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ruh oh > P12. Oversight by Regulators > Flashcards

P12. Oversight by Regulators Flashcards

1
Q

When was the first version of the UK Corporate Governance Code produced?

A

1992

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2
Q

Who produced the 1992 UK Corp Gov Code

A

The Cadbury Committee

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3
Q

Definition of corp gov as per cadbury committee

A

The system by which companies are directed and controlled

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4
Q

UK CG Codes advise on board appraisal

A

FTSE350 companies undertake independent board evaluation exercise at least once every three years, complemented by formal and rigorous annual evaluation of performance of board, committees and individual directors

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5
Q

What is the fundamental key to a board evaluation exercise?

A

Knowing what it is expected to achieve

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6
Q

4 main reasons for undertaking board evaluations

A

Address specific need identified by the board
Requirement to benchmark board performance externally
Ensure board is as effective as it can be
Directors observing benefits of previous evaluations

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7
Q

Internal board eval - pro - Cost

A

Cheaper

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8
Q

Internal board eval - pro - Objectivity

A

An internal evaluator might already know what types of common issues to ignore as not being relevant to their board

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9
Q

Internal board eval - pro - Focus

A

Issues may well already be known to the evaluator saving time in trying to establish the problems and concentrating on finding solutions

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10
Q

Internal board eval - pro - Ease of undertaking

A

Quicker as no need to bring external consultant up to speed

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11
Q

Internal board eval - pro - Expertise

A

High degree of company and industry knowledge

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12
Q

Internal board eval - con - Cost

A

Saving money is not the goal of board evaluation

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13
Q

Internal board eval - con (counterpoint) - Objectivity

A

An internal evaluator is likely to have preconceived ideas and lack of objectivity

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14
Q

Internal board eval - con - Focus

A

Internal evaluator may not be able to bring external experience to bear

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15
Q

Internal board eval - con - Ease of undertaking

A

An internal evaluator is likely to require more time to conduct research, assess different types of evaluation and the time to write the report will be competing for their time with their normal daily duties

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16
Q

Internal board eval - con - Expertise

A

Lack of evaluation expertise

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17
Q

External board eval - pro - Cost

A

Expertise is expensive (ie. higher cost implies better skill)

18
Q

External board eval - pro - Objectivity

A

External evaluators should not have preconceived ideas or any agenda to pursue and will be seen as independent

19
Q

External board eval - pro - Focus

A

May identify issues that internal evaluators are unaware of or have discounted through familiarity

20
Q

External board eval - pro - Ease of undertaking

A

Whilst company specific knowledge will be poor, an expert external evaluator is likely to be able to conduct their research, interviews and complete their report quicker as that is their sole focus

21
Q

External board eval - pro - Expertise

A

Expert board evaluators with lots of experience

22
Q

External board eval - con - Cost

A

Expense of hiring external consultant

23
Q

External board eval - con - Objectivity

A

An external evaluator may need to ask a broader range of questions in order to identify areas of concern or where improvement can be made

24
Q

External board eval - con - Focus

A

More difficult for an external evaluator to identify key relevant issues and might suggest solutions that are not appropriate or relevant to the company’s situation

25
Q

External board eval - con - Ease of undertaking

A

Time required to brief external consultant on company and industry issues/practices

26
Q

External board eval - con - Expertise

A

Potential lack of company or industry specific factors

27
Q

8 broad categories of stakeholder

A

Members
Directors
Creditors
Suppliers
Local community
Employees
Environment
Government

28
Q

Criteria for company needing to publish corp gov statement

A

2,000 employees, or £200m turnover & balance sheet £1b

29
Q

What must the ‘statement of corporate governance arrangement’ state?

A

Either
Which code has been applied, how it has been applied, and the reasons and respects in which it departed from the code
Or
Explain the reasons for not applying any code, and explain arrangement for corp gov that were applied

30
Q

Which organisation regulates all companies?

A

BEIS - Department for Business, Energy and Industrial Strategy

31
Q

If BEIS appoints inspectors, who do these tend to be?

A

An accountant and a barrister

32
Q

Do BEIS inspectors have right of entry or right to undertake search of business?

A

No

33
Q

What do BEIS inspectors have powers to do?

A

Require company and any officers or agents to produce documents and be questioned by inspectors

34
Q

Can BEIS inspectors require production of docs, and interview bankers, solicitors and auditors? why?

A

Yes, because these are considered agents of the company

35
Q

When will an application for warrant to enter and search premises be made?

A

If request for docs is ignored, or if there are reasonable grounds for believing certain documents have not been produced

36
Q

What will the warrant authorise a police officer to do? (4)

A

Enter premises
Search and take possession of relevant documents
Take copies of such documents
Require explanations concerning documents from persons on premises

37
Q

What are the 6 categories of BEIS inspection?

A

Appointment of inspectors to investigate affairs of the company
Investigations into ownership of company
Investigations of directors’’ share dealings
Production of documents
Investigations to assist overseas regulatory authorities
Investigations under FSMA2000

38
Q

What do HMRC typically investigate?

A

Tax returns and claims for tax credits and allowances

39
Q

What is the FCA?

A

Financial Conduct Authority

40
Q

What is the PRA?

A

Prudential Regulation Authority

ruh oh (18 decks)

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