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BSA 28C > MTE > Flashcards

MTE Flashcards

1
Q

___________ is a process whereby elements in society wield power, authority and influence and enact policies and decisions concerning public life and social upliftment.

A

GOVERNANCE

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2
Q

___________ is the process of decision-making and the process by which decisions are implemented through the exercise of power or authority by leaders of the country and/or organization

A

GOVERNANCE

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3
Q

What are the eight characteristics of good governance?

A

(1) Participation
(2) Accountability
(3) Effectiveness and Efficiency
(4) Equity and Inclusiveness
(5) Consensus-oriented
(6) Responsiveness
(7) Transparency
(8) Rule of law

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4
Q

Participation by both men and women is a key cornerstone of good governance. True or False?

A

TRUE

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5
Q

A representative democracy means that the concern of the most vulnerable in society would not be taken into consideration in decision-making. True or False?

A

FALSE. A representative democracy does not necessarily mean that the most vulnerable in society would not be taken into consideration in decision-making.

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6
Q

Good governance requires fair legal frameworks that are enforced _____________.

A

Impartially

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7
Q

Impartial enforcement of laws requires an independent judiciary and an impartial and incorruptible police force. True or False?

A

TRUE

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8
Q

______________ means that decisions taken and their enforcement are done in a manner that follows rules and regulations.

A

TRANSPARENCY

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9
Q

______________ means that information is freely available and directly accessible to those who will be affected by such decisions and their enforcement

A

TRANSPARENCY

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10
Q

What characteristic of good governance means freedom of association and expression on one hand and an organized civil society on the other hand?

A

PARTICIPATION

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11
Q

What characteristic of good governance is described by fair legal frameworks that are enforced impartially?

A

RULE OF LAW

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12
Q

What characteristic of good governance is described by serving the needs of all stakeholders within a reasonable timeframe?

A

RESPONSIVENESS

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13
Q

What characteristic of good governance comes as a result of an understanding of the historical, cultural, and social contexts of a given society or community?

A

CONSENSUS-ORIENTED

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14
Q

What characteristic of good governance ensures that all members feel that they have a stake in the organization and do not feel excluded from the mainstream of society?

A

EQUITY AND INCLUSIVENESS

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15
Q

What characteristic of good governance ensures that process and institutions produce results that meet the needs of society while making the best use of resources at their disposal?

A

EFFECTIVENESS AND EFFICIENCY

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16
Q

Accountability can be enforced without transparency and the rule of law. True or False?

A

FALSE. Accountability cannot be enforced without transparency and the rule of law.

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17
Q

In general, to whom is an organization or institution accountable to?

A

In general, an organization or institution is accountable to those who will be affected by its decisions or actions.

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18
Q

___________________ is defined as the system of rules, practices, and processes by which business corporations are directed and controlled.

A

CORPORATE GOVERNANCE

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19
Q

Corporate governance involves balancing the interests of a company’s many stakeholders.

A

TRUE

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20
Q

What are the four basic objectives of corporate governance?

A
  1. Fair and equitable treatment of shareholders
  2. Self-assessment
  3. Increase shareholders’ wealth
  4. Transparency and full disclosure
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21
Q

The roles of chairperson and chief executive officer are very similar and should be exercised by the same individual

A

FALSE. The roles of chairperson and chief executive officer should not be exercised by the same individual.

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22
Q

What principle of good corporate governance does this question relate to?
a. Transparency and full disclosure
b. Accountability
c. Corporate control

“Does the board meet the information needs of investment communities?”

A

Transparency and full disclosure

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23
Q

What principle of good corporate governance does this question relate to?
a. Transparency and full disclosure
b. Accountability
c. Corporate control

“Does it safeguard integrity in financial reporting?”

A

Transparency and full disclosure

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24
Q

What principle of good corporate governance does this question relate to?
a. Transparency and full disclosure
b. Accountability
c. Corporate control

“Does the board have sound disclosure policies and practices?”

A

Transparency and full disclosure

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25
Q

What principle of good corporate governance does this question relate to?
a. Transparency and full disclosure
b. Accountability
c. Corporate control

“Does it make timely and balanced disclosures?”

