Corporate Governance Test
The Organization for Economic Co-operation and Development (OECD) Principles of
Corporate Governance define corporate governance as involving what? - answer'a set
of relationships between a company's management, its board, its shareholders, and
other stakeholders'.
From a financial industry perspective, corporate governance involves the manner in
which the business and affairs of a firm are governed by its board and senior
management, including how they what? - answer- set the firm's strategy and objectives
• determine the firm's risk tolerance/appetite
• operate the firm's day-to-day business
• protect the interests of depositors, meet shareholder obligations, and take into account
the interests
of other recognised stakeholders, and
• align corporate activities and behaviour with the expectation that the firm will operate
in a safe and
sound manner, with integrity and in compliance with applicable laws and regulations.
What is a corporate governance manual designed to do? - answerA corporate
governance manual is designed to help executives and others understand the
governance framework and approach pertaining to their business. A corporate
governance manual also explains the corporate and management structure of a
business.
The compliance 2LoD function in relation to the compliance manual is what? -
answerAs part of its work as the firm's second line of defence, the compliance function
should also include a review of these governance standards as part of its monitoring
activity. This monitoring should include the regulatory standards relating to corporate
governance, and also the activity of those board members and senior management in
positions of significant influence. Any deviations should be reported to an appropriate
level of management and, in case of material deviations, to the board.
What is a unitary board ? - answerThe unitary board of directors is characterised by one
single board comprising both executive and non-executive directors. The dual board
consists of a supervisory board and an executive board of management where there is
a clear separation between the functions of supervision and management.
Typically, which countries have unitary boards? - answerUK and US
What is a dual or Two-Tier board? - answerIn a two-tier structure, a management board
manages the company's business operation but is accountable to, and supervised by, a
supervisory board elected by shareholders.
, Which countries have a two tier board system? - answerTypically continental Europe,
notably Germany.
What functions in a Unitary and Dual board have in common? - answerThe board of
directors in a unitary board and the supervisory board in the two-tier system are usually
elected by shareholders. Typically, both the unitary board and the supervisory board in
the two-tier structure appoint the members of the managerial body. In addition, both the
unitary board and the supervisory board usually have responsibility for ensuring that
financial reporting and control systems are effectively functioning and to ensure the
company complies with laws and regulations.
the compliance function should clearly be independent within the firm. This involves
what four related elements? - answer1. The compliance function should have a formal
status within the firm.
2. There should be a group compliance officer or head of compliance with overall
responsibility for
coordinating the management of the firm's compliance risk.
3. Compliance function staff, and in particular the head of compliance, should not be
placed in a position where there is a possible conflict of interest between their
compliance responsibilities and any other responsibilities they may have.
4. Compliance function staff should have access to the information and personnel
necessary to carry out their responsibilities.
The board and senior management can enhance the ability of the internal audit function
to identify problems with a firm's risk management and internal control systems by? -
answer- encouraging internal auditors to adhere to national and international
professional standards, such as those established by the Institute of Internal Auditors
• promoting the independence of the internal auditor, for example by ensuring that the
internal audit function reports to, or has direct access to, the board or the board's audit
committee
• recognising the importance of the audit and internal control processes and
communicating their importance throughout the firm
• utilising, in a timely and effective manner, the findings of internal audits and requiring
timely correction, by senior management, of identified problems, and
• engaging internal auditors to judge the effectiveness of the risk management and
compliance function, including the quality of risk reporting to the board and senior
management, as well as the effectiveness of other key control functions.
Can non-executives meet with the external and internal auditors away from the Senior
Mgmt. team? - answerYes. Non-executive board members should have the right to
meet regularly - in the absence of senior management - with the external auditor and
the heads of the internal audit and compliance functions. This can strengthen the ability
of the board to oversee senior management's implementation of the board's policies
and to ensure that the firm's business strategies and risk exposures are consistent with
risk parameters established by the board.
The Organization for Economic Co-operation and Development (OECD) Principles of
Corporate Governance define corporate governance as involving what? - answer'a set
of relationships between a company's management, its board, its shareholders, and
other stakeholders'.
From a financial industry perspective, corporate governance involves the manner in
which the business and affairs of a firm are governed by its board and senior
management, including how they what? - answer- set the firm's strategy and objectives
• determine the firm's risk tolerance/appetite
• operate the firm's day-to-day business
• protect the interests of depositors, meet shareholder obligations, and take into account
the interests
of other recognised stakeholders, and
• align corporate activities and behaviour with the expectation that the firm will operate
in a safe and
sound manner, with integrity and in compliance with applicable laws and regulations.
What is a corporate governance manual designed to do? - answerA corporate
governance manual is designed to help executives and others understand the
governance framework and approach pertaining to their business. A corporate
governance manual also explains the corporate and management structure of a
business.
The compliance 2LoD function in relation to the compliance manual is what? -
answerAs part of its work as the firm's second line of defence, the compliance function
should also include a review of these governance standards as part of its monitoring
activity. This monitoring should include the regulatory standards relating to corporate
governance, and also the activity of those board members and senior management in
positions of significant influence. Any deviations should be reported to an appropriate
level of management and, in case of material deviations, to the board.
What is a unitary board ? - answerThe unitary board of directors is characterised by one
single board comprising both executive and non-executive directors. The dual board
consists of a supervisory board and an executive board of management where there is
a clear separation between the functions of supervision and management.
Typically, which countries have unitary boards? - answerUK and US
What is a dual or Two-Tier board? - answerIn a two-tier structure, a management board
manages the company's business operation but is accountable to, and supervised by, a
supervisory board elected by shareholders.
, Which countries have a two tier board system? - answerTypically continental Europe,
notably Germany.
What functions in a Unitary and Dual board have in common? - answerThe board of
directors in a unitary board and the supervisory board in the two-tier system are usually
elected by shareholders. Typically, both the unitary board and the supervisory board in
the two-tier structure appoint the members of the managerial body. In addition, both the
unitary board and the supervisory board usually have responsibility for ensuring that
financial reporting and control systems are effectively functioning and to ensure the
company complies with laws and regulations.
the compliance function should clearly be independent within the firm. This involves
what four related elements? - answer1. The compliance function should have a formal
status within the firm.
2. There should be a group compliance officer or head of compliance with overall
responsibility for
coordinating the management of the firm's compliance risk.
3. Compliance function staff, and in particular the head of compliance, should not be
placed in a position where there is a possible conflict of interest between their
compliance responsibilities and any other responsibilities they may have.
4. Compliance function staff should have access to the information and personnel
necessary to carry out their responsibilities.
The board and senior management can enhance the ability of the internal audit function
to identify problems with a firm's risk management and internal control systems by? -
answer- encouraging internal auditors to adhere to national and international
professional standards, such as those established by the Institute of Internal Auditors
• promoting the independence of the internal auditor, for example by ensuring that the
internal audit function reports to, or has direct access to, the board or the board's audit
committee
• recognising the importance of the audit and internal control processes and
communicating their importance throughout the firm
• utilising, in a timely and effective manner, the findings of internal audits and requiring
timely correction, by senior management, of identified problems, and
• engaging internal auditors to judge the effectiveness of the risk management and
compliance function, including the quality of risk reporting to the board and senior
management, as well as the effectiveness of other key control functions.
Can non-executives meet with the external and internal auditors away from the Senior
Mgmt. team? - answerYes. Non-executive board members should have the right to
meet regularly - in the absence of senior management - with the external auditor and
the heads of the internal audit and compliance functions. This can strengthen the ability
of the board to oversee senior management's implementation of the board's policies
and to ensure that the firm's business strategies and risk exposures are consistent with
risk parameters established by the board.
