ACCA AS Ethics and Corporate Governance 2

Question 1

Which of the following is a primary function of an audit committee in a listed company?

Accepted Answer

Overseeing the integrity of financial reporting and reviewing internal controls

Answer

The audit committee oversees financial reporting integrity, reviews internal controls, and manages the relationship with external and internal auditors.

Question 2

A remuneration committee in a listed UK company is primarily responsible for:

Accepted Answer

Setting remuneration policy and packages for executive directors to attract, retain, and motivate them

Answer

The remuneration committee sets executive director remuneration policy and specific packages to ensure alignment with shareholder interests and avoid conflicts of interest.

Question 3

Which corporate governance theory holds that managers act as trustworthy stewards of corporate assets and naturally align their interests with shareholders?

Accepted Answer

Stewardship theory

Answer

Stewardship theory holds that managers are intrinsically motivated to act in the best interests of the organisation and its owners, viewing themselves as stewards rather than self-interested agents.

Question 4

What is the primary purpose of a nomination committee on a listed company board?

Accepted Answer

Leading the process for board appointments and succession planning

Answer

The nomination committee leads board appointment processes, evaluates board composition, and oversees succession planning to ensure the board has the right mix of skills and experience.

Question 5

Under the UK Corporate Governance Code, which combination of roles should NOT be held by the same individual?

Accepted Answer

Chair and Chief Executive Officer

Answer

The UK Corporate Governance Code explicitly requires separation of the chair and CEO roles to avoid inappropriate concentration of power and ensure effective board accountability.

ACCA Applied Skills Practice Test

ACCA Applied Skills Practice Test

ACCA AS Ethics and Corporate Governance 2