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

The UK Corporate Governance Code recommends that at least half the board, excluding the Chairman, should comprise independent non-executive directors in FTSE 350 companies.

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

Stakeholder theory holds that companies have responsibilities to all stakeholders — including employees, customers, suppliers, and communities — not solely to shareholders.

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

The nomination committee oversees the process for board appointments and succession planning to ensure the board maintains the appropriate skills, diversity, and composition.

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

Accountability means directors must be answerable to shareholders for their decisions and management of company resources, forming a core pillar of good governance.

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

External auditors provide shareholders with an independent opinion on whether the financial statements present a true and fair view, underpinning the governance framework's integrity.

ACCA Strategic Professional Practice Test

ACCA Strategic Professional Practice Test

ACCA SP Corporate Governance 3