Governance

Question 1

Is the combination of people, policies, procedures, and processes (including internal control) that help ensure that an entity effectively and efficiently directs its activities toward meeting the objectives of its stakeholders.

Answer 1

Governance

Question 2

Governance has two major components:

Answer 2

Strategic direction & Oversight

Question 3

Determines (a) the business model, (b) overall objectives, (c) the approach to risk taking (including risk appetite), and (d) the limits of organizational conduct.

Answer 3

Strategic direction

Question 4

Concerns (a) risk management activities performed by senior management and risk owners and (b) internal and external assurance activities.

Answer 4

Oversight

Question 5

Is the highest governing body responsible for directing or overseeing the activities and management of the organization.

Answer 5

The board of directors

Question 6

Performs day-to-day governance functions.

Answer 6

Management

Question 7

May have an active role in support of the organization’s ethical culture.

Answer 7

Internal auditors

Question 8

Must evaluate the design, implementation, and effectiveness of the organization’s ethics-related objectives, programs, and activities.

Answer 8

The internal audit activity

Question 9

The Sarbanes-Oxley Act of 2002 (SOX) established that the issuer’s audit committee must be:

Answer 9

An independent member of the board of directors & at least one member must be a financial expert

Question 10

The Sarbanes-Oxley Act of 2002 (SOX) established what private-sector body to regulate the accounting profession:

Answer 10

The Public Company Accounting Oversight Board (PCAOB)

Question 11

The Sarbanes-Oxley Act of 2002 (SOX) established that a public accounting firm is prohibited from:

Answer 11

Preforming consulting, legal, and internal auditing services (with some exceptions) for the audit client

Question 12

The Sarbanes-Oxley Act of 2002 (SOX) established that a public accounting firm may provide:

Answer 12

Conventional tax planning and certain services if preapproved by the audit committee

Question 13

The Sarbanes-Oxley Act of 2002 (SOX) established that the CEO and CFO must certify that:

Answer 13

1) To the best of their knowledge, the financial statements are free of material misstatements.
2) They are responsible for the system of internal control and have evaluated its effectiveness.

Question 14

The Sarbanes-Oxley Act of 2002 (SOX) established that all annual reports must contain a statement by the CEO and CFO that includes:

Answer 14

1) A statement that management has taken responsibility for establishing and maintaining an adequate system of internal control over financial reporting.
2) An assessment of whether internal control over financial reporting is effective.
3) A statement that an independent public accounting firm that is registered with the PCAOB also has assessed the system.

Question 15

The internal audit activity must assess and make appropriate recommendations for improving the governance process in its accomplishment of the following objectives:

Answer 15

1) Promoting appropriate ethics and values within the organization.
2) Ensuring effective organizational performance management and accountability.
3) Communicating risk and control information to appropriate areas of the organization; and
4) Coordinating the activities of, and communicating information to, the board, external and internal auditors, and management.

Question 16

Created to protect the environment by writing and enforcing regulations based on laws passed by Congress in the US.

Answer 16

The Environmental Protection Agency (EPA)

Question 17

What does the EPA do?

Answer 17

Investigates cases, gathers evidence, and provides legal assistance for the prosecution of criminal conduct.

Question 18

Set of criteria established by the International Organization for Standardization for certification of an environmental management system?

Answer 18

ISO 14000 Standards

Question 19

The benefits of using ISO 14000 can include:

Answer 19

Reduced cost of waste management, savings in consumption of energy and materials, lower distribution costs, and improved corporate image among regulators, customers, and the public.

Question 20

The purpose of the Occupational Safety and Health Act of 1970 is to:

Answer 20

Develop safety standards, prevent injuries, and promote job safety.

Question 21

Information reliability and integrity includes:

Answer 21

Accuracy, completeness, and security

Question 22

Internal auditors periodically assess:

Answer 22

Reliability and integrity practices and recommend new or improved controls

Question 23

Internal auditors also evaluate compliance with:

Answer 23

Laws and regulations concerning privacy.

Question 24

Corporate Social Responsibility (CSR) is:

Answer 24

1) A corporation’s purpose is not only to benefit shareholders but also to serve other groups in society beyond what the law requires
2) Actions must be voluntary
3) Can be profitable