CCO Corporate Governance and Board Relations 1

Question 1

What is the primary governance role of the Board of Directors regarding compliance?

Accepted Answer

Setting the ethical tone, overseeing the compliance program, and holding management accountable

Answer

The Board sets strategic direction and ethical culture, oversees the compliance program's effectiveness, and holds management accountable for its operation.

Question 2

What is the purpose of an Audit Committee in corporate governance?

Accepted Answer

To oversee financial reporting, internal controls, risk management, and the internal audit function on behalf of the Board

Answer

The Audit Committee provides Board-level oversight of financial integrity, internal controls, and the independence of both internal and external audit functions.

Question 3

What does the Sarbanes-Oxley Act (SOX) require of public company CEOs and CFOs?

Accepted Answer

Personal certification of the accuracy of financial statements and the effectiveness of internal controls

Answer

SOX Section 302 requires CEOs and CFOs to personally certify the accuracy of financial reports and the effectiveness of internal controls, creating personal accountability.

Question 4

What is an independent director in corporate governance?

Accepted Answer

A board member who has no material relationship with the company that could influence their judgment

Answer

Independent directors have no significant financial, familial, or other relationship with the company that could compromise their objectivity in board decisions.

Question 5

What is the 'business judgment rule' in corporate governance?

Accepted Answer

A legal presumption that directors acted on an informed basis, in good faith, and in the honest belief that decisions were in the company's best interest

Answer

The business judgment rule protects directors from liability for decisions made in good faith after reasonable deliberation, even if those decisions turn out poorly.

CCO - Chief Compliance Officer Practice Test

CCO - Chief Compliance Officer Practice Test

CCO Corporate Governance and Board Relations 1