Corporate Governance Quiz
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Questions and Answers

What is the primary role of the chairperson of the board?

  • To appoint the CEO
  • To manage the company’s finances
  • To oversee daily operations
  • To provide leadership to the board (correct)

    • The CEO should also act as the chairperson according to King IV recommendations.

    False

    What must be appointed at each Annual General Meeting (AGM) for public companies?

    Audit committee

    The role of the lead independent director includes providing support to the chairperson and acting as an __________ for the other directors.

    <p>intermediary</p> Signup and view all the answers

    Match the roles with the corresponding responsibilities:

    <p>Chairperson = Provide leadership to the board CEO = Implement approved strategy Audit Committee = Focus on financial issues Lead Independent Director = Support and act as intermediary</p> Signup and view all the answers

    According to the JSE Listing Requirements, who must not be the same person?

    <p>CEO and Chairperson</p> Signup and view all the answers

    A retired CEO may become the chairperson immediately after leaving the position.

    <p>False</p> Signup and view all the answers

    What must happen if the chairperson is not independent?

    <p>A lead independent director must be appointed.</p> Signup and view all the answers

    What is one of the functions of the social and ethics committee?

    <p>Report to shareholders at the AGM</p> Signup and view all the answers

    The risk committee should include a majority of executive directors.

    <p>False</p> Signup and view all the answers

    What is the minimum number of directors required to form a social and ethics committee?

    <p>Three</p> Signup and view all the answers

    The remuneration committee should mainly consist of __________ directors.

    <p>non-executive</p> Signup and view all the answers

    Which company type is required to have a social and ethics committee?

    <p>Every state-owned company</p> Signup and view all the answers

    Match the committees with their main functions:

    <p>Social and Ethics Committee = Monitor social and economic development Risk Committee = Advise on risks and opportunities Remuneration Committee = Set and administer remuneration policies Audit Committee = Oversee financial and reporting risks</p> Signup and view all the answers

    King IV suggests that companies not required to create a social and ethics committee should still consider doing so.

    <p>True</p> Signup and view all the answers

    Who should chair the remuneration committee?

    <p>An independent non-executive director</p> Signup and view all the answers

    What is the main purpose of the remuneration committee?

    <p>To ensure that directors and executives are appropriately rewarded</p> Signup and view all the answers

    The nomination committee should consist of members who are all executive directors.

    <p>False</p> Signup and view all the answers

    What should the board review on an annual basis regarding risk management?

    <p>The implementation of the risk management plan</p> Signup and view all the answers

    The remuneration policy addresses base pay, bonuses, employee contracts, severance, retirement benefits, and __________.

    <p>share-based and other long-term incentive schemes</p> Signup and view all the answers

    Match the following committees with their primary focus:

    <p>Remuneration Committee = Director and executive compensation Nomination Committee = Board composition Risk Management Committee = Overseeing risk policies Audit Committee = Financial oversight</p> Signup and view all the answers

    What is the ideal composition of the nomination committee according to King III?

    <p>It should include only non-executive directors and a majority must be independent</p> Signup and view all the answers

    The board is responsible for determining the levels of risk tolerance and risk appetite.

    <p>True</p> Signup and view all the answers

    What should the board charter include regarding risk management?

    <p>The board's responsibility regarding risk management and a documented risk management policy</p> Signup and view all the answers

    What is one of the responsibilities of the audit committee concerning internal audit?

    <p>Appoint and dismiss the chief audit executive.</p> Signup and view all the answers

    The audit committee does not need to ensure the internal audit function undergoes a quality review.

    <p>False</p> Signup and view all the answers

    What should the audit committee report on regarding its duties?

    <p>How it has discharged its duties.</p> Signup and view all the answers

    The audit committee is responsible for recommending the appointment of the __________ auditor.

    <p>external</p> Signup and view all the answers

    Which risk is NOT specifically overseen by the audit committee?

    <p>Operational risks</p> Signup and view all the answers

    Match the following roles of the audit committee with their responsibilities:

    <p>Appointment of external auditor = Nominate external auditor for appointment Independent quality review = Ensure internal audit function quality review Oversight of risk management = Monitoring reporting risks Reporting duties = Report to the board and shareholders</p> Signup and view all the answers

    The audit committee’s responsibilities include approving contracts for non-audit services.

