Corporate Governance

Question 1

Primary purpose of a company’s board of directors

Answer 1

To serve as the intermediary between the corporation’s shareholders and those executing its activities (i.e., management) and act as guardian of the organization’s resources and assets

Question 2

Primary responsibility of a corporation’s management

Answer 2

To make the daily decisions that affect company performance

Question 3

What is corporate governance?

Answer 3

The oversight responsibilities of different parties for an organization’s direction, operations, and performance

Question 4

Purpose of corporate governance

Answer 4

To encourage the efficient use of organizational resources and accountability for the stewardship of those resources

Question 5

4 general core principles or values of corporate governance

Answer 5

-Accountability
-Transparency
-Fairness
-Responsibility

Question 6

Treadway Commission’s 4 recommendations to reduce fraud in financial reports

Answer 6

-Mandatory independent audit committee
-Written charter for audit committee
-Adequate resources and authority for the audit committee to execute its responsibilities
-Informed, vigilant, and effective audit committee members

Question 7

Purpose of the Treadway Commission

Answer 7

To define the responsibility of the auditor in preventing and detecting fraud

Question 8

6 areas of G20/OECD Principles of Corporate Governance #1

Answer 8

-Request for governments to have an effective legal, regulatory, and institutional framework to support good corporate governance practices

Question 9

6 areas of G20/OECD Principles of Corporate Governance #2

Answer 9

-Call for a corporate governance framework that protects the exercise of shareholders’ rights and supports the equal treatment of all shareholders

Question 10

6 areas of G20/OECD Principles of Corporate Governance #3

Answer 10

-Guidance regarding the effect of institutional investors and other intermediaries in stock markets and the resulting corporate governance implications

Question 11

6 areas of G20/OECD Principles of Corporate Governance #4

Answer 11

-Emphasis on the importance of timely, accurate, and transparent disclosure mechanisms

Question 12

6 areas of G20/OECD Principles of Corporate Governance #5

Answer 12

-Guidance regarding appropriate board structures, responsibilities, and procedures

Question 13

6 areas of G20/OECD Principles of Corporate Governance #6

Answer 13

-Recognition of the need to integrate sustainability and resilience into the corporate governance framework through incentives for companies and investors