P3 - 3. Corporate Governance

Question 1

What are the 2 main objectives of corporate governance?

Answer 1

1. Management and reduction of risk
2. Clear communication with all stakeholders

Question 2

What are the 4 main advantages of having NEDs?

Answer 2

1. More objective
2. External experience
3. Challenge and develop strategy proposals
4. Monitor board so provide comfort level

Question 3

What are the 3 internal responsibilities of the audit committee?

Answer 3

1. Review internal control and RM systems
2. Monitor internal audit committee
3. Review internal audits work

Question 4

What are the 3 external responsibilities of the audit committee?

Answer 4

1. Monitor integrity of financial statements
2. Recommend appointment and remuneration of external auditor
3. Review auditors ‘letter of weakness’

Question 5

What are the 5 sections of the UK Corporate Governance Code?

Answer 5

1. Board leadership and company purpose
2. Division of responsibilities
3. Composition, succession and evaluation
4. Audit, risk and internal control
5. Remuneration