FREE CGAP Finance Questions and Answers

Question 1

Someone who ______________ is a stakeholder.

Accepted Answer

has a vested interest in a company’s success

Answer

is hired to do a specific job

Answer

is required to read a company’s annual report

Answer

answers to a board of directors

Question 2

The ultimate objective of attaining long-term, sustainable global development is something that "an good business leader will recognize as well as the social and environmental responsibilities of their organization." This sentence alludes to .

Accepted Answer

practicing strong corporate governance

Answer

employing an experienced environmental consulting firm

Answer

the advantages of having an audit committeethe advantages of having an audit committee

Answer

having a diversified and well-experienced board of directors

Question 3

Having members who are ______________ is a crucial component of a powerful board of directors (BOD).

Accepted Answer

culturally diverse and experienced in the industry

Answer

new to the industry and without preconceptions

Answer

able to write a strong corporate press release

Answer

former employees of the company

Question 4

Which of the following is NOT a justification for why a business requires sound corporate governance?

Accepted Answer

to analyze the company’s operations and systems of internal control in order to detect and prevent various forms of fraud and other accounting irregularities

Answer

to increase the company’s overall accountability and prevent significant organizational problems

Answer

to enable the company to raise capital more efficiently and mitigate financial and operational risk to stakeholders

Answer

to avoid mismanagement of the company

Question 5

In a big corporation, who is ultimately in charge of the business operations?

Accepted Answer

board of directors

Answer

stakeholders

Answer

external auditors

Answer

shareholders

Question 6

Offering managers ______________ is one method businesses try to reduce their reliance on short-term managerial concentration.

Accepted Answer

stock options

Answer

comprehensive health insurance

Answer

increased paid sick leave

Answer

increased vacation time

Question 7

Which of the following principles govern the exercise of fiduciary responsibility?

Accepted Answer

Both end-of-year financial ledgers and audits

Answer

end-of-year financial ledgers

Answer

audits

Answer

a letter from the board of directors

Question 8

What one of the following is NOT a responsibility of an audit committee?

Accepted Answer

launching special investigations of employees, company practices, or procedures

Answer

reviewing systems of internal control.

Answer

reviewing the work of the internal audit

Answer

ensuring that appropriate resources are used in company operations

Question 9

Which of the following is a significant issue dealt with by corporate governance?

Accepted Answer

ethics and its implementation

Answer

expanding operations internationally

Answer

improving banking relations

Answer

improving profits for shareholders

Question 10

The core of agency issues is .

Accepted Answer

conflicts of interest

Answer

nepotism

Answer

problems with the IRS

Answer

fraudulent business activities