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BEC > Corporate Governance > Flashcards

Corporate Governance Flashcards

1
Q

What are the rights, duties, responsibilities & authority of the Board of Directors?

A
  • Election, removal & supervision of officers
  • Adoption, amendment & repeal of bylaws
  • Reacquire treasuary stock (authorized, issued but not outstanding)
  • Declare dividends

* Officer may also serve as directors *

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2
Q

What are 5 components of COSO?

A

CRIME

  • Control Evironment
  • Risk Assessment
  • Information & Communications
  • Monitoring
  • Existing Control Activities
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3
Q

What are principles associated with control environment component of COSO?

A

CHOPPER

  • Commitment of Competence
  • Human resource policies & procedures
  • Organizational structure
  • Philosophy & Operating style of Management
  • Participation of Board of directors or audit committee
  • Ethical & Integrity values
  • Responsibility & Authority Assignment
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4
Q

What are 4 principles associated with risk assessment?

A
  • Specify objectives
  • Identify & analyze risks
  • Accesses fraud risk
  • Identify & analyzes significant changes
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5
Q

What are 3 principles associated with (existing) control activities?

A
  • Select & develop control activities
  • Select & develop technology controls
  • Deploy through policies & procedures
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6
Q

What are the types of control activities?

A

PIPS

  • Performance review: Actual vs budget, P/Y, financial to non-financial
  • Information processing: General vs Application controls (input, processing, and output controls)
  • Physical controls: Access to assets
  • Segregation of duties: ARCC
    • Authorization of transactions
    • Recording (posting) of transactions
    • Custody of assets
    • Comparisons, Reconciliation
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7
Q

What are 3 principles associated with information & communication?

A
  • Obtain & use information
  • Internally communicate information
  • Communicate with external parties
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8
Q

What are 2 principles associated with monitoring?

A
  • Ongoing & separate evaluations
  • Communication of deficiencies
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9
Q

What are sequence activities of monitoring?

A
  • Control baseline
  • Change identification
  • Change management
  • Control revalidation/update
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10
Q

What are the limitations of COSO?

A
  • Collusion
  • Override by management
  • Competence: errors or mistakes, poor human judgment
  • Cost/benefit constraints
  • Obsolescence: change in co’s operations or size
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11
Q

Name & describe 3 objectives within COSO?

A

ORC

  • Operating: effectiveness & efficiency of entity’s operations
  • Reporting: reliabiltiy, timeliness & transparency of financial & non-financial r
  • Compliance: complying with applicable laws & regulations
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12
Q

What are components of COSO- ERM?

A

IS EAR AIM

  • Internal Control Environment
  • Objective Setting
  • Event Identfication
  • Risk Assessment
  • Risk Response
  • Control Activities
  • Information & Communication
  • Monitoring
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13
Q

What are principles of objective setting component of COSO- ERM?

A
  • Strategic Obj
  • Related Obj: Operation, Reporting, Compliance
  • Selected Obj
  • Risk Appetite
  • Risk Tolerances
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14
Q

What are principles of risk response component of COSO- ERM?

A
  • Avoidance: Terminate risk like discontinue products
  • Reduction: Reduce/mitigate risk like invest in inventory technology, relocating
  • Sharing: Reduce risk by transferring risk like insurance or bonds
  • Acceptance: NO action
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15
Q

What’s control baseline?

A

Developing the initial understanding of the control system

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16
Q

What’s change identification?

A

Identify & address changes in the effectiveness of I/C to initiate changes to controls

17
Q

What’s change management?

A

Evaulates the design & implementation of changes and establishing a new baseline

18
Q

What’s control revalidation/update?

A

Revalidating the understanding periodically

19
Q

Which COSO component includes the goal of proper measurement of transactions?

A

Information & Communication

20
Q

What are the requirements for financial expert?

A
  • Experience with internal accounting controls
  • Experience with preparation or auditing of F/S
  • Understanding GAAS
21
Q

Which entity is best for ERM process?

A

Manager within the deparment

22
Q

Describe EMR

A

Manages risks and seizes opportunities to achieve the goals of the organization

23
Q

Who is ultimately responsible for the implementation and development of the ERM?

A
  • Management
  • Notes: Board of directors is responsible for oversight
24
Q

What are the examples of risk sharing?

A
  • Insurance
  • Hedging
  • Fidelity bonds
25
Q

Changes in effectiveness show in which stages of monitoring?

A

Change identification

BEC (5 decks)

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