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401 Compilation
Accounting Technology (BSACT)
University of Cebu
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Seatwork: Corporate Governance
1/1 point
The separation of the roles of Chairman of the Board and the CEO is considered
a rule a best practice a legal requirement an unusual setup Question 2 1 / 1 point
Which of the following is not one of the governance roles?
Policy making Executive activities Accountability Strategy formulation Question 3 1 / 1 point
The agency theory recognizes that both the principal and the agent are
strangers together human beings economic men Question 4 1 / 1 point
Which model of corporate governance emphasizes the importance of banks?
German Model US Anglo Saxon Model Japanese Model Philippine Model Question 5 1 / 1 point
Costs of arrangements that help align the interests of shareholders and managers
Monitoring costs Residual loss Finance costs Bonding costs Question 6 1 / 1 point
This committee ensures and strengthens transparency and financial reporting
Risk Committee Nomination Committee Audit Committee Remuneration Committee Question 7 1 / 1 point
Which is not part of the corporate governance triangle?
Main bank Board of directors Shareholders Management Question 8 1 / 1 point
Which of the following is not a principle related to Board's Governance Responsibilities
Establishing a Competent Board Reinforcing Board Independence Establishing Board Committees Enhancing Company Disclosure Policies and Procedures Question 9 1 / 1 point Concerned with leading the company, and monitoring and controlling the decisions of management to ensure that the business meets its objectives.
Board of Directors CFO COO CEO Question 10 1 / 1 point A system by which organizations are directed and controlled
Internal Controls Risk management Ethics Corporate Goverance Question 11 1 / 1 point Which of the following is one of the ways to align the interest of the principal to the agent?
Give management company shares as part of compensation Pay senior managers a fixed salary regardless of performance Hire an external auditor Issue an annual report to shareholders Question 12 1 / 1 point
Quiz Submissions - QUIZ - Corporate Governance
Question 1
The board of directors may grant stock options to managers in order to
Comply with a legal requirement Align the interest with that of shareholders Use as a substitute for bonus Save compensation costs Question 2
A board committee is best described as a subset of the board formed to achieve which
one of the following outcomes?
Enhance the effectiveness of the board Being independent by having exclusively independent auditors Report to the shareholders on specific issues Enable directors to reduce their individual liability Question 3
Which one of the following is not a function of the board of directors of a large public
company?
Managing the recurring operations of the business The oversight of management in the application of policies and guidelines about the principal risks faced by the company The selection of auditors Monitoring of the CEO's performance Question 4
Which of the following is the best description of conflict of interest?
a situation in which a person is in a position to derive perofficial or unofficial capacity sonal benefit from actions or decisions made either in their
a situation in which a person or organization is involved interest could involve working against another in singular interests, financial or otherwise, and serving one
a situation in which a person's ability to act with indepenheld in a cause which could be the beneficiary of decisionsdence and impartiality is hindered by a countervailing inte made rest
a situation in which the concerns or aims of two different parties are compatible Question 5
What is meant by the separation of ownership and control?
That those who control the company should be separate to those who own it The owners and controllers of companies should not act in concert to defeat resolutions That the owners of companies have become separated from those who control companies That the law should seek to keep the owners and controlpower lers of company apart in order to avoid an over concentration of
Question 6
Which of the following is true?
Corporate governance addresses the principal agent relationthe relationship between the company and suppliers on the other ship between management and directors on the one hand and
It is the responsibility of the internal auditor to set the objectives for the company The management board approves the mission, vision, objectives, and strategy of the entity Conflicts of interest between management and stakeholders can result in bankruptcies or major fraud Question 7
Which of the following is not a benefit of having NEDs?
NEDs can help increase market confidence in the business, especially in the earlier years of the company's life NEDs can advise on specific issues with start up businesses NEDs increase the board's accountability to the shareholders NEDs can better make decisions relating to the recurring transactions of the business Question 8
The cost of monitoring management is considered to be a(n)
Agency cost Bankruptcy cost Transaction cost Institutional cost Question 9
Which of the following is not a key corporate factor driving the need for better
governance?
Increasing competition making high levels of performance harder to achieve Higher levels of individual taxation dissuading potential shareholders The growth in shareholder activism The requirement to access lower cost debt and equity finance Question 10
Why do corporate governance problems arise as per the agency theory?
Profit maximization is the main objective of organizations Stakeholders have differing levels of power Managers act in their own self interest Ownership and control is separated
Question 11
Which of the following can be considered opportunistic residual loss behaviour by an agent?