    <p>True</p> Signup and view all the answers

    The audit committee should conduct an annual review of the __________ function.

    <p>finance</p> Signup and view all the answers

    What is one of the roles of the audit committee concerning the integrated report?

    <p>Consider factors and risks impacting the integrity of the report</p> Signup and view all the answers

    The audit committee is responsible for reviewing and commenting only on sustainability issues.

    <p>False</p> Signup and view all the answers

    What should the audit committee recommend regarding external assurance providers?

    <p>Engagement of external assurance providers on material sustainability issues.</p> Signup and view all the answers

    The audit committee should monitor the relationship between the external and _____ auditors.

    <p>internal</p> Signup and view all the answers

    Match the following roles to the audit committee's responsibilities:

    <p>Review financial statements = Integrated reporting oversight Ensure compliance = Code of ethics adherence Engage external auditors = Financial information assurance Monitor auditor relationships = Combined assurance model</p> Signup and view all the answers

    What is an essential component of the audit committee's role in integrated reporting?

    <p>Issuing interim results</p> Signup and view all the answers

    The audit committee has no responsibility for the company's financial function.

    <p>False</p> Signup and view all the answers

    What model should the audit committee ensure is applied for assurance activities?

    <p>Combined assurance model</p> Signup and view all the answers

    Study Notes

    Lead Independent Director

    • A Lead Independent Director should be appointed when the Chairperson is an executive or not independent.
    • The Lead Independent Director supports the Chairperson, acts as a sounding board, and acts as an intermediary for other directors.
    • The Lead Independent Director does not detract from the Chairperson's authority.

    Chairperson of the Board

    • The Chairperson leads the board and sets the tone for ethical and effective decision-making.
    • The Chairperson should not accumulate too much power and should not serve on the Audit Committee or chair the Remuneration Committee.

    CEO

    • The CEO is appointed by the board.
    • The CEO has collective responsibility for all management functions and is the link between management and the board.
    • The CEO should implement approved strategies and report to the board, but should not serve on the Remuneration, Audit or Nomination Committees.

    Board Committees

    • Audit Committee:
      • Required for public and state-owned companies.
      • Elected by shareholders at the AGM.
      • Focuses on financial issues and oversees financial and other reporting risks.
    • Social and Ethics Committee:
      • Required for listed public companies, state-owned companies, and companies with a public interest score above a certain threshold.
      • Comprises a minimum of three directors, with at least one non-executive director.
      • Monitors company social and ethical activities and reports to shareholders at the AGM.
    • Risk Committee:
      • Recommended by King IV.
      • Should be comprised mainly of non-executive directors.
      • Advises on risks and opportunities and oversees risk management implementation.
    • Remuneration Committee:
      • Recommended by King IV.
      • Comprised of non-executive directors, majority of whom are independent.
      • Chaired by an independent non-executive director.
      • Sets and administers remuneration policies for directors and senior executives.
    • Nomination Committee:
      • Ensures the board has the right mix of skills and experience.
      • Reviews the board composition and identifies skills gaps.
      • Ideally chaired by the Chairperson of the board or an independent non-executive director.

    Governance of Risk

    • The Board should be responsible for risk governance.
    • A risk management policy and plan should be developed, approved, and distributed widely.
    • The Board should review and monitor risk management implementation annually.
    • Director training should focus on risk management.
    • The Board should determine and monitor risk tolerance and appetite levels.
    • Ethical risks and opportunities should be incorporated into the risk management process.

    Audit Committees

    • The Audit Committee should oversee the integrated report and ensure the reliability of sustainability disclosures.
    • The Audit Committee should review interim results and financial information.
    • The Audit Committee is responsible for appointing and dismissing the Chief Audit Executive (CAE), approving the internal audit plan, and ensuring an independent quality review of the internal audit function.
    • The Audit Committee is integral to risk management, particularly overseeing financial reporting, internal financial controls, and IT risks related to financial reporting.
    • The Audit Committee nominates and approves the external auditor, oversees the external audit process, and ensures the auditor's independence.
    • The Audit Committee reports to the Board and shareholders on its activities.

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    Related Documents

    CGE101 Exams Notes PDF

    Description

    Test your knowledge on key roles in corporate governance including the Lead Independent Director, Chairperson of the Board, and the CEO. Understand the responsibilities and limitations of these positions and their importance in maintaining effective board operations.

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