Corporate Governance

Question 1

To monitor management behavior.

Answer 1

Corporate Governance

Question 2

Oversees the board

Responsible for hiring new CEO

Answer 2

Corporate Governance

Question 3

The audit committee appoints and oversees the external auditor.

Answer 3

Corporate Governance

Question 4

The compensation committee handles the CEO’s compensation package.

Answer 4

Corporate Governance

Question 5

They require the board to be independent.

Answer 5

Corporate Governance

Question 6

The package should ensure that the goals of management should match those of the shareholders.

Answer 6

Corporate Governance

Question 7

Executive compensation should create an incentive for management to govern in a shareholder-friendly way that doesn’t sacrifice the long-term success of the enterprise for short-term gain.

Answer 7

Corporate Governance

Question 8

They range from internal (Board of Directors- Audit Committee- Internal Control) to external (Creditors- SEC- IRS)

These influences should not be tainted by undue influence from management or have financial ties to management such as compensation-related duties

Answer 8

Corporate Governance

Question 9

When management doesn’t act in the best interest of shareholders.

It can be alleviated by tying compensation to stock performance or company profit.

Answer 9

Corporate Governance

Question 10

Management must submit a report on the effectiveness of Internal Control in the 10K.

Management must disclose significant Internal Control deficiencies.

CEO/CFO must certify that the financial statements comply with securities laws and fairly present the financial condition of the company.

Answer 10

Corporate Governance

Question 11

Reliable financial reporting

Effective and efficient operations

Compliance

Answer 11

Corporate Governance

Question 12

Integrity & Ethics
Competence
The Board of Directors & Audit Committee
Management's Operating Style
Organizational Structure
Authority & Roles of Responsibilities
HR Policies

Answer 12

Corporate Governance

Question 13

A component of Internal Control that includes actions being taken to promote the control environment.

Answer 13

Corporate Governance

Question 14

Control Environment
Risk Assessment
Control Activities
Information and Communication
Monitoring

Answer 14

Corporate Governance

Question 15

Management must have access to relevant and timely information to make good decisions.

Answer 15

Corporate Governance

Question 16

Internal Control activities must be constantly monitored and evaluated for effectiveness.

Answer 16

Corporate Governance

Question 17

Identifies Risk Factors
Promotes Risk Response Decisions
Compares Management Risk vs. Shareholder Goals
Aids in evaluating opportunities
Promotes Quicker Capital movement

Does NOT eliminate all risk

Answer 17

Corporate Governance

Question 18

Avoid or Reduce

Share or Accept

Answer 18

Corporate Governance