ACCA SP Corporate Governance 3

Question 1

Under the UK Corporate Governance Code, what proportion of the board of a FTSE 350 company (excluding the Chairman) should be independent non-executive directors?

Accepted Answer

At least half

Answer

At least one-quarter

Answer

At least one-third

Answer

At least two-thirds

Question 2

Which of the following best describes 'stakeholder theory' in the context of corporate governance?

Accepted Answer

Companies have responsibilities to all groups affected by their activities, not just shareholders

Answer

Only shareholders' financial interests should drive corporate strategy and decisions

Answer

Directors should act solely as stewards of financial assets on behalf of creditors

Answer

Government regulation should exclusively determine a company's strategic priorities

Question 3

What is the primary responsibility of the nomination committee within a company's governance structure?

Accepted Answer

Overseeing board appointments and succession planning for directors

Answer

Reviewing and approving executive pay structures and bonus schemes

Answer

Approving the annual financial statements before publication

Answer

Setting and monitoring the company's overall risk appetite

Question 4

In corporate governance, what does the principle of 'accountability' primarily mean for directors?

Accepted Answer

Directors must be answerable to shareholders for their stewardship of the company

Answer

Directors must personally guarantee all company debts and liabilities

Answer

Directors must publish their personal financial statements in the annual report

Answer

Directors must report directly to regulatory bodies on a monthly basis

Question 5

What is the external auditor's primary responsibility in relation to a company's corporate governance and financial reporting?

Accepted Answer

Providing an independent opinion on whether the financial statements give a true and fair view

Answer

Setting and documenting the company's internal control framework

Answer

Attending all board and audit committee meetings as a non-voting observer

Answer

Approving the appointment and remuneration of executive directors

Question 6

What is 'integrated reporting' primarily designed to communicate to stakeholders?

Accepted Answer

How an organisation creates value over time across multiple financial and non-financial capitals

Answer

Only the financial performance and position of a company over a reporting period

Answer

The total remuneration paid to all directors and senior management in the period

Answer

The company's full compliance record with all applicable regulatory requirements

Question 7

Why do corporate governance codes require regular performance evaluations of the board and individual directors?

Accepted Answer

To address the risk of entrenchment and ensure effective ongoing oversight

Answer

To determine each director's annual salary increment

Answer

To satisfy statutory audit requirements under the Companies Act

Answer

To rank directors for potential promotion to executive roles