Exam 3: Ethics and Corporate Governance

The role of the board of directors is to represent shareholders and debtholders.

The appointment of an audit committee is an example of internal corporate governance, whereas the ability of one company to take over another is an example of external corporate governance.

Ethical behaviour in business will be achieved if:

Corporate governance:

Explain what is meant by the term 'corporate governance'.

The major thrust for the creation of an audit committee is to add credibility to the financial reporting process.

Which of the following would not be considered a function of an audit committee?

The fundamental characteristic of the corporate form of business organisation that gives rise to the need for governance mechanisms is:

Australian regulation requires the automatic rotation of the lead audit partner every seven years.

Which of the following statements is incorrect?

Good governance is only relevant to the for-profit sector, not the not-for-profit sector.

In a utilitarian ethical framework, moral correctness is based on the premise that:

Deontologists judge the moral correctness of actions by only looking at the consequences of such actions.

It is ethical for an accountant to minimise the amount of tax his client is required to pay.

Describe the nature and general role of an audit committee.

ASX Ltd needs to appoint a new director from 1 January next year. Which of the following persons would meet the requirements for an independent director in accordance with the ASX principles?

An audit committee is a sub-committee of the board of directors, and part of the corporate governance structure of a company.

Which of the following is considered to be an example of good corporate governance according to the ASX principles?

For accountants to use judgement in providing advice would be unethical.

Effective corporate governance may reduce agency costs.