

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

Question 31

What two documents definitely need to be completed for a limited company to be registered at companies house

Answer 31

1. Memorandum of association

2. Articles of association which will often include a quorum

Question 32

For most companies what will annual accounts include and what can they be known as

Answer 32

1. An income statment
2. A balance sheet
3. A directors report signed

Annual report and finanical statements

Question 33

If a company is quoted what should the business review include

Answer 33

• trends likely to affect future development
• environmental matters
• company employees
• social and community issues

Question 34

What must a directors of a quoted company prepare

Answer 34

Directors remuneration report which must be approved by the board of directors

Question 35

As per the companies act 2006 do public companies have to have a company secretary

Answer 35

Yes although a private company doesn’t

Question 36

What is the first line of defence

Answer 36

Front line managers to ensure that risks are identified and controlled in keeping with a strategy and control environment

Question 37

Who formed the second line of defence with the risk strategy

Answer 37

The risk management department

Question 38

What is the third line of defence for risk strategy

Answer 38

When audit teams audit both the front line operational management and risk management department

Question 39

What two out of Free things are required to have a full statutory ordered by registered auditor

Answer 39

A turnover exceeding 10.2 million
Net assets exceeding 5.1 million
More than 50 employees

Question 40

What companies are always subject to a statutory audit in order to To ensure transparency and efficiency

Answer 40

Banks, investment firms, insurance companies and public companies