ALLYSSA CANINO

Bachelor of Science in Accountancy

AE18 – Governance, Business Ethics, Risk Management & Internal Control
BSA 2-1
Module 1: Corporate Governance
March 29, 2021

CHAPTER QUIZ – Lesson 1

Assessment Questions:

1. What does governance means?

Governance is the system of decision-making as well as the process by which policies are
implemented (or not implemented) by leaders of countries or organizations through the exercise
of power or authority. It can be used in several contexts such as corporate governance,
international governance, national governance and local governance.

2. Explain whether the following statement is true or false. “Governance is exercised only by the
government of a country”.

False; practicing governance is not exclusive to the country's government. Corporations, small
enterprises, schools, and even our own homes can benefit from it. Our parent is in charge of
governance, making decisions and policies for the family's well-being. Furthermore, governance
is practiced in all organizations since it is essential for us to maintain unity, discipline, and
respect for one another.3. Explain how governance can be used in the following contexts and give
appropriate examples:

a. National Governance

Governance can be used through ensuring safety and security, foreign affairs, defense, health of
the people, economic growth and improvement of education and technology in the country.
National governance can develop policies for the local governance. Example of exercising
governance in national is giving free tuition to the entire college student enrolled in the
universities to ensure that all students can afford to go to college and to enhance the quality of life
of the people in the country.

b. Local Governance

Responsible in a number of municipal tasks, interact with citizens and communities on a daily
basis. It is a vital tool for ensuring peace, boosting economic development, increasing
administrative efficiency, ensuring social inclusion, and ensuring environmental sustainability.
For example, municipal planning, building regulations, municipal public transport, local tourism,
the regulation of harbours and airports, and fire-fighting services.

c. Corporate Governance
 Corporate governance is Important because it establishes a set of rules and policies that regulate
how a company runs and how all of its stakeholders' interests are aligned. Ethical business
practices lead to financial viability when corporate governance is good. Example, creating a
mission and vision and the Board of Directors will lead to achieve the goals that they set.

d. International Governance

International governance entails multilevel and networked relations and interactions to manage
and facilitate linkages across policy levels and domains. For example, United Nations where
different country are bind together to help each other through governance.

4. Explain briefly the eight (8) basic characteristics of good governance.

Participation- Both men and women should participate in the governance. Men have
traditionally occupied board posts. Governance experts have recognized the value of having
gender and ethnic diversity on corporate boards as women have ascended to positions of
leadership in the business world. Participation needs to be informed and organized.
Rule of Law - Good governance necessitates a just and impartial legal framework. Human rights,
particularly those of minorities, must also be fully protected. An independent judiciary and an
unbiased and incorruptible police force are required for impartial law enforcement.
Transparency - indicates that the decisions made and the actions taken are carried out in
accordance with rules and regulations. It means that information is openly available and
immediately accessible to individuals who will be impacted by such decisions and their
implementation.
Responsiveness - institutions and procedures must strive to meet the requirements of all
stakeholders within a reasonable timeframe in order to be considered good governance.
Consensus-Oriented- Good governance necessitates the mediation of many societal interests in
order to reach a wide agreement on what is in the best interests of the entire community and how
this might be accomplished. A broad consensus typically serves the best interests of communities
and companies.
Equity & Inclusiveness - guarantees that all of its members believe they have a stake in it and
that they are not left out of society. No one should feel left out or feel that their opinions have less
meaning than others.
Effectiveness and Efficiency- good governance should meet or provide the needs of the society
while also make use of the available resources.
Accountability- the organization or corporations are accountable for all those are affected on the
decisions or actions that they make.

5. Explain whether the statement is correct or not. “Transparency and accountability are synonymous.”

The statement "transparency and accountability are synonymous" is incorrect, in my opinion,

because transparency refers to taking action in a clear and open manner to avoid doubt from other
members, whereas accountability refers to being accountable for whatever occurs as a result of
the decisions or actions taken.
6. Explain whether the statement is correct or not. “Responsiveness usually results to effectiveness and
efficiency”.

The statement is valid because if you endeavor to satisfy the requirements that must be met in a
corporation, you will be an effective employee who will meet the requirements at the appropriate
time and with the resources available to you. You will also be efficient.

7. Define Corporate Governance.

Corporate governance is defined as the process of balancing the interests of a company's various
stakeholders, including shareholders, top management executives, consumers, suppliers,
financiers, the government, and the community. It is a company's direction and controls are
governed by a set of rules, procedures, and processes.

8. What does corporate governance structure involve?

The structure of corporate governance establishes the distribution of rights and obligations among
the various participants in the business, as well as the rules and procedures for making decisions.
The management board is usually in charge of deciding how the firm will grow.

9. State the purpose of corporate governance.

The primary goal of corporate governance is to improve company performance and accountability
in order to increase shareholder value and protect the interests of other stakeholders.

10. Explain the basic objectives of corporate governance.

Fair and Equitable Treatment of Shareholders- A corporate governance system ensures that all
company shareholders are treated equally and fairly.
Self-assessment- Corporate governance helps a company to evaluate its behavior and activities
before regulatory organizations investigate them.
Increase Shareholders’ Wealth- corporate governance should protect the long-term interest of the
shareholders.
Transparency and Full Disclosure- By encouraging complete disclosure of transactions in the
business finances, strong corporate governance attempts to ensure a higher level of openness in
an organization.

