Biasura, Jhazreel Mae N.

BSA 2B
MULTIPLE CHOICE QUESTIONS
1. B
2. D
3. B
4. B
5. A
REVIEW QUESTIONS
1.”Small business enterprises do not need good governance.” Do you agree?
No. Good governance applies to all kinds of business, whether big or small. As much as
big business enterprises need it, the same goes with small business enterprises. Since
all businesses are aiming for the betterment of their enterprise as a whole, it is undoubted
that all kinds needs good governance. To carry the business successfully, proper
governing is one of the essentials. One good way of governing is giving workers the right
amount of motivation while monitoring them. Another is proper planning in the financial
aspect of the business to be able to manage and execute the objectives of the enterprise.
Topping it all, the business will function well with right governance.
2. Does good governance require absolute rules that must be adopted by all
organizations?
No. We cannot deny the fact that the principle under corporate governance are
continually developing as time goes by. Therefore, there is no absolute rules which must
be adopted by organizations. Good governance does not really require absolute rules.
There are many different approaches to consider. It is up to the company to look for
appropriate action to meet the needs of the enterprise. On the other hand, employees
play a significant role in this matter. They should follow the rules set by the company the
best they can.
3. What is the essence of any system of corporate governance?
With good governance, leaders have been tested with the way they lead and govern the
enterprise. Board and management’s freedom to drive their organization in an ideal
manner with the exercise of effective accountability is the essence of any system of
corporate governance.
4. Where does the board of directors derive its authority?
The board of directors is the highest authority in the company. It derives its powers from
the company particularly as stated in the Articles of Association of the company and
they must exercise a duty of care, skill and diligence in the discharge. An election is
made in order to appoint those who will comprise the board of directors. With that,
governance starts the moment responsibilities were being delegated.
5. To whom is the board of directors accountable?
The weight of their responsibilities is reflected in their accountability to the shareholders.
The Board of Directors practice accountability to them to carry out appropriate actions
for the company's business operations and corporate governance in accordance with
management objectives and maximization of shareholders' benefit within the framework
of sound business ethics. This responsibility is also equivalent to what they have to
extend to all stakeholders which are also significant as they may be indirectly influenced
by the actions of a company.
6. On what aspects do shareholders demand accountability from the board of
directors?
Shareholder require accountability as to how well the resources that have been
entrusted to management and the board have been used. To enumerate some, they
want accountability with regards to the matter like financial performance, financial
transparency, stewardship, quality of internal control and composition of the board of
directors and the nature of its activities. To sum it off, boards of
directors are accountable to shareholders for an accurate financial records that is
accurate, complete and timely.
7. What is management’s responsibility as far as financial reporting is
concerned?
With regards to financial reporting, shareholders or owners want disclosure from
management that are accurate and objectively verifiable. Therefore,
management is highly responsible for the practice of having a proper and effective
system of internal control that deals with financial reporting matters. Making sure that
the reports are complete and accurate is the management’s primary goal.
To enumerate their specific responsibility, the following are but a few:
1. Choose which accounting principles best portray the economic substance of
company transactions.
2. Implement a system of internal control that assures completeness and accuracy
in financial reporting.
3. 3. Ensure that the financial statement contain accurate and complete disclosure.
8. Describe the broad role of the shareholders in the corporation
Shareholders are one of the major parties involved in corporate governance. With
respect to their broad role, they provide effective oversight through election of board
members and approval of major initiatives. They have the right to elect representatives
or directors and to receive information material to investment and voting decisions.
What shareholders do in a corporation is the buying of its stock in return for potential
dividends over the lifetime of the company.
9. Describe the broad role of the Board of Directors.
Given that the board of directors has the highest authority in the company, we cannot
deny the fact that they have the major responsibility to ensure that the organization is
doing just right and the overall direction is on the right track . The exercise of duty with
care and diligence is a must. Overall, the role of the Board is to provide leadership to
the company while overseeing the group and its activities.
10. What are the specific activities of the board of directors?
The following are the specific activities of the board of directors:
1. Overall Operations

 Establishing the organization's vision, mission, values and ethical standards.

 Delegating an appropriate level of authority to management
 Demonstrating leadership.
 Assuming responsibility for the business relationship with CEO including his or
her appointment, succession, performance remuneration and dismissal
 Overseeing aspects of the employment of the management team including
management remuneration, performance and succession planning
 Recommending auditors and new directors to shareholders.
 Ensuring effective communication with shareholders other stakeholders.
 Crisis management.
 Appointment of the CFO and corporate secretary.

2. Performance

Ensuring the organization’s long term viability and enhancing the financial
position.
 Formulating and overseeing implementation of corporate strategy.
 Approving the plan, budget and corporate policies
 Agreeing key performance indicators (KPIs)
 Monitoring l assessing assessment, performance of organization, the board itself,
management and major projects.
 Overseeing the risk management framework and business risks.
 Monitoring developments in the industry and the operating environment
 Oversight of the and organization, including its control and accountability
systems.
 Approving and monitoring the progress of major capital expenditure, capital
management and acquisitions and divestitures.

4. Compliance / Legal Conformance

 Understanding and protecting the organization's financial position.

 Requiring and monitoring legal and regulatory compliance including compliance
with accounting standards, unfair trading legislations, occupational health and
safety and environmental standards
 Approving annual financial reports, annual reports and other public documents/
sensitive reports.
 Ensuring an effective system of internal controls exists and is operating as
expected.