Chapter 8: Internal controls I
Multiple-choice questions
1. What part of an organisation determines the corporate governance?
a. Shareholders.
*b. Board of directors.
c. Employees.
d. Government.
Correct answer: b
Learning objective 8.1 – describe the evolution of corporate governance.
2. Which of the following is related to corporate governance?
(i) Goal setting.
(ii) Risk management.
(iii) Performance measurement and management.
*a. (i) (ii) (iii)
b. (i) (ii) only
c. (ii) (iii) only
d. (i) (iii) only
Correct answer: a
Learning objective 8.1 – describe the evolution of corporate governance.
3. Which of the following is the objective(s) of a corporate governance system?
(i) Ensuring security holders and other stakeholders in the investment community can
have a meaningful dialogue with the board and management on governance matters.
(ii) Ensuring security holders can factor that information into their decision on how to
vote on particular resolutions.
(iii) Ensuring investors can factor important information into their decision on
whether or not to invest in the entity’s securities.
a. (ii) only
b. (iii) only
c. (i) (iii) only
*d. (i) (ii) (iii)
Correct answer: d
Learning objective 8.1 – describe the evolution of corporate governance.
, Chapter 8: Internal controls I
4. What could be the result of poor corporate governance in an organisation?
a. Poor returns on investment for minority shareholders.
b. Bad publicity from environmental groups.
*c. Company failure and potential damage to economy.
d. Managers who are influenced by self-interest rather than the longevity of the
company.
Correct answer: c
Learning objective 8.1 – describe the evolution of corporate governance.
5. Under the ASX Corporate Governance Principles, entities listed on the Australian
Securities Exchange are:
*a. required to have a majority of independent directors.
b. not required to have a majority of independent directors.
c. required to ensure 50% of the directors are independent.
d. required to let the stakeholders choose the independent directors.
Correct answer: a
Learning objective 8.1 – describe the evolution of corporate governance.
6. The OECD’s definition of corporate governance has specifically outlined the
relationships between:
a. a company, its customers and its suppliers.
b. a company’s management, its board, its employees and its suppliers.
*c. a company’s management, its board, its shareholders and other stakeholders.
d. a company and various government agencies.
Correct answer: c
Learning objective 8.1 – describe the evolution of corporate governance.
8.1
, 7. Corporate governance is about:
(i) the many relationships in which an organisation is involved and how these
relationships are managed.
(ii) putting in place policies that allow for the various relationships of the organisation
to be successfully managed.
(iii) putting in place structures that allow for the various relationships of the
organisation to be successfully managed.
a. (i) only
b. (i) (ii) only
c. (i) (iii) only
*d. (i) (ii) (iii)
Correct answer: d
Learning objective 8.1 – describe the evolution of corporate governance.
8. Which of the following principle is not part of the principles for corporate governance
identified by the ASX Corporate Governance Council?
a. Respect the rights of shareholders.
*b. Keep disclosure of business information to a minimum.
c. Safeguard integrity in financial reporting.
d. Structure the board to add value.
Correct answer: b
Learning objective 8.2 – explain the principles of corporate governance.
9. In corporate governance principles, remunerate fairly and responsibly means:
a. all board members should be paid the same amount of remuneration.
b. all employees of an organisation should be paid fairly.
*c. the organisation should be able to demonstrate a clear link between company
performance and executive remuneration.
d. the organisation should be able to demonstrate a clear link between employee
performance and employee remuneration.
Correct answer: c
Learning objective 8.2 – explain the principles of corporate governance.
8.2
Multiple-choice questions
1. What part of an organisation determines the corporate governance?
a. Shareholders.
*b. Board of directors.
c. Employees.
d. Government.
Correct answer: b
Learning objective 8.1 – describe the evolution of corporate governance.
2. Which of the following is related to corporate governance?
(i) Goal setting.
(ii) Risk management.
(iii) Performance measurement and management.
*a. (i) (ii) (iii)
b. (i) (ii) only
c. (ii) (iii) only
d. (i) (iii) only
Correct answer: a
Learning objective 8.1 – describe the evolution of corporate governance.
3. Which of the following is the objective(s) of a corporate governance system?
(i) Ensuring security holders and other stakeholders in the investment community can
have a meaningful dialogue with the board and management on governance matters.
(ii) Ensuring security holders can factor that information into their decision on how to
vote on particular resolutions.
(iii) Ensuring investors can factor important information into their decision on
whether or not to invest in the entity’s securities.
a. (ii) only
b. (iii) only
c. (i) (iii) only
*d. (i) (ii) (iii)
Correct answer: d
Learning objective 8.1 – describe the evolution of corporate governance.
, Chapter 8: Internal controls I
4. What could be the result of poor corporate governance in an organisation?
a. Poor returns on investment for minority shareholders.
b. Bad publicity from environmental groups.
*c. Company failure and potential damage to economy.
d. Managers who are influenced by self-interest rather than the longevity of the
company.
Correct answer: c
Learning objective 8.1 – describe the evolution of corporate governance.
5. Under the ASX Corporate Governance Principles, entities listed on the Australian
Securities Exchange are:
*a. required to have a majority of independent directors.
b. not required to have a majority of independent directors.
c. required to ensure 50% of the directors are independent.
d. required to let the stakeholders choose the independent directors.
Correct answer: a
Learning objective 8.1 – describe the evolution of corporate governance.
6. The OECD’s definition of corporate governance has specifically outlined the
relationships between:
a. a company, its customers and its suppliers.
b. a company’s management, its board, its employees and its suppliers.
*c. a company’s management, its board, its shareholders and other stakeholders.
d. a company and various government agencies.
Correct answer: c
Learning objective 8.1 – describe the evolution of corporate governance.
8.1
, 7. Corporate governance is about:
(i) the many relationships in which an organisation is involved and how these
relationships are managed.
(ii) putting in place policies that allow for the various relationships of the organisation
to be successfully managed.
(iii) putting in place structures that allow for the various relationships of the
organisation to be successfully managed.
a. (i) only
b. (i) (ii) only
c. (i) (iii) only
*d. (i) (ii) (iii)
Correct answer: d
Learning objective 8.1 – describe the evolution of corporate governance.
8. Which of the following principle is not part of the principles for corporate governance
identified by the ASX Corporate Governance Council?
a. Respect the rights of shareholders.
*b. Keep disclosure of business information to a minimum.
c. Safeguard integrity in financial reporting.
d. Structure the board to add value.
Correct answer: b
Learning objective 8.2 – explain the principles of corporate governance.
9. In corporate governance principles, remunerate fairly and responsibly means:
a. all board members should be paid the same amount of remuneration.
b. all employees of an organisation should be paid fairly.
*c. the organisation should be able to demonstrate a clear link between company
performance and executive remuneration.
d. the organisation should be able to demonstrate a clear link between employee
performance and employee remuneration.
Correct answer: c
Learning objective 8.2 – explain the principles of corporate governance.
8.2