11. Explain the three basic principles of effective corporate governance.

Accountability- refers to a publicly traded company's performance in non-financial areas such as

social responsibility and sustainability. Corporate accountability asserts that financial
performance should not be a corporation's only significant purpose, and that shareholders are not
the only people to whom a company must be accountable; other stakeholders, such as employees
and community members, need accountability as well.
Transparency and Full Disclosure- In corporate governance, transparency is seen as creating
standards of corporate ethics to prohibit unscrupulous corporate activities while maintaining a fair
business climate, leading to complete disclosure as both action and behavior.
 Corporate Control- refers to the authority to make operational and strategic decisions for a
company, such as capital allocations, acquisitions and divestitures, top personnel decisions, and
significant marketing, production, and financial decisions.

Multiple Choice Questions:

1. The basic principle of “transparency and full disclosure” for effective corporate governance responds
positively to the following questions except.

a. Does the board of directors safeguard integrity in financial reporting?

b. Does the board meet the information needs of investments communities?

c. Can an outsider meaningfully analyze the firm’s actions and performance?

d. Has the board built long-term sustainable growth in shareholders’ value for the corporation?

2. The basic principle of “accountability” for effective corporate governance responds positively to the
following questions except.

a. Does the board recognize and manage risk?

b. Does the board lay solid foundations for management oversight?

c. Does the composition mix of the board membership ensure an appropriate range and risk of expertise
diversity, knowledge added value?

d. Does the board promote objective, ethical and responsible decision making?

3. “Transparency and Full Disclosure” principle advocates the following except

a. Sound disclosure policies and practices

b. Solid foundations for management oversight

c. Meeting the information needs of investment communities

d. Safeguards integrity in financial reporting

4. The rights of shareholders can be effectively upheld through the following measures except

a. By establishing an audit committee

b. By designing and disclosing a communications strategy to promote affective communication with

shareholders
c. By encouraging active participation at general meetings

d. By requiring the external auditor to attend the annual general meeting and to answer questions about
the audit

5. To safeguard integrity in financial reporting the business firm should do the following except

a. Establish an audit committee

b. Request the external auditor to attend the annual general meeting

c. Disclose the functions reserved to the board and those delegated to management

d. Disclose the policy concerning trading in company securities by directors, officers and employees

6. To encourage enhanced performance by the board and management, it is recommended that the
following should be adopted, except

a. Disclosure of the process for performance evaluation of the board, its committees, individual directors
and by executives.

b. A remuneration committee

c. Distinguish between non-executive director’s remuneration from that of executives

d. Establish policies on risks oversight and management

7. The characteristics of good governance where fair legal framework are enforced impartially is

a. Participation

b. Rule of Law

c. Equity

d. Accountability
CHAPTER QUIZ – Lesson 2
Assessment Questions:

1. “Small business enterprises do not need good governance” Do you agree? Explain.

I disagree with the preceding statement because I feel that good governance is necessary for every
business, large or small, to fulfill its goals or be successful. Good governance steers the company
or enterprise in the right path.

2. Does good governance require absolute rules that must be adopted by all organizations?

Good governance does not necessitate absolute rules; rather, rules are established and must be
observed by the organization at all times. It is entirely dependent on the personnel. They should
do their best to adhere to the company's rules. Good governance is determined by how those who
are governed by the rules act, not by what the rules say.

3. What is the essence of any system of corporate governance?

The essence of any excellent corporate governance system is to give the board of directors and
management the freedom to steer their company ahead while also ensuring that they do so within
a framework of effective accountability. Good governance allows the company's leaders to run
the company. However, because of the word good, good governance is excellent governance.

4. What does the board of directors derive its authority?

The board of directors derives it authority from the vote of its shareholders.

5. To whom is the board of directors accountable?

The Board of Directors is accountable to shareholders for the company's business operations and
corporate governance in accordance with management objectives and maximizing of shareholder
value while adhering to strong business ethics and taking into account the interests of all
stakeholder groups.

6. On what aspects do shareholders demand accountability from the board of directors?

The basic responsibilities of board directors to shareholders are fiduciary duties, which include
the duties of care, loyalty, and obedience. These responsibilities force board members to
prioritize the company's interests over their own.

7. What is management’s responsibility as far as financial reporting is concerned?

Management is in charge of developing and maintaining an effective system of internal control

over financial reporting, which includes preserving assets from unauthorized acquisition, use, or
disposition.

8. Describe the broad role of the shareholders in a corporation.

 Provide effective monitoring through the board's election of members, approval of important
activities such as stock purchases or sales, and yearly reporting on management compensation.

9. Describe the broad role of the Board of Directors.

The key stockholder representative in charge of ensuring that the organization is administered in
accordance with its charter and that sufficient accountability is maintained.

10. What are the specific activities on the board of directors?

Recruit, supervise, retain, evaluate and compensate the manager.

Provide direction for the organization.
Establish a policy based governance system.
Govern the organization and the relationship with the CEO.
Fiduciary duty to protect the organization’s assets and member’s investment.
Monitor and control function.

Multiple Choice Questions

1. Approving annual financial reports and other public documents are specific responsibilities of

a. Management

b. Board of Directors

c. Shareholders

d. Employees

2. Providing oversight of the internal and external audit function, the process of preparing the annual
financial statements and public reports on internal control are the responsibility of

a. Board of Directors

b. Chief Executive Officer

c. Chief Financial Officer

d. Audit Committee of the Board of Directors

3. Who is responsible for ensuring the accuracy, timeliness of public reporting of financial and other
information for public companies?
a. External Auditors

b. Securities and Exchange Commission

c. Shareholders

d. Board of Accountancy

4. Who performs audit companies for compliance with company policies and laws, audits efficiency of
operations and periodic evaluation and tests of controls?

a. External Auditors

b. Internal Auditors

c. Commission on Audit

d. Chief Accountant

5. An independent director is expected to, except.

a. Apply expertise and skills in the corporation’s best interest

b. Assist management to keep performance objectives at the top of its agenda

c. Respect the collective, cabinet nature of the board’s decision

d. Act as conduit between the board and the organization