A

Transparency and full disclosure

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26
Q

What principle of good corporate governance does this question relate to?
a. Transparency and full disclosure
b. Accountability
c. Corporate control

“Can an outsider meaningfully analyze the organization’s actions and performance?”

A

Transparency and full disclosure

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27
Q

What principle of good corporate governance does this question relate to?
a. Transparency and full disclosure
b. Accountability
c. Corporate control

“Does the board clarify its role and that of management?”

A

Accountability

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28
Q

What principle of good corporate governance does this question relate to?
a. Transparency and full disclosure
b. Accountability
c. Corporate control

“Does it promote objective, ethical and responsible decision making?”

A

Accountability

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29
Q

What principle of good corporate governance does this question relate to?
a. Transparency and full disclosure
b. Accountability
c. Corporate control

“Does it lay solid foundations for management oversight?”

A

Accountability

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30
Q

What principle of good corporate governance does this question relate to?
a. Transparency and full disclosure
b. Accountability
c. Corporate control

“Does the composition mix of board membership ensure an appropriate range and mix of expertise, diversity, knowledge, and added value?”

A

Accountability

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31
Q

What principle of good corporate governance does this question relate to?
a. Transparency and full disclosure
b. Accountability
c. Corporate control

“Is the organization’s senior official committed to widely accepted standards of correct and proper behavior?”

A

Accountability

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32
Q

What principle of good corporate governance does this question relate to?
a. Transparency and full disclosure
b. Accountability
c. Corporate control

“Has the board built long-term sustainable growth in shareholders’ value for the corporation?”

A

Corporate control

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33
Q

What principle of good corporate governance does this question relate to?
a. Transparency and full disclosure
b. Accountability
c. Corporate control

“Does it create an environment to take risk?”

A

Corporate control

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34
Q

There is a universal formula for good governance. True or False?

A

FALSE. There is not simple universal formula for good governance.

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35
Q

______________ is anybody who is influenced, whether directly or indirecly, by trhe actions of a company.

A

STAKEHOLDERS

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36
Q

______________ are a response to society’s wishes to ensure that organizations act responsibly and operate in compliance with relevant laws.

A

Regulators

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37
Q

_____________________ provide effective oversight through election of board members, approval of major initiatives from the board

A

SHAREHOLDERS

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38
Q

_____________________ are the major representative of stockholders to ensure that the organization is run according to the organization’s charter and that there is proper accountability

A

BOARD OF DIRECTORS

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39
Q

____________________ share the same role as the BOD.

A

NON-EXECUTIVE or INDEPENDENT DIRECTORS

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40
Q

____________________ is in charge of operations and accountability. They manage the organization effectively and provide accurate and timely reports to shareholders and other stakeholders.

A

MANAGEMENT

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41
Q

_______________ provide oversight of the internal and external audit function and the process of preparing the annual financial statements as well as public reports on internal control

A

AUDIT COMMITTEES OF THE BOD

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42
Q

______________________ set accounting and auditing standards dictating underlying financial reporting and auditing concepts. They set the expectations of audit quality and accounting quality

A

BOARD OF ACCOUNTANCY

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43
Q

____________________ ensures the accuracy, timeliness, and fairness of public reporting of financial and other information for public companies

A

SECURITIES AND EXCHANGE COMMISSION

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44
Q

___________________ performs audits of company financial statements to ensure that the statements are free of material misstatements

A

EXTERNAL AUDITORS

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45
Q

___________________ performs audits of companies for compliane with company policies and laws, audits to evaluate the efficiency of operations, and periodic evaluation and test of control

A

INTERNAL AUDITORS

46
Q

Effective corporate governance should be integrated with the company’s business strategy and not viewed as simply a compliance obligation. True or False?

A

TRUE

47
Q

________________ has the primary responsibility for creating a culture of performance with integrity and ethical behavior.

A

Management

48
Q

_____________________ is intended to raise the corporate governance standards of the Philippine corporations to a level at par with its regional and global counterparts

A

CODE OF CORPORATE GOVERNANCE

49
Q

The Code will adopt the _________________________. This approach combines voluntary compliance with mandatory disclosure.

A

“comply or explain” approach

50
Q

Companies do not have the comply with the Code. True or False?

A

TRUE. However, they must identify any areas of non-compliance and explain the reasons for non-compliance

51
Q

__________________ are considered high-level statements of corporate governance good practice, and are applicable to all companies.

