Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Corporate Governance > Final Quiz > Flashcards

Final Quiz Flashcards

1
Q

BOD responsibilities and conflict

A 
Strategic guidance (advisory)- operational direction, balancing risk and reward
Monitor/incent management (Oversight)- hire/fire executives, legal and reporting requirements
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

BOD operations committees

A

Compensation committee- independent directors
Governance committee
BOD nominating committee
Audit committee- 3 members must be financially literate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

BOD fiduciary duties

A

A duty of care: “business judgment rule” (informed good faith)
A duty of loyalty: act in best interests of corporation
A duty of candor: Inform shareholders by disclosing material information publicly

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Duty of care considerations

A

Attendance at board meetings
Staying informed
Must inquire of potential issues when alerted to them
Must disclose info to other directors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Duty of loyalty considerations

A

Act in good faith
Cannot use their position for personal gain
Decisions should be fair to corporation
Board must review business opportunities before a member can pursue them

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Duty of candor considerations

A

Report all material info known to shareholders
Must have disclosure policy that meets regulatory standards (8-K for US companies)
Do not disclose confidential information

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Fiduciary duty stake holders in order of importance

A
  1. All shareholders
  2. Investors
  3. Customers
  4. Creditors
  5. Management
  6. Employees
  7. Analysts and Wall Street
  8. Activist shareholders
  9. Community
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Risk (COSO definition)

A

The possibility that events will occur and affect the achievement of strategy and business objectives

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Uncertainty (COSO definition)

A

The state of not knowing how or if potential events may manifest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

ERM (COSO definition)

A

The culture, capabilities, and practices, integrated with strategy-setting and performance, that organizations rely on to manage risk in creating, preserving, and realizing value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

COSO ERM 5 components

A

Governance and Culture- oversee board risk, define culture
Strategy and Objective Setting- define risk analysis
Performance- identify, assess, prioritize risk
Review and Revision
Information, Communication, Reporting- on risk, culture, performance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Components of strategy

A

Objective
Scope
Competitive Advantage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Risk Assessment Approach

A 
Identify Risks
Develop Assessment Criteria
Assess Risks
Assess Risk Interactions
Prioritize Risks
Respond to Risks
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Risk Assessment Equation

A

Likelihood x Risk + Vulnerability + Speed of onset

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Risk Responses

A

Accept (and monitor)
Avoid
Reduce (via controls)
Share (insurance, R&D efforts)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

2 types of corporation perspectives

A

Contract based: aligned with shareholders- advocate for free markets and little governance
Public interest based: aligned with stakeholders- advocate for impact on society, need governance

17
Q

US corporate governance gatekeepers- those we rely on for financial information

A

Auditors
Security Analysts
Bankers
Credit Rating Agencies

18
Q

Conservatism

A

GAAP requires more verifiable evidence to record revenues and gains, less verifiable evidence to record expenses/losses
Entices managers to tell the truth

19
Q

How can a company manage (increase) ROA

A

Do nothing, let assets depreciate

20
Q

Big Bath strategy

A

If a company fires CEO and management, new CEO brought in writes down assets heavily, large non-restructuring charge (non-recurring) and blame the prior management team

21
Q

Equity method in earnings management

A

Joint Venture revenues, expenses, assets, and liabilities are hidden.
Used to hide debt, borrow off balance sheet

22
Q

Cap and trade system

A

Government sets a cap on emissions for all organizations combined, issues allowances for this cap proportionately to companies depending on how much they emit.
Tax on carbon emissions
Companies who can reduce their emissions for a lower price will sell their allowances for a higher price

23
Q

Cap and trade systems in US

A

Regional GHG initiative- Goal: reduce 10% of CO2 emitted in power generation by 2018
Western Climate Initiative- Goal: reduce 2005 GHG levels by 15% by 2020
California Carbon Dashboard

24
Q

US GAAP records allowances as ______ and IFRS records allowances as __________ and _________

A

Inventory,
Intangible assets,
deferred revenue to be recognized over the year

25
Q

Issues with sustainability

A

Lack of agreed upon framework for sustainability reporting

Inadequate internal measurement and control systems

26
Q

Global reporting initiative

A

Leading organization in sustainability reporting with stakeholder perspective
Produced many GRI Standards
Modeled after FASB and IASB
Board comprised of 15 members
Meetings are open to public and available online

27
Q

Disclosure 303-3

A

GRI environmental standard stating companies must report total volume of water recycled and as % of total water withdrawn

28
Q

Sustainability Accounting Standards Board

A

Shareholder view, goal is to design industry level reporting standards for use in 10-K filings
Highlights sustainability issues that are material to specific industries, and develops standards to disclose them

29
Q

PwC reasons for intergrated reporting

A

Growth may depend on it
Many companies are part of the way there
It could attract long term investors

30
Q

Ethical issues for accountants

A

Professional responsibilities- behave honorably even at sacrifice of personal advantages
Public interest principle- serve the public interest- clients and colleauges
Objectivity and independence principle- free of conflicts of interest in both facts and appearance
Due care principle

31
Q

Loosey Goosey standards that do not improve governance

A 
Independent Chairman
Staggered boards (elected every 3 years)
Multiple class shares
32
Q

4 Loosely defined concepts (Loosey Goosey)

A

Good Governance
Board Oversight
Pay for Performance
Sustainability

33
Q

5 ways ESG creates value

A

Facilitating top-line growth
Reducing costs
Minimizing regulatory and legal interventions
Increasing employee productivity
Optimizing investment and capital expenditures

34
Q

Triple bottom line (accounting framework)

A

3 dimensions of performance:
Social (People)
Environmental (Planet)
Financial (Profit)

35
Q

Challenges with sustainability reporting

A

Inconsistent or incomparable
Costly or time-entensive
Unclear benefits

36
Q

Stakeholder centric assurance

A

Focuses on entity’s adherance to inclusivity, materiality, responsiveness in a stakeholder engagement

Corporate Governance (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions