Corporate Governance

Question 1

An entity’s corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organization and lays down the rules and procedures for organizational decision-making.

A. True
B. False

Answer 1

True

Question 2

Which of the following is TRUE regarding a corporation’s board of directors?

A. The directors are generally elected by the company’s shareholders
B. The directors represent the intermediaries between the shareholders and management
C. The directors oversee business operations by assessing the strategy and underlying purpose of management’s decisions and actions
D. All of the above

Answer 2

D. All of the above

Question 3

Which of the following is NOT one of the core principles of sound corporate governance?

A. Transparency
B. Independence
C. Responsibility
D. Fairness

Answer 3

B. Independence

Question 4

Ownership of an equity share in a publicly traded company provides an investor with a right to certain information about the corporation and a right to influence the corporation through participation in general shareholder meetings and by voting.

A. True
B. False

Answer 4

True

Question 5

Specific corporate governance practices for publicly traded corporations are often mandated by the listing standards for the stock markets on which they are listed.

A. True
B. False

Answer 5

True

Question 6

The G20/OECD Principles of Corporate Governance support establishing stronger protection for foreign shareholders than for minority shareholders as a means to encourage increased international investment.

A. True
B. False

Answer 6

False

Question 7

To reduce the probability of fraud in financial reports, the National Commission on Fraudulent Financial Reporting (the Treadway Commission) provided recommendations about which of the following parties involved in corporate governance?

A. Management
B. The compensation committee
C. The audit committee
D. Shareholders

Answer 7

C. The audit committee

Question 8

The G20/OECD Principles of Corporate Governance are binding and are required to be implemented by all corporations in jurisdictions that have officially adopted them.

A. True
B. False

Answer 8

False

Question 9

Sound corporate governance practices ensure that all stakeholders are treated equitably and are given just and appropriate consideration.

A. True
B. False

Answer 9

True

Question 10

Effective corporate governance is the foundation of fraud risk management.

A. True
B. False

Answer 10

True

Question 11

According to the G20/OECD Principles of Corporate Governance, an entity’s corporate governance framework should:

A. Encourage active cooperation between corporations and stakeholders in creating wealth and jobs
B. Ensure the timely and accurate disclosure of all material matters regarding the corporation
C. Ensure the equitable treatment of all shareholders, including minority and foreign shareholders
D. All of the above

Answer 11

D. All of the above

Question 12

The G20/OECD Principles of Corporate Governance include which of the following?

A. A request that governments have an effective legal, regulatory, and institutional framework to support good corporate governance practices
B. Recognition of the importance of the role of stakeholders in corporate governance
C. An emphasis on the importance of timely, accurate, and transparent disclosure mechanisms
D. All of the above

Answer 12

D. All of the above

Question 13

According to the G20/OECD Principles of Corporate Governance, companies should disclose all financial information to investors, regardless of the cost burden of the disclosure or the disclosure’s possible negative effects on the company’s competitive position.

A. True
B. False

Answer 13

False

Question 14

The term _______ refers to the oversight responsibilities of different parties for an organization’s direction, operations, and performance.

A. Fraud risk assessment
B. Corporate governance
C. Risk management
D. Corporate compliance

Answer 14

B. Corporate governance

Question 15

According to the G20/OECD Principles of Corporate Governance, governments should have an effective framework to support good corporate governance practices that:

A. Promotes transparent and fair markets
B. Supports effective supervision and enforcement
C. Is consistent with the rule of law
D. All of the above

Answer 15

D. All of the above

Question 16

Which of the following parties is responsible for directing employees to execute business activities and managing their performance of those tasks?

A. Shareholders
B. External auditors
C. The board of directors
D. Management

Answer 16

D. Management

Question 17

Good corporate governance is based on a framework that:

A. Is appropriate for the organization’s legal and regulatory environment
B. Remains adaptable
C. Considers the organization’s cultural and ethical environment
D. All of the above

Answer 17

D. All of the above

Question 18

Effective corporate governance practices are MOST IMPORTANT for which of the following organizations?

A. An advertising firm with 75 employees and four partners, all of whom actively participate in the business
B. A financial services company whose stock shares are traded on a public securities exchange
C. A sole-practitioner dentist’s office
D. A small souvenir shop in a tourist town that employs four retail clerks, in addition to the store’s owners

Answer 18

B. A financial services company whose stock shares are traded on a public securities exchange

Question 19

The _______________ provides guidance for policymakers in evaluating and improving the legal, regulatory, and institutional framework for corporate governance.

A. IOSCO Principles for Auditor Oversight
B. G20/OECD Principles of Corporate Governance
C. INTOSAI Code of Ethics
D. IIA Standards for the Professional Practice of Internal Auditing

Answer 19

B. G20/OECD Principles of Corporate Governance

Question 20

Who is responsible for holding the board of directors accountable for proper governance and oversight?

A. The external auditors
B. The shareholders
C. Executive management
D. The chairman of the board

Answer 20

B. The shareholders

Question 21

Specific corporate governance requirements for publicly traded corporations in all jurisdictions are:

A. Mandated by the G20/OECD Principles of Corporate Governance
B. Found in the Universal Corporate Governance Act
C. Considered optional and left to the discretion of the corporation’s board of directors
D. Contained in the various laws and regulations imposed upon corporations in the jurisdictions in which they operate

Answer 21

D. Contained in the various laws and regulations imposed upon corporations in the jurisdictions in which they operate

Question 22

Which of the following parties is responsible for overseeing business operations by assessing the strategy and underlying purpose of management’s decisions and actions?

A. External auditors
B. The board of directors
C. Industry regulators
D. Shareholders

Answer 22

B. The board of directors

Question 23

Effective ownership and reporting structures within an organization are necessary for ensuring which of the following principles of corporate governance?

A. Responsibility
B. Accountability
C. Fairness
D. Transparency

Answer 23

B. Accountability

Question 24

The purpose of corporate governance is to:

A. Ensure the accuracy and reliability of the organization’s financial reports.
B. Provide reasonable assurance regarding the organization’s compliance with applicable laws and regulations.
C. Encourage the efficient use of resources and require accountability for the stewardship of those resources.
D. Prevent and detect financial misstatements whether caused by errors or fraud.

Answer 24

C. Encourage the efficient use of resources and require accountability for the stewardship of those resources.

Question 25

The structure, responsibilities, and procedures of an organization’s governing board is one of the primary areas covered by the G20/OECD Principles of Corporate Governance.

A. True
B. False

Answer 25

True

Question 26

According to the G20/OECD Principles of Corporate Governance, a corporate governance framework should recognize the rights of which of the following parties?

A. Employees
B. Shareholders
C. Creditors
D. All of the above

Answer 26

D. All of the above

Question 27

________ in the context of corporate governance generally refers to the clarity, accuracy, completeness, and timeliness of the financial statements and other information provided by management to shareholders.

A. Responsibility
B. Transparency
C. Fairness
D. Accountability

Answer 27

B. Transparency

Question 28

The National Commission on Fraudulent Financial Reporting (the Treadway Commission) made which of the following recommendations to reduce the probability of fraud in financial reports?

A. Have adequate audit committee resources and authority.
B. Have a mandatory independent audit committee.
C. Develop a written charter for the audit committee.
D. All of the above are recommendations made by the Treadway Commission.

Answer 28

D. All of the above are recommendations made by the Treadway Commission.

Question 29

Good corporate governance practices:

A. Provide clear lines of accountability and reporting
B. Ensure that no single party can make all the business decisions without influence, input, or approval of other parties
C. Define the relationships and expectations of the parties involved
D. All of the above

Answer 29

D. All of the above

Question 30

Which of the following principles of corporate governance relates to the duty of internal parties to act in the best interest of the organization?

A. Transparency
B. Fairness
C. Responsibility
D. Accountability
Submit

Answer 30

C. Responsibility