Chapter 6 - Corporate Governance

Question 1

What is corporate governance?

Answer 1

Means by which a company is directed and controlled

Question 2

What matters does corporate governance concern?

Answer 2

Responsibilities of directors
Appropriate composition of the board of directors
necessity for good internal control
the necessity for an audit committee
relationship with external auditors

Question 3

What are the two different approaches to corporate governance?

Answer 3

Rules-based approach
Principles-based approach

Question 4

What is the rules based approach?

Answer 4

instils the code into law with appropriate penalties for transgression.

Question 5

What is the principles-based approach?

Answer 5

requires the entity to adhere to the spirit rather than the letter of the code. The entity must either comply with the code or explain why it has not, through reports to the appropriate body and its shareholders

Question 6

What does corporate governance usually incorporate?

Answer 6

Segregation of duties
Committees
Internal Audit

Question 7

What are the four different committees that corporate governance recommends?

Answer 7

Audit
Remuneration
Risk
Nominations