Corporate governance and accountability Exam Questions With Correct Answers
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Course
Corporate governance and accountability
Institution
Corporate Governance And Accountability
Corporate governance and accountability Exam Questions With Correct Answers
.- ANSWER-Be able to:
Define, explain & discuss corporate governance, with reference to the Code (2016)
Display an understanding of different types of internal controls and their importance
Discuss the role of audit i...
Corporate governance and
accountability Exam Questions With
Correct Answers
.- ANSWER-Be able to:
Define, explain & discuss corporate governance, with reference to the Code (2016)
Display an understanding of different types of internal controls and their importance
Discuss the role of audit in corporate governance
Discuss the differences and purposes of internal & external audit
. - ANSWER-Corporate governance is considered crucial in the modern world of business.
a) Give a definition of the term 'corporate governance'.
(2 marks)
b) Explain what is meant by 'agency theory' in relation to corporate governance.
(3 marks)
c) Discuss the key elements of the UK Corporate Governance Code, with reference to the five sections of
the code.
(10 marks)
d) Discuss the aims of both internal and external audit and explain how each can contribute towards
good corporate governance
.(2016)
Applies to listed companies
Principles based
Companies must comply or explain to investors why they have not complied
, If investors are not satisfied they can use their powers, including the power to appointments and
remove directors, to hold the company to account. - ANSWER-Uk corporate governance code
.• Why it is important that management maintain good accounting records - 3 marks
The management of an enterprise need complete and accurate accounting and other records because:
1. The business cannot otherwise be controlled
2. Day to day records of receivables and payables are indispensable
3. Assets can only be safeguarded if a proper record of them is made
4. Financial statements which are required for numerous purposes can only be prepared if adequate
primary records exist
5. Statutes (eg the Companies Act 2006) often have specific requirements on record keeping for specific
types of business
6. Record keeping for PAYE, NIC, VAT and statutory sick pay and statutory maternity pay is also a
statutory requirement
• Define the term internal control - 2 marks
Internal control can be defined as:
"Internal control system - the whole system of controls, financial and otherwise, established by the
management in order to - ANSWER-You have been approached by John Bradshaw, the managing
director of Safesystems Ltd, a company that supplies security services. Safesystems has teams of
security guards throughout the South West of England and South Wales and John is frequently away
from the office. In his absence the office is left in charge of Barbara Wilkins who also carries out the
accounting function. He also employs two part time assistants to process transactions as directed by
Barbara. John knows that he has to have accounts prepared for his company as it is a limited company
but he confides to you that he finds accounting "boring" and that he has always had complete trust in
Barbara to complete this side of the business for him.
Recently Barbara has prepared the draft annual accounts for 2011. On review of these accounts John
had been alarmed to discover the following
• The total of expense claims by security personnel is double that of the previous year when turnover
was 5% lower. Barbara Wilkins has sole responsibility for the payment of expense claims.
• The gross profit is lower than expected. A closer review revealed that Barbara who invoiced customers
for the cost of security services (using a computerised system) had priced many invoices in the Cardiff
area at below the correct prices. Her husband, Jim, is in charge of generating new business in the South
Wales area and his commission had increased by 50% in the last year.
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