Corporate Governance Flashcards
7 cards from real ACCA SP 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 flashcards as text
Under the UK Corporate Governance Code, what proportion of the board of a FTSE 350 company (excluding the Chairman) should be independent non-executive directors?
Answer: At least half
The UK Corporate Governance Code recommends that at least half the board, excluding the Chairman, should comprise independent non-executive directors in FTSE 350 companies.
Which of the following best describes 'stakeholder theory' in the context of corporate governance?
Answer: Companies have responsibilities to all groups affected by their activities, not just shareholders
Stakeholder theory holds that companies have responsibilities to all stakeholders — including employees, customers, suppliers, and communities — not solely to shareholders.
What is the primary responsibility of the nomination committee within a company's governance structure?
Answer: Overseeing board appointments and succession planning for directors
The nomination committee oversees the process for board appointments and succession planning to ensure the board maintains the appropriate skills, diversity, and composition.
In corporate governance, what does the principle of 'accountability' primarily mean for directors?
Answer: Directors must be answerable to shareholders for their stewardship of the company
Accountability means directors must be answerable to shareholders for their decisions and management of company resources, forming a core pillar of good governance.
What is the external auditor's primary responsibility in relation to a company's corporate governance and financial reporting?
Answer: Providing an independent opinion on whether the financial statements give a true and fair view
External auditors provide shareholders with an independent opinion on whether the financial statements present a true and fair view, underpinning the governance framework's integrity.
What is 'integrated reporting' primarily designed to communicate to stakeholders?
Answer: How an organisation creates value over time across multiple financial and non-financial capitals
Integrated reporting communicates how an organisation's strategy, governance, and performance lead to value creation across financial, manufactured, human, social, and natural capitals.
Why do corporate governance codes require regular performance evaluations of the board and individual directors?
Answer: To address the risk of entrenchment and ensure effective ongoing oversight
Regular board performance evaluations identify situations where directors may have become entrenched or ineffective, ensuring ongoing board effectiveness and accountability.