Corporate Governance Flashcards
7 cards from real CFE 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 flashcards as text
A whistleblower who reports securities law violations to the SEC may be entitled to a financial award under:
Answer: Dodd-Frank Wall Street Reform and Consumer Protection Act
Dodd-Frank established the SEC's whistleblower program, providing awards of 10–30% of sanctions exceeding $1 million to eligible tipsters.
The three-lines-of-defense model assigns internal audit to which line?
Answer: Third line
The third line of defense is internal audit, which provides independent assurance over the effectiveness of governance, risk management, and controls.
Which of the following scenarios most directly represents a failure of the duty of care by a corporate director?
Answer: Approving a major acquisition without reviewing any financial analysis
The duty of care requires directors to make decisions based on adequate information; approving a major transaction without review clearly breaches this duty.
Which governance structure is characterized by a supervisory board overseeing a separate management board, common in Germany and the Netherlands?
Answer: Two-tier board structure
The two-tier (dual) board structure separates strategic oversight (supervisory board) from executive management (management board), common in continental Europe.
An audit committee charter should specify all of the following EXCEPT:
Answer: Daily operational responsibilities of the CFO
The CFO's daily operational duties are a management responsibility and are not governed by the audit committee charter.
Environmental, Social, and Governance (ESG) reporting is most directly associated with which stakeholder concern?
Answer: Broader corporate accountability to multiple stakeholder groups
ESG reporting reflects a company's accountability to investors, employees, communities, and regulators — not just short-term shareholders.
Which of the following is a RED FLAG suggesting that a board may be ineffective at fraud prevention?
Answer: Dominant CEO who also chairs the board with no lead independent director
A dominant CEO who also controls the board removes a critical check on executive authority, significantly increasing fraud risk.