Corporate Governance & Compliance Flashcards
7 cards from real CEA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Corporate Governance & Compliance flashcards as text
What is the primary purpose of a whistleblower protection policy within a corporate compliance program?
Answer: To encourage reporting of internal wrongdoing without fear of retaliation
Whistleblower protection policies create safe channels for employees to report misconduct, protecting them from retaliation and encouraging a culture of transparency.
Under Sarbanes-Oxley (SOX) Section 404, what are management and external auditors required to assess?
Answer: The effectiveness of internal controls over financial reporting
SOX Section 404 requires management to assess and external auditors to attest to the effectiveness of internal controls over financial reporting.
A 'clawback' provision in executive compensation allows a company to:
Answer: Recover previously paid compensation if misconduct or restatements occur
Clawback provisions enable companies to recoup compensation paid to executives when it was based on inaccurate financial results or when misconduct is discovered.
Which body primarily sets accounting standards used in financial reporting for U.S. public companies?
Answer: Financial Accounting Standards Board (FASB)
FASB sets Generally Accepted Accounting Principles (GAAP), which govern financial reporting for U.S. public and private companies.
What does 'board independence' primarily mean in corporate governance?
Answer: A majority of directors have no material relationship with the company
Board independence means that a majority of directors have no material financial, personal, or professional relationship with the company that could compromise their objective judgment.
Which of the following best describes 'enterprise risk management' (ERM) in a corporate governance context?
Answer: A framework to identify, assess, and manage risks across the entire organization
ERM is a holistic framework that helps organizations identify, assess, prioritize, and respond to risks across all business functions to achieve strategic objectives.
A company's compliance officer discovers a potential FCPA violation by a subsidiary. What is the MOST appropriate immediate action?
Answer: Notify the CEO and begin a thorough internal investigation
The most appropriate first step is to notify senior leadership and conduct a thorough internal investigation to understand the scope before determining external reporting obligations.