A

PRINCIPLES

52
Q

__________________ are objective criteria that are intended to identify the specific features of corporate governance good practice that are recommended for companies operating according to the Code.

A

RECOMMENDATIONS

53
Q

Alternatives to a Recommendation are always rejected. True or False?

A

FALSE. Alternatives to a Recommendatin may be justified as long as it is consistent with the overall Principle.

54
Q

When a Recommendation is not complied with, the company must ________________________.

A

disclose and describe this non-compliance, and explain how the overall Principle is being achieved

55
Q

____________________ strive to provide companies with additional information on the recommended best practice.

A

EXPLANATIONS

56
Q

Smaller companies may decided that the cost of some provisions outweigh the benefits. Thus, ____________________ is considered in the application of its provisions.

A

Principle of Proportionality

57
Q

It is a system of stewardship and control to guide organizations in fulfilling their long-term economic, moral, legal and social obligations towards their stakeholders.

A

CORPORATE GOVERNANCE

58
Q

The governing body elected by the stockholders that exercises the corporate powers of a corporation, conducts all its business and controls its properties.

A

BOARD OF DIRECTORS

59
Q

Group of executives given the authority by the BOD to implement the policies it has laid down in the conduct of the business of the corporation.

A

MANAGEMENT

60
Q

A person who is independent of management and the controlling shareholder.

A

INDEPENDENT DIRECTOR

61
Q

A director who has executive responsibility of day-to-day operations of a part of the whole of the organization.

A

EXECUTIVE DIRECTOR

62
Q

A director who has no executive responsibility and does not perform any work related to the operations of the corporation.

A

NON-EXECUTIVE DIRECTOR

63
Q

A group of corporations that has diversified busines activities in varied industries, whereby such the operations of such businesses are controlled and managed by a parent corporate entity.

A

CONGLOMERATE

64
Q

A process designed and effective to provide reasonable assurance on the achievement of objectives.

A

INTERNAL CONTROL

65
Q

A process designed to identify potential events that may affect the entity, manage risks to be within its risk appetite, and provide reasonable asurance regarding the achievement of entity objectives.

A

ENTERPRISE RISK MANAGEMENT

66
Q

This term shall cover parties that the company exerts direct or indirect control over or that exerts direct or indirect control over the company.

A

RELATED PARTY

67
Q

A transaction is not considered a related party transaction if a price that reflects market rates is charged by a company to a related party. True or False?

A

FALSE. A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party.

68
Q

Any individual, organization or society at large who can either affect or be affected by the company’s strategies, policies, business decisions and operations.

A

STAKEHOLDERS

69
Q

The Board should be composed of a majority of non-executive directors. True or False?

A

TRUE. A board composed of majority of NEDs assures the protection of the company’s interest over the interests of the individual shareholders.

70
Q

A Corporate Secretary should be a member of the BOD and should annually attend a training on corporate governance. True or False?

A

FALSE. A Corporate Secretary should not be member of the BOD and should be a separate individual from the compliance officer.

71
Q

The primary responsibility of the Corporate Secretary is to the Chairman of the Company, not to the corporation and its shareholders. True or False?

A

FALSE. The Corporate Secretary is primarily responsible to the corporation and its shareholders.

72
Q

The Compliance Officer should be a member of the BOD. True or False?

A

FALSE. The Compliance Officer should have a rank of Senior Vice President or an equivalent position.

73
Q

No director should participate in discussions or deliberations involving his own remuneration. True or False?

A

TRUE

74
Q

For employees in control functions, their remuneration is determined independent of any business line being overseen. True or False?

A

TRUE

75
Q

If the Board committees are not established, the functions of these committees may be carried out by the _________________.

A

WHOLE BOARD

76
Q

The Internal Auditor should report directly to the CFO. True or False?

A

FALSE. The internal auditor should report directly to the Audit Committee.

77
Q

The absence of a director in more than ___________ of all regular and special meetings of the Board is ground for disqualification in the succeeding election.

A

50%

78
Q

The External Auditor is accountable to the shareholders or the company as a whole, rather than to management. True or False?

A

TRUE

79
Q

It is a standard practice to allow the external auditor to perform non-audit services for the company in order to improve transparency and good governance in the organization. True or False?