Investing in technology that will substantially reduce short term profit, but yield returns in the long run Suspending negotiations with a potential acquisition target because it would not enhance shareholder wealth Purchase of an expensive painting for the managing director's office All the choices are opportunistic residual loss behaviour Question 17 Which of the following is not included as one of the main roles of a Chief Executive Officer (CEO) of a listed company?
to analyse the performance of the board of directors to propose and develop strategies capable of making an acceptable return to shareholders to ensure that appropriate systems are in place for internal controls and the management of risk to implement the decisions of the board of the directors Question 18 Which of the following actions will not help directors to protect themselves from non compliance with their obligations and responsibilities?
Keeping themselves fully informed about company affairs Seeking professional help Ensuring that regular management accounts are prepared by the company Including a disclaimer clause in their service contracts Question 19 Which one of the following statements best describes characteristics likely found in agency relationships?
Agents who are highly bonded will be expected to try to maseek returns for themselves. ximize the returns of their principal and will be expected also to
It is necessary to monitor an agent extensively, even wcosts hen that agent voluntarily assumes the imposition of higher bonding
Agents will often not provide sufficient signalling to necessary to engage in and pay for monitoring. principals. It is principally this factor that results in principals finding it
An agent will find it relatively easy to achieve the best interests of the principal in an agency relationship Question 20
Which one of the following would not be an example of agency cost?
Audit fees Delegated authorities Information asymmetry Dividends
Question 21
According to the agency theory
Information asymmetry does not exist
The management board is the agent
The management board is the principal
Self interest plays no role
Question 22
Directors may not be disqualified for
Continuing to trade when the company is insolvent
Paying inadequate attention to the company finances
Persistent breaches of company legislation
Being convicted of drunken driving
Question 23
Directors' responsibilities are unlikely to include
A duty to propose high dividends for shareholders
A duty to ensure proper accounting records are kept
A fiduciary duty
A duty of care
Question 24
Why is it rational to make shareholders weak by giving control to the managers of the firm?
This may be rational to the extent that managers are answerable to the board of directors
This may be rational when shareholders may be neither qualified nor interested in making business decisions
All of the choices
This may be rational since may shareholders may find it easiemonitor the management. r to sell their shares in underperforming firms than to
Question 25
Which of the following is not something performed by the company's board?
Defines the company's strategy
Oversees management and ensures the quality of information provthe financial statements ided to shareholders and financial markets through
Day to day supervision of the sales manager
Appoints the corporate officers responsible for managing the company and implementing its strategy
Question 31
New Ideas Company (NIC) was floated as a publicly listed company early this year as a result of a scientific breakthrough at a university, and the take up of their shares was very good. The business itself was highly technical, with many shareholders only weakly understanding the science behind the company. Dr Rita Fumar, the lead scientist who made the scientific discovery, was thought to be the logical person to become chief executive despite not having any business experience before. Colleagues said of Rita that, being a good scientist, she was excellent at detail but sometimes struggled to see the bigger picture on a project. Per your assessment, is Rita Fumar suitable to become NIC’s CEO? Justify your answer. The significance of learning Corporate Governance helps us comprehend more that in a business organization it is indeed fundamental to know the needed functions, specific duty, role, and most especially the capability of one laborer can do in such business organization. Corporate Governance also emphasizes that in a bigger business organization ownership and controls are separated, thus defines how diverse and dynamic a business organization can be. I also learned how Governance and Management are separated and that contributes differently towards the business. This is very much applicable to the given the situation above wherein a potential laborer whom is Dr. Rita Fumar is about to be promoted as the CEO of the company.
In relevance to this, I would say that I wouldn't agree for the promotion given to Dr. Rita Fumar. I would simply relate this to a series that I once was fond to watched, it is a K-Drama named "Start-Up". In this series, it was portrayed how an expert I/Computer Engineer run his own business which is also very much inclined to his interest which is making Technology or advancements. However, despite him being so expert about it still his business didn't foster. However, when they really hire a specific CEO who can really attain the business goals and objectives, that someone who has more knowledge in the business industry they were able to be successful. From this, it simply shows how knowledge, expertise, characteristics, and skills in business industry help the business itself foster and grow.
As a conclusion, Dr. Rita Fumar as an expert of her field which is in Science, a very much similar to the work of business itself, must be included in the day-to-day management. For the reason that, she is able to have the capability to function well, performed well and critic the performance of her colleagues.
Quiz Submissions - QUIZ: Internal Controls
Which of the following is not an example of factors that are reflected in the control environment?
New business models, products, or activities that are undertaken by the company. Those charged with governance actively participate in setting the direction of the company. Management's philosophy and operating style clearly reinforces its internal control culture. A company has clear lines of communication and policies that enforce integrity and ethical values. Question 2
Which of the following is responsible for establishing a private company's internal control?
Management and external auditors External auditors COSO Management Question 3
Which of the following is a component of internal control
Risk awareness Organizational structure Legal environment Control environment Question 4
Internal controls can never be considered as absolutely effective because
Internal controls prevent separation of duties Their effectiveness is limited by the competency and dependability of employees Controls are designed to prevent and detect only material misstatements Not all organizations have internal audit departments Question 5
These are policies and procedures that help ensure that management directives are carried
out.
