Module 2

Question 1

What is corporate governance?

Answer 1

The system by which companies are directed and controlled.

Question 2

Good corporate governance ensures (5)

Answer 2

• Fulfil long term strategic goals
• Consider and care for interests of employees
• Take into account environment and local community
• Maintain relationships with stakeholders
• Compliance with applicable legal and regulatory requirements

Question 3

AIM listed can chose to follow

Answer 3

UK Corporate Governance Code OR QCA Corporate Governance Code

Question 4

Firms which audit 20 or more listed entities follow

Answer 4

Audit Firm Governance Code

Question 5

G20/ OECD Six Core Principles

Answer 5

• Basis for effective CG framework
• Rights and equitable treatment of shareholders and key ownership functions
• Institutional investors, stock markets and others
• Role of stakeholders in CG
• Disclosure and transparency
• Responsibilities of the board

Question 6

FRC Guidance on Risk Management, Internal Control and Related Financial and Business Reporting (2014) > 3 specific areas for consideration

Answer 6

• Risk management and internal control
• Going concern
• Viability statement

Question 7

Two-part disclosure statement required by Listing Rules

Answer 7

Comply or explain basis

Question 8

Section 404 Controls report requirements (3)

Answer 8

• Management state responsibility for establishing and maintaining adequate internal control structure
• Management make assessment of and representations about effectiveness of internal control structure and procedures
• Every audit report must attest to assessment made by management

Question 9

SEC Monitors

Answer 9

PCAOB

Question 10

PCAOB (Public Company Accounting Oversight Board)

Answer 10

Oversees and investigates audits and auditors of public companies. Enforces compliance with SOx.

Question 11

SEC Director Remuneration

Answer 11

Require companies to allow shareholders to vote on the pay that directors receive, and to vote on how frequently they wish to vote on the level of pay

Question 12

Committees (3)

Answer 12

• Audit
• Remuneration
• Nomination

Question 13

Viability statement

Answer 13

Provision 31