Governance & Organizational Structure Flashcards
7 cards from real Certified Internal Auditor practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Governance & Organizational Structure flashcards as text
An independent board director is best characterized as someone who:
Answer: Has no material relationship with the company that could influence their judgment
Board independence requires that a director have no material relationship with the company—financial, personal, or professional—that could impair their objective judgment, as defined by stock exchange listing standards.
Under Sarbanes-Oxley and stock exchange rules, an audit committee should be composed of:
Answer: A majority of independent directors, with at least one member qualifying as a financial expert
SOX Section 301 and NYSE/NASDAQ listing rules require audit committees to consist entirely of independent directors, with at least one member designated as a financial expert.
According to IIA Standards, what is the recommended reporting relationship for the chief audit executive (CAE)?
Answer: Functionally to the audit committee and administratively to senior management
IIA Standards recommend the CAE report functionally to the audit committee to preserve independence and administratively to senior management for operational support.
A 'staggered board' (also called a classified board) in corporate governance means:
Answer: Directors are divided into classes elected in rotation, so only a portion of the board faces election each year
A staggered or classified board divides directors into classes with different multi-year terms, meaning shareholders can only replace a fraction of the board at any single election.
A board-level risk committee is primarily responsible for:
Answer: Overseeing the enterprise risk management framework and the organization's risk appetite
The board risk committee oversees the enterprise risk management framework, approves the organization's risk appetite statement, and monitors major risk exposures.
In the IIA's Three Lines Model (2020), what role does the governing body (board) play?
Answer: The governing body sits above the three lines, providing accountability and oversight to stakeholders
In the IIA's 2020 Three Lines Model, the governing body sits above and outside the three lines, providing ultimate oversight and holding the organization accountable to stakeholders.
A nominating/governance committee of the board is primarily responsible for:
Answer: Identifying and recommending director candidates and overseeing corporate governance practices
The nominating/governance committee oversees board composition, leads director nominee identification and vetting, and monitors corporate governance practices and policies.