Control activities Internal control Internal control system Monitoring
Question 6
What does PSA mean?
Application controls relate to various aspects of the IT function including software acquisition and the processing of transactions Application controls relate to all aspects of the IT function Application controls relate to the processing of individual transactions Application controls relate to various aspects of the IT various cycles function including physical security and the processing of transactions in Question 12 A company regularly compares information about current performance to forecasts, budgets, and previous results in order to de termine company performance. This is an example of
Preventive controls Corrective controls Detective controls General controls Question 13 San Jose Incorporated, a manufacturer of life sized religious statues, observes controls such as the management team regularl y checks the organization's inventory, security systems are in place, and authorization policies for the access of assets and equipment are
properly laid out. These are considered
General controls Preventive controls Detective controls Corrective controls Either detective or preventive controls Question 14 Which of the following is not a reason why the effectiveness of internal controls cannot be guaranteed?
The cost of putting up internal controls is relatively expensive. Human factors can undermine or circumvent the effectiveness of many internal controls. The occurrence of non routine events when controls are designed for relatively routine behaviour. The control can be over or under specified. An under-specified risk or activity intended. Conversely, an over-specified control is one which over-controls and may have the effect ocontrol is one which is not capable of actually controlling the f losing the confidence of employees and others influenced by the control. Question 15 The following are examples of separate monitoring, except
Independent checks performed by outsiders Self assessment performed by managers over the controls in their areas of responsibility Evaluations built into business processes at different levels of the entity Periodic checks on operational, legal, and financial performances and reporting
Question 16
An act of two or more employees to steal assets or misstate records is frequently referred to as
Control deficiency Collusion Significant deficiency Material weakness Question 17
Monitoring involves assessing the
all of the three other choices operation of controls quality of internal control over time design of controls Question 18
Internal control procedures for cash disbursements (other than from petty cash) should not
include
Cash disbursing function should be decentralized as much as possible Checks are signed by authorized individuals All expenditures are authorized All disbursements are made by check, debit card, or credit card Question 19
To segregate duties involving cash receipts, specific responsibilities should be assigned to
various employees, except when
A supervisor is responsible for collecting cash at the end of each cashier's shift Members of the accounting department are responsible for ensuring that cash sales are properly recorded Cashiers are responsible for collecting cash and issuing a receipt at the point of sale An employee who handles credit approval authorizes the derecognition of accounts receivable Question 20
Financial controls provide reasonable assurance on the following, except
Access to assets is allowed in accordance with general or specific authorization Transactions are recorded so that assets can be accounted for Profits are maximized in the negotiations entered into by management Transactions are made only in accordance with general or specific authorization
Question 21
Which of the following is not one of the primary objectives of effective internal control?
In Yaya Company, operations director Ben Janoon recently realised there had been an increase in products failing the final quality checks. These checks were carried out in the QC (quality control) laboratory, which tested finished goods products before being released for sale. The product failure rate had risen from 1% of items two years ago to 4% now, and this meant an increase of hundreds of items of output a month which were not sold on to Yaya's customers. The failed products had no value to the company once they had failed QC as the rework costs were not economic. Because the increase was gradual, it took a while for Mr Janoon to realise that the failure rate had risen.
A thorough review of the main production operation revealed nothing that might explain the increased failure and so attention was focused instead on the QC laboratory. For some years, the QC laboratory at Yaya, managed by Jane Goo, had been marginalised in the company, with its two staff working in a remote laboratory well away from other employees. Operations director Ben Janoon, who designed the internal control systems in Yaya, rarely visited the QC lab because of its remote location. He never asked for information on product failure rates to be reported to him and did not understand the science involved in the QC process. He relied on the two QC staff, Jane Goo and her assistant John Zong, both of whom did have relevant scientific qualifications.
The two QC staff considered themselves low paid. Whilst in theory they reported to Mr Janoon, in practice, they conducted their work with little contact with colleagues. The work was routine and involved testing products against a set of compliance standards. A single signature on a product compliance report was required to pass or fa il in QC and these reports were then filed away with no-one else seeing them.
It was eventually established that Jane Goo had found a local buyer to pay her directly for any of Yaya's products which had failed the QC tests. The increased failure rate had resulted from her signing products as having 'failed QC' when, in fact, they had passed. She kept the proceeds from the sales for herself, and also paid her assistant, John
Zong, a proportion of the proceeds from the sale of the failed products.
Yaya’s internal controls were proven ineffective, as reflected by Jane Goo’s fraud going undetected. Which of the
following is not a reason for the ineffectiveness of Yaya’s internal control system in relation to this event?
Absence of an internal control system that effectively looks after product sales.