A

FALSE. Allowing the same auditor to perform non-audit services for the company may create a potential conflict of interest.

80
Q

___________________ is the process of measuring and assessing risk and developing strategies to manage it.

A

RISK MANAGEMENT

81
Q

____________________ is a systematic approach in identifying analyzing and controlling areas or events with a potential for causing unwanted change.

A

RISK MANAGEMENT

82
Q

What are the three steps of risk management according to the ISO?

A
  1. Establish the context
  2. Identification of potential risk
  3. Risk assessment
83
Q

_________________ refers to the uncertainty about the rate of return caused by the nature of the business.

A

BUSINESS RISK

84
Q

_________________ is related to the probability that some or all of the initial investment will not be returned.

A

DEFAULT RISK

85
Q

_________________ is associated with the uncertainty created by the inability to sell the investment quickly for cash.

A

LIQUIDITY RISK

86
Q

What are the five typical areas of organiztional risk?

A
  1. Financial
  2. Commercial
  3. Strategic
  4. Technical
  5. Operational
87
Q

It is more difficult to assess the risks inherent in a business decision than to identify them. True or False?

A

TRUE

88
Q

Risk is both desirable and necessary. True or False?

A

TRUE

89
Q

______________ is the lifeblood of a business, heavily influencing strategies and decisions at every level.

A

FINANCE

90
Q

_______________ is the process designed and effected by to provide reasonable assurance about the achievement of the entity’s objectives.

A

INTERNAL CONTROL

91
Q

___________________ means all the policies and procedures adapted by the management of an entity to assist in achieving the management’s objective.

A

INTERNAL CONTROL SYSTEM

92
Q

___________________ means the overall attitude, awareness and actions of directors and management regarding the internal control system and its importance in the entity.

A

CONTROL ENVIRONMENT

93
Q

__________________ is the identification, analysis, and management of risks pertaining to the preparation of financial statements.

A

Risk assessment

94
Q

_________________ is the process for identifying and responding to business risks

A

Risk assessment process

95
Q

Mnay small entities are carried out entirely by the engagement partner who is responsible for considering the susceptibility of the entity’s financial statements to material misstatement. True or False?

A

TRUE

96
Q

__________________ are the policies and procedures that help ensure that management directives are carried out.

A

CONTROL ACTIVITIES

97
Q

In a ___________________, management uses accounting and operating data to assess performance, and it then takes corrective action.

A

PERFORMANCE REVIEW

98
Q

Only personnel at high levels in an organizatoin may make performance reviews. True or False?

A

FALSE. Personnel at various levels in an organization may make performance reviews.

99
Q

___________________ are policies and procedures designed to require authorization of transactions and to ensure the accuracy and completeness of transaction processing.

A

Information processing controls

100
Q

_________________ is the process that an entity uses to assess the quality of internal control over time.

A

MONITORING

101
Q

______________ is an intentional act involving the use of deception that results in material misstatement of the financial statements

A

FRAUD

102
Q

What distinguishes fraud from errors?

A

Intent to deceive

103
Q

____________________ occurs when a perpretrator steals or misuses an organization’s assets

A

ASSET MISAPPROPRIATION

104
Q

This is the intentional manipulation of reported financial results to misstate the economic condition of the organization.

A

FRAUDULENT FINANCIAL REPORTING

105
Q

What are the three elements of the Fraud Triangle?

A

a. Incentive
b. Opportunity
c. Rationalization

106
Q

_____________________ is a deficiency in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s financial statements will not be prevented or detected on a timely basis.

A

MATERIAL WEAKNESS

107
Q

___________________ refers to choosing accounting methods and making accounting principle changes to produce a specified income level or trend.

A

INCOME SMOOTHNIG

108
Q

___________________ is the practice of carefully timing the recognition of revenue and expenses.

A

INCOME SMOOTHING

109
Q

What are the three basic business transaction cycles?

A
  1. Sales and collection cycle
  2. Acquisitions and payment cycle
  3. Payroll and personnel cycle
110
Q

This refers to the act of withholding cash receipts without recording them.

A

Skimming

111
Q

This technique is used to conceal the fact that cash has been abstracted.

A

Lapping

BSA 28C (3 decks)

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