ACCA ACCA Corporate Governance 1 — Questions and Answers
Question 1: Which ACCA paper primarily covers corporate governance and its application to listed companies?
- P1 - Governance, Risk and Ethics (Correct answer)
- P2 - Corporate Reporting
- F7 - Financial Reporting
- F8 - Audit and Assurance
Correct answer: P1 - Governance, Risk and Ethics
The ACCA P1 (now SBL) paper focuses on governance, risk, and ethics as they apply to organizations including listed companies.
Question 2: In the UK Corporate Governance Code, what principle governs the relationship between a company's board and its shareholders?
- Accountability and audit
- Leadership
- Engagement (Correct answer)
- Remuneration
Correct answer: Engagement
The UK Corporate Governance Code's 'Engagement' principle addresses how the board should maintain dialogue with shareholders and stakeholders.
Question 3: Which of the following best describes a 'unitary board' structure in corporate governance?
- Separate supervisory and management boards
- Executive and non-executive directors on a single board (Correct answer)
- A board composed entirely of independent directors
- A board chaired by the CEO
Correct answer: Executive and non-executive directors on a single board
A unitary board combines both executive and non-executive directors on one board, which is the typical structure in the US and UK.
Question 4: According to the OECD Principles of Corporate Governance, which stakeholder group is primarily protected by governance frameworks?
- Creditors only
- Management only
- Shareholders and stakeholders broadly (Correct answer)
- Government regulators
Correct answer: Shareholders and stakeholders broadly
The OECD Principles aim to protect the interests of both shareholders and wider stakeholders, ensuring accountability and transparency.
Question 5: What is the primary role of an audit committee within a company's corporate governance structure?
- Setting executive pay
- Overseeing financial reporting and internal controls (Correct answer)
- Approving major capital expenditures
- Managing investor relations
Correct answer: Overseeing financial reporting and internal controls
The audit committee is responsible for overseeing the integrity of financial reporting, internal controls, and the relationship with external auditors.
Question 6: Under the 'comply or explain' regime in corporate governance, what are companies required to do?
- Comply with all governance code provisions without exception
- Either follow code provisions or explain why they have not (Correct answer)
- Explain all governance decisions to regulators annually
- Comply with rules only if they are a listed company
Correct answer: Either follow code provisions or explain why they have not
The 'comply or explain' approach requires companies to follow the governance code or provide a clear explanation to shareholders for any departure.
ACCA ACCA Corporate Governance 1
Which ACCA paper primarily covers corporate governance and its application to listed companies?