Corporate Governance and Ethics Flashcards
7 cards from real ACCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Corporate Governance and Ethics flashcards as text
Under the UK Corporate Governance Code, what is the recommended minimum proportion of independent non-executive directors for a premium-listed company (excluding the chair)?
Answer: Half
The UK Corporate Governance Code recommends that at least half the board, excluding the chair, should be independent non-executive directors.
Which ethical theory holds that an action is morally right if it produces the greatest good for the greatest number?
Answer: Utilitarianism
Utilitarianism, associated with Bentham and Mill, judges actions by their consequences and seeks to maximize overall welfare.
In agency theory, the 'agency problem' primarily arises because:
Answer: Agents may act in their own interests rather than those of principals
The agency problem occurs when agents (managers) pursue personal goals that diverge from the interests of principals (shareholders).
Which committee is specifically responsible for overseeing a company's financial reporting and internal controls under best-practice governance?
Answer: Audit committee
The audit committee oversees financial reporting integrity, internal controls, and the relationship with external auditors.
A professional accountant discovers their manager has misstated inventory figures. According to ACCA's Code of Ethics, the FIRST action the accountant should take is:
Answer: Raise the issue internally through appropriate channels
ACCA's Code of Ethics requires accountants to first attempt to resolve ethical conflicts internally before escalating externally.
The 'comply or explain' principle in corporate governance means that:
Answer: Listed companies must follow the Code or publicly explain why they have not
Under 'comply or explain,' listed companies either follow the Code's provisions or give a reasoned explanation for non-compliance in their annual report.
Which of the following best describes a 'stakeholder' in the context of corporate governance?
Answer: Any individual or group that can affect or is affected by the organization's activities
A stakeholder is any individual or group that can affect or be affected by the organization, including shareholders, employees, customers, suppliers, and communities.