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GOVERNANCE, BUSINESS ETHICS, RISK MANAGEMENT & INTERNAL
CONTROL
MIDTERM QUIZ- November 28,2020
RAQUEL ALVAREZ-DE CASTRO, CPA, MBA/MPA
Name: WENJUN HERMINADO
Course: BS ACCOUNTANCY III

I.QUESTIONS.

1. Describe the “Integrity Initiative Campaign”.

The Integrity Initiative is a multisectoral campaign that aims to institutionalize ethics
norms through diverse sectors of society—business, government, the judiciary,
education, youth, civil society, church, and the media. The program, led by the private
sector, seeks to help eliminate, if not entirely eliminate, the vicious cycle of corruption in
the Philippines, which has not only worsened poverty but also hampered the creation of a
sustainable market climate that exists on a level playing field.

2. Explain why a Code of Conduct is necessary.

The Code of Conduct is a formal representation of the principles and standards of the
company. The Code of Ethics should: advise directors and senior executives, at a
minimum, on the activities required to preserve trust in the reputation of the company.
Other team members may also have a code of ethics applicable to them. It may be the
same as for directors and senior management, or it may be complementary; encourage the
responsibility and transparency of individuals for reporting and prosecuting non-ethical
practices and ensure conformity with legal and other responsibilities on legitimate
stakeholders.

3. Why is there a need to improve business ethics?

Business ethics help ensure a good reputation for your company. Not only does it feel
good to be part of a company with a great reputation, but it’s great for business. When
you have a reputation for consistently being ethical in how you source and build
products, and treat employees, customers and the community, more people will want to
do business with you.

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4. Why should business organizations adopt a Code of Conduct?
A well-written code of conduct clarifies an organization's mission, values and principles,
linking them with standards of professional conduct. The code articulates the values the
organization wishes to foster in leaders and employees and, in doing so, defines desired
behaviors.

5. Explain the areas of risk management

 Enterprise risk management
 Risk management activities as applied to project management
 Risk management for megaprojects
 Risk management of information technology
 Risk management techniques in petroleum and natural gas

6. What are the elements of risk management process?

 identification, characterization, and assessment of threats
 assessment of the vulnerability of critical assets to specific threats
 determination of the risk (i.e. the expected likelihood and consequences of
specific types of attacks on specific assets)
 identification of ways to reduce those risks
 prioritization of risk reduction measures based on a strategy

7. Is there a positive attitude to budgets and budgeting?

Modern formal budgets not only restrict expenditure; they also forecast revenue, earnings
and returns on investment in the coming year. They also developed into instruments of
regulation and are also used as a way of assessing incentives such as profit-sharing and
bonuses. If the budgetary process is handled with extreme competence and caution, the
very virtues of budgeting will turn into negatives—and have lately arisen as a trend that
is vigorously trying to reform this process.

8. Define what is meant by a control and weakness in internal control

An internal audit control system is like a good diet and exercise plan. Like the measures
you take to protect your health, it consists of all the policies and procedures you have in
place to protect your business’s assets. Assets include the premises, furnishings,
equipment and, of course the money. Intangibles like your business’s reputation and
name recognition are also assets. While the best course of action is to build a strong
internal control system in the first place, weaknesses in internal audit control systems
are usually pretty easy to fix. But first you have to know what they are.

9. Explain what fraud means

Fraud is an intentional act involving the use of deception that results in a material
misstatement of the financial statements. Two types of misstatements are relevant to

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 auditors' consideration of fraud: (a) misstatements arising from misappropriation of
assets, and (b) misstatements arising from fraudulent financial reporting.

10. Explain who is primarily responsible for the prevention and detection of fraud in a
business enterprise
According to the auditing standards, the primary responsibility for the prevention and
detection of fraud rests with the governing body and management. Management’s
responsibilities include creating an environment where fraud is not tolerated, identifying
risks of fraud, and taking appropriate actions to ensure that controls are in place to prevent
and detect fraud. The governing body is responsible for ensuring that management is
carrying out the tasks assigned to them in relation to fraud risk and prevention, as well as
understanding the environment to determine if management can override or influence the
controls in place.

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