Fraudulent collusion between staff undermined segregation and oversight
Mistakes or poor judgment.
Staff has become less conscientious about applying controls over time, particularly since they were dissatisfied with
the organization.
Question 27
Which of the following is considered an internal control weakness in Yaya’s system? i. No-one reviewed the compliance work that Jane had done to see if it was correct. There was no need for a second signature. No-one saw the quality control reports after they had been filed. Jane was thus able to file fraudulent reports.
ii. There was no automatic reporting of the increase in the failure rate. An acceptable failure rate had not been established. Hence there was no trigger that the rate was excessive. Since the failure rate increased gradually, it did not become noticeable for quite some time.
iii. There was no reporting on the quantity and amount of sales being made to new or unidentified customers. The lack of
monitoring on sales added to the problem of “defective” products being sold by Jane Goo to outsiders undetected.
Only one out of the three statements is an internal control weakness.
Only two out of the three statements are internal control weaknesses.
All three statements are internal control weaknesses.
None of the three statements are internal control weaknesses.
Question 28
Which of the following are internal control deficiencies that you have identified on the case presented above?
Failure to deal with products that had failed
Opportunity for collusion between Jane and John
Failure of supervision
Only b and c
a, b, and c
Question 29
Which of the following is a specific measure that you would propose in order to
address the inefficiencies in Yaya’s internal controls?
The information supplied by the QC Department could have been much more detailed, with a breakdown of why
products had failed, ideally measured against precise metrics. This would have provided useful operational
information for Ben Janoon and made it more difficult for Jane Goo to fake results.
To establish accountability, there should be at least two people who will sign off on the quality control inspection. For
instance, John Zong could recommend the failure of products from the metrics while Jane Goo will approve John’s
recommendation.
Product rework on items that have failed quality control inspection should be done instead of disposing them. This will
eliminate the risk of selling these products to outsiders.
More frequent reports should be provided to Jane Goo so that the QC Department will be made aware of the controls
in place at Yaya Company that would be able to detect their fraudulent act
Question 30
One of the reasons for Jane Goo’s fraudulent act was the dissatisfaction of the QC Department with Yaya Company. Which of the following will not be a valid recommendation to address this problem?
All of the choices are goals of accounting transparency. To discourage managerial self dealings To impose more rules and harsher penalties for their violation To reduce information asymmetry between corporate insiders and the public Question 6 A board member is independent when
She is a family member of the CEO She has no relationship of any kind whatsoever with ther judgment he corporation, its group or the management of either that is such to colour
She represents the company's only majority shareholder She is a top executive of the company supervised Question 7 Which of the following is not something performed by the company's board?
Oversees management and ensures the quality of informatstatements ion provided to shareholders and financial markets through the financial
Day to day supervision of the sales manager Defines the company's strategy Appoints the corporate officers responsible for managing the company and implementing its strategy Question 8 According to the agency theory
Self interest plays no role The management board is the principal Information asymmetry does not exist The management board is the agent Question 9 Which of the following is true?
The management board approves the mission, vision, objectives, and strategy of the entity Conflicts of interest between management and stakeholders can result in bankruptcies or major fraud It is the responsibility of the internal auditor to set the objectives for the company Corporate governance addresses the principal agent relationrelationship between the company and suppliers on the other ship between management and directors on the one hand and the Question 10 Which of the following is not a desired quality of someone who wishes to be a Chief Executive Officer?
Analytical skills in major aspects of the business' operations and finances Persuasiveness, confidence, and communication skills most especially in dealing with colleagues and negotiation with external parties Micro management skills that allows one to focus solely on detailed work particularly in the company's products/services Strategic skills that would allow for the conception and implementation of strategic objectives
Question 11
Which of the following is not a key corporate factor driving the need for better governance?
Increasing competition making high levels of performance harder to achieve The requirement to access lower cost debt and equity finance Higher levels of individual taxation dissuading potential shareholders The growth in shareholder activism Question 12
Why do corporate governance problems arise as per the agency theory?
Managers act in their own self interest Ownership and control is separated Profit maximization is the main objective of organizations Stakeholders have differing levels of power Question 13
Directors may not be disqualified for
Persistent breaches of company legislation Paying inadequate attention to the company finances Continuing to trade when the company is insolvent Being convicted of drunken driving Question 14
The board of directors may grant stock options to managers in order to
Comply with a legal requirement Save compensation costs Use as a substitute for bonus Align the interest with that of shareholders Question 15
What is the meaning of OECD?
Organization for Ensuring Collaboration and Development Organization for Economic Co-operation and Development Organization for Ease of Collaboration and Development Organization for Economic and Cultural Development
Question 16
Which one of the following is not a business or operating risk?
Customer defaults through bankruptcy
401 Compilation
Course: Accounting Technology (BSACT)
University: University of Cebu
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