Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

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.

Accepted Answer

A) True 
 B)False  True

Question 3

Ethical behaviour in business will be achieved if:

Accepted Answer

A)   the strict letter of the law is applied.
B)   a course in ethics is undertaken.
C)   judgement is used, based on rules and morals.
D)   None of the above is correct. C

Question 4

Corporate governance:

Accepted Answer

A)   refers to the governance of not-for-profit entities.
B)   is concerned with promoting corporate fairness, transparency and accountability.
C)   is a recent phenomenon in the conduct of company affairs.
D)   will improve the company's financial performance.

Question 5

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

Accepted Answer

The answer of Explain what is meant by the term...

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)   The responsibility for appointing the members of the committee
B)   Overseeing the appointment of the internal auditor
C)   Overseeing the appointment of the external auditor
D)   Overseeing a company's risk management practices

Question 8

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

Accepted Answer

A)   the separation of ownership and control.
B)   mutual agency.
C)   the lack of separation of ownership and control.
D)   the abuses by professional managers.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is incorrect?

Accepted Answer

A)   Corporate governance can provide assurances that management is accountable for their actions.
B)   The external auditor is responsible for the preparation of a company's financial statements.
C)   Audit committees are now compulsory for the top 500 companies.
D)   An audit committee may be responsible for reviewing policies on internal control procedures.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)   the underlying nature of an action determines its correctness.
B)   the consequences of an action determine its correctness.
C)   the nature of an action and its consequences determines its correctness.
D)   all of the above are correct.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Describe the nature and general role of an audit committee.

Accepted Answer

The answer of Describe the nature and general role of...

Question 16

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?

Accepted Answer

A)   John who holds substantial shares in the company.
B)   Jill who is a major supplier of office supplies to the company.
C)   Jordan who was an employee of the company up until 31 December two years ago.
D)   Bill, a retired business consultant, who previously was the auditor for the company for five years until some three years ago.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)   The appointment of a board of directors consisting of the company CEO, three company executives and one independent director.
B)   The appointment of an audit committee consisting of the audit partner and an independent auditor, and the company CEO and one company director.
C)   A board of directors that has intimate knowledge of the company's activities since their appointment 10 years ago when the company was formed.
D)   Rotating the lead external audit partner every five years.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Effective corporate governance may reduce agency costs.

Accepted Answer

A) True 
 B)False

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.