Chapter 5 - Governance Factors Flashcards
What are the ‘two As’ that lie at the heart of corporate governance?
(a) Advocacy and alignment.
(b) Advocacy and argument.
(c) Accountability and advocacy.
(d) Accountability and alignment.
(d) Accountability and alignment.
Which of the following is NOT a reason why the role of the chair of a company board is so important?
(a) The chair sets the agenda for board discussions.
(b) The chair helps ensure all directors make their full contribution.
(c) The chair will usually also be CEO.
(d) The chair leads the process of selecting and appointing new directors.
(c) The chair will usually also be CEO.
Which of the following is NOT a board committee expected to be established at all companies?
(a) Audit.
(b) Risk.
(c) Nominations.
(d) Remuneration.
(b) Risk.
Which of the following scandals did NOT help set the context for the creation of the first
corporate governance code?
(a) Polly Peck.
(b) Enron.
(c) Mirror Group Newspapers.
(d) Caparo.
(b) Enron.
What was the model created by the Cadbury Code for adherence to its principles, still followed in the UK code?
(a) If not, why not.
(b) Comply or else.
(c) Apply and explain.
(d) Comply or explain.
(d) Comply or explain.
Which element of executive pay is most likely to include some metric based on ESG performance?
(a) Salary.
(b) Benefits.
(c) Annual bonus.
(d) Long-term incentive or share scheme.
(c) Annual bonus.
Which of the following is NOT typically seen as a driver of concern regarding an individual director’s independence?
(a) A family tie to an executive.
(b) Recent senior role in a firm that provides advisory services.
(c) Receiving share options in the company.
(d) Not having been on the board for long enough fully to understand the business.
(d) Not having been on the board for long enough fully to understand the business.
What US legislation led to the creation of the Public Company Accounting Oversight Board (PCAOB)?
(a) Glass-Steagall Act.
(b) Sarbanes-Oxley Act.
(c) Dodd-Frank Act.
(d) Accountable Capitalism Act.
(b) Sarbanes-Oxley Act.
What were the two major scandals in Europe in 2003 that led to a reassessment of the continent’s approach to governance?
(a) Ahold and Parmalat.
(b) WorldCom and Tyco.
(c) HIH and Satyam.
(d) BCCI and Caparo.
(a) Ahold and Parmalat.
Which area of ethical corporate behaviour is most likely to be subject to extraterritorial legislation?
(a) Anti-corruption.
(b) Employee health and safety.
(c) Supplier payments.
(d) Lobbying activities.
(a) Anti-corruption.
Which is the only major country that does NOT, as of 2020, have a corporate governance code?
(a) Japan.
(b) France.
(c) UK.
(d) USA.
(d) USA.
Which statement outlines the distinction between the auditor’s role in relation to the financial statements and to the rest of the annual report and accounts?
(a) Assurance on the financial statements, report on inconsistencies in narrative reporting.
(b) Guarantee accuracy of the financial statements, report on inconsistencies in narrative
reporting.
(c) Assurance on the financial statements and on narrative reporting.
(d) Assurance on the financial statements and on numbers within narrative reporting.
(a) Assurance on the financial statements, report on inconsistencies in narrative reporting.
How long can an audit firm remain in the role at an EU public company?
(a) 5 years.
(b) 7 years.
(c) 10 years.
(d) 20 years.
(d) 20 years.
Which of the following is NOT one of the three key elements of disclosure in the new enhanced auditor’s reports?
(a) Scope.
(b) Materiality.
(c) Scepticism.
(d) Key audit matters.
(c) Scepticism.
Which of the following is NOT likely to be considered a G factor by a sovereign debt investor?
(a) Corruption.
(b) Rule of law.
(c) Regulatory effectiveness.
(d) Proportion of investors that are PRI signatories.
(d) Proportion of investors that are PRI signatories.
