ACCA Corporate Governance and Ethics 2

Question 1

Under the UK Corporate Governance Code, what is the recommended minimum proportion of independent non-executive directors for a premium-listed company (excluding the chair)?

Accepted Answer

Half

Answer

The UK Corporate Governance Code recommends that at least half the board, excluding the chair, should be independent non-executive directors.

Question 2

Which ethical theory holds that an action is morally right if it produces the greatest good for the greatest number?

Accepted Answer

Utilitarianism

Answer

Utilitarianism, associated with Bentham and Mill, judges actions by their consequences and seeks to maximize overall welfare.

Question 3

In agency theory, the 'agency problem' primarily arises because:

Accepted Answer

Agents may act in their own interests rather than those of principals

Answer

The agency problem occurs when agents (managers) pursue personal goals that diverge from the interests of principals (shareholders).

Question 4

Which committee is specifically responsible for overseeing a company's financial reporting and internal controls under best-practice governance?

Accepted Answer

Audit committee

Answer

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

Question 5

A professional accountant discovers their manager has misstated inventory figures. According to ACCA's Code of Ethics, the FIRST action the accountant should take is:

Accepted Answer

Raise the issue internally through appropriate channels

Answer

ACCA's Code of Ethics requires accountants to first attempt to resolve ethical conflicts internally before escalating externally.

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA Corporate Governance and Ethics 2