Lecture 8 - Corporate Governance Flashcards
What is the definition of corporate governance?
Corporate governance is the system by which companies are directed and controlled
What are the features of the UK corporate governance model?
- Unitary board with non-executive directors and executive directors
- Shareholder orientated
- Chairman cannot be CEO and vice versa
What is the European model of corporate governance?
- Dual board system
- Considers employees etc
Who appoints the independent auditor?
Shareholders
Are directors required to follow the corporate governance code?
No - comply or explain
What is the role of non executive directors?
To challenge and help develop proposals on strategy
What are the key considerations when appointing NEDs?
- Employed within last 5 years by company?
- Within 3 years, a material business relationship?
- Any additional remuneration?
- Close familial ties?
- A significant shareholder?
- On board > 9 years?
What is the C1.1 provision for auditors to review?
Are the reports prepared to be FBU?
What is the C2.1 provision for auditors to review?
Does the board review internal controls annually?
What is the C3.1 provision for auditors to review?
Does the a
Audit Committee have at least 2/3 NEDs?
What is the C3.2 provision for auditors to review?
Does the audit committee perform the following duties?
- Ensure the financial statements integrity
- Review internal controls
- Review effectiveness of internal audit
- Assist appointment and remuneration of external audit
- Ensure external auditors independence
- Procure NAS from external auditor
What is the C3.3 provision for auditors to review?
Ensures written terms of reference for audit committee
What is the C3.4 provision for auditors to review?
Does audit committee provide advice on FBU?
What is the C3.5 provision for auditors to review?
Has the audit committee made arrangements for whistleblowing?
What is the C3.6 provision for auditors to review?
Has audit committee ensured the internal audit function is working
