24 Questions
What is the primary responsibility of the board of directors in terms of financial reports?
Approving annual financial reports
What is a key aspect of a non-executive independent director's role?
To respect the collective nature of the board's decisions
What is the primary role of non-executive independent directors?
To understand the organization and apply expertise in its best interests
What is the primary focus of management in a corporate structure?
Operations and accountability
What is a key responsibility of the board of directors in terms of internal controls?
To ensure an effective system of internal controls exists
What is a key aspect of a non-executive independent director's preparation for board meetings?
To seek information on a timely basis
What is a key characteristic of a non-executive independent director's role?
To understand the organization and its business
What is the collective nature of the board of directors' decisions referred to as?
Cabinet nature
What is the primary role of internal auditors?
To perform audits of companies for compliance with company policies and laws
Who has greater standing in a corporation, the Chairperson of the Board or the CEO?
The Chairperson of the Board has greater standing
Who is responsible for providing accurate and timely reports to shareholders and other stakeholders?
Executive Management
What is the consequence of combining the CEO and Chairperson of the Board roles?
The independence of the board is eliminated
What is the primary role of the Audit Committee?
To provide oversight of the internal and external audit function
What is the purpose of a strong and independent board?
To govern executive activities
What is the role of the CEO in a corporation?
To lead corporate operations and executive activities
Who translates the strategic plan into the operations of the business?
Executive Management
Why is it desirable to have a separate Chairperson of the Board and CEO?
To ensure good corporate governance
What is the primary responsibility of the executive management?
To manage the company's human, physical and financial resources
What happens when there is a disagreement between the board and the executive?
The will of the board is expected to stand
Who develops financial and other reports that meet public, stakeholder, and regulatory requirements?
Executive Management
What is the primary purpose of internal auditors performing audits?
To ensure compliance with company policies and laws
What is the role of executive management in relation to the board?
To act as a conduit between the board and the organization
Who is responsible for being alert to relevant trends in the industry and the organization's operating environment?
Executive Management
What is the primary responsibility of the executive management in terms of laws and regulations?
To assume day-to-day responsibility for the organization's conformance with relevant laws
Study Notes
Roles and Responsibilities in Corporate Governance
Executive Directors
- Approve annual financial reports, annual reports, and other public documents/sensitive reports
- Ensure an effective system of internal controls exists and operates as expected
Non-Executive/Independent Directors
- Understand the organization, its business, operating environment, and financial position
- Apply expertise and skills in the organization's best interests
- Assist management in keeping performance objectives at the top of its agenda
- Recognize that their role is not to act as an auditor or member of the management team
- Respect the collective, cabinet nature of the board's decisions
- Prepare for and attend board meetings
- Seek information on a timely basis to contribute to discussions
- Ask appropriate questions relative to operations
Management Auditors
- Perform audits of companies for compliance with company policies and laws
- Conduct audits to evaluate the efficiency of operations
- Periodically evaluate and test controls
Chairperson of the Board/CEO
- The Chairperson of the Board governs all board activities, including regulatory functions over the executive
- The CEO leads corporate operations and is in charge of executive activities
- The Chairperson has greater standing than the CEO in case of disagreements between the board and executive
- Combining the CEO and Chairperson roles can compromise the independence of the board
CEO's Responsibilities
- Manage the organization effectively and provide accurate and timely reports to shareholders and stakeholders
- Recommend strategic direction and translate into operational plans
- Manage human, physical, and financial resources to achieve objectives
- Ensure conformance with relevant laws and regulations
- Develop and manage risk management and internal control frameworks
- Develop, implement, and update policies and procedures
- Monitor industry trends and the operating environment
- Provide information to the board and act as a conduit between the board and organization
- Develop financial and other reports that meet public, stakeholder, and regulatory requirements
Audit Committee of the Board of Directors
- Provide oversight of the internal and external audit function
- Oversee the process of preparing annual financial statements and public reports on internal control
Test your knowledge on governance, business ethics, risk management, and internal control systems. Learn about approving annual reports, internal controls, and non-executive roles.
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