STEPHANIE DEANNE E.

LUMAKANG
Bachelor of Science in Accountancy
AE18- Governance, Business Ethics, Risk Management & Internal Control
BSA 3-2
Module 1: Corporate Governance
April 06, 2021

CHAPTER QUIZ

Assessment Questions:
1. What does governance means?
- Governance is the power or authority to govern. It is controlling the works of an
organization for the benefit of the whole. It is a way of how to derive a decision and how
to enact it. Their people are concerned on how responsive their government is in terms of
satisfying their needs and protecting their rights.
2. Explain whether the following statement is true or false. “Governance is exercised only by the
government of a country.”
- False. Governance is concerned on achieving any desired goals of an organization. It is
not only for the government nor for the public-listed companies but also for other groups
whatever their types and sizes are. Even a classroom needs governance. It means that
these organizations have one common factor and that is their aim of maintaining their
operations on a long-term basis and to satisfy their people.
3. Explain how governance can be used in the following contexts and give appropriate examples:
a. National Governance
- In national, governance can be used by safeguarding the whole nation. It can set
laws and regulations for the people to ensure their welfare such as having a national
army to secure its territory. In addition, they must have enough power to govern the
regions and provinces and they must have the ability to collect taxes to sustain the
needs of the whole society.
b. Local Governance
- In local, governance can be used by regulating the public affairs within its local
community. It is an elected group to create management that is accountable and responsible in
their local affairs. Examples are having a freedom of organizing their bodies in accordance with
the state administration, also, they are the ones who are monitoring the performance of municipal
agencies and other local figures. Moreover, they are allowed to enact pieces of legislation in their
community.
c. Corporate Governance
- In business, governance refers to the rules and policies by which the companies are
governed. It is allowing us to have a clear distinction on the roles of the shareholders and
managers. It ensures that the company considers the interests of everyone, it helps and secures the
company to have a long-term success and growth, and it serves as a guide to them to have an
effective strategy to attain their goals.
d. International Governance
- Internationally, governance may involve institutionalization. There is no world
government, however, a set of principles is needed in solving problems that affect more than one
state or region. For instance, there are global organizations like United Nations (UN) and World
 Health Organizations (WHO), that create and enact the laws and norms that govern international
politics. Another is the IFRS that brings international comparability and quality of financial
information.
4. Explain briefly the eight (8) basic characteristics of good governance.
 Participation- everyone especially the most vulnerable should be able to voice out
their opinions in decision-making, either directly or through representatives. This will
establish a strong civil society with the freedom of association and expression.
 Rule of Law- legal frameworks should be fair, especially on human laws. The
Principle of Matsya Nyanya will prevail without the rule of law.
 Transparency- it means having a media that is accessible to the public/users. It should
contain enough information that is easily understandable and monitored.
 Responsiveness- this involves how the institutions provides the needs of its
shareholders in a reasonable period of time.
 Consensus Oriented- ensures that even though everyone has differing interests, still,
it meets the broad consensus of the best interest in a community.
 Equity and Inclusiveness- assures an equitable society. People should have a chance
to maintain their well-being.
 Effectiveness and Efficiency- this means meeting the needs of the society while
making the best use of their resources.
 Accountability- governance aims for the betterment of its people, and without the
accountability of the government to the people, this cannot take place.
5. Explain whether the statement is correct or not. “Transparency and accountability are
synonymous.”
- Incorrect. These two are used most of the time, however, even though they may often
consider as synonymous, the two have distinct meanings. While transparency is having a
duty that shares information in an open and clear manner, an accountability is a duty of
being liable after the task is completed. It means that transparency is there while
achieving the final goals in a sense of informing the public about the decisions that they
are doing, while accountability happens afterwards. In short, transparency is a task-
focused duty because of a responsibility that they have in sharing the informed decisions
and accountability is a results-focused duty that occurs after the task. In addition,
transparency is a tool in which the accountability is articulated. Showing to public the
information regarding a certain task or decision is also holding the officials accountable
on whatever the results is. so, the two is reasonably connected to each other.
6. Explain whether the statement is correct or not. “Responsiveness usually results to effectiveness
and efficiency.”
- True. To have a good governance, it requires institutions to fulfill its shareholder’s needs
in a period of time. You can tell that the governance is effective and efficient if it meets
the criteria. Efficiency and effectiveness is good and relieving but without
responsiveness, it is vulnerable to some disasters.
7. Define Corporate Governance.
- Corporate governance is how the company is being controlled or administered. It is a set
of customs and policies that affects the way a company is being directed. It involves
monitoring the interests of the shareholders. It is said that heart of corporate governance
is transparency, disclosures accountability and integrity.
8. What does corporate governance structure involve?
- Structures may differ based on company but usually it consists of a shareholder, board of
directors, managers, and its officers and employees. Having a structure regulates the
division of rights and responsibilities between the committees and it sets the rules and
procedures for decision-making.
9. State the purpose of corporate governance.
- The purpose of corporate governance is to set up system of rules and regulations to serve
as a guide for the company to follow. It also helps companies have a long-term corporate
success and economic growth. Also, it is concerned on shareholders’ value and interest
that is why it improves and protects it by enhancing the corporate performance and
accountability.
10. Explain the basic objectives of corporate governance.
The basic objectives of corporate governance include:
 Fair and Equitable Treatment of Shareholders- the structure aims to always secure
that the treatment for all the shareholders is fair and just. No one should feel a little
less compare to another one. Each member deserved an equitable treatment whatever
their net-worth is.
 Self-assessment- it allows the company to evaluate and rate their approach and
actions to ensure the effectiveness of their governance. Also, they will be able to
limit the outside risks like having a fines by doing this.
 Increase Shareholders’ Wealth- protecting the long-term investments of the
shareholders is the main objective of governance. Having an increasing valuation rate
reflects a positive perception towards the performance of the company. Aside from
safeguarding the interests of the shareholders’, it also attracts investors to the
company.
 Transparency and Full Disclosure- to attain good governance the company should
practice transparency by having full disclosures and transactions open to public. This
will ensure the users that the official has the accountability of their actions.
11. Explain the three (3) basic principles of effective corporate governance.
The basic principles of effective corporate governance:
 Transparency and Full Disclosure- Is the board telling us what is going on? Without
transparency, it is hard to have accountability. Also, requiring this will be a big help
on decision making, voting matters and will attract good investors.
 Accountability- Is the board taking responsibility? To have an effective governance,
the officials must know how to take responsibility on their actions. Actions have
consequences. They must personify the principle of accountability; Shareholders
must know that good performance will be rewarded, and poor performance will not.
 Corporate Control- Is the board doing the right thing? The company is expected to
make their processes transparent and their people accountable while doing the right
thing for the company. The board has the authority to make decisions for the
company

Multiple Choice Questions:

1. D. Has the board built long-term sustainable growth in shareholders’ value for the corporation.
2. A. Does the board recognize and manage risk?
3. B. Solid foundations for management oversight.
4. A. By establishing an audit committee
5. D. Disclose the policy concerning trading in company securities by directors, officers and
employees
6. C. Distinguish between non-executive director’s remuneration from that of executives
7. B. Rule of Law
STEPHANIE DEANNE E. LUMAKANG
Bachelor of Science in Accountancy
AE18- Governance, Business Ethics, Risk Management & Internal Control
BSA 3-2
Module 2: Corporate Governance Responsibilities and Accountabilities
April 06, 2021

CHAPTER QUIZ

Assessment Questions:
1. “Small business enterprises do not need good governance”. Do you agree? Explain.
- No. In fact, SMEs need good governance the most. It is as important as how the public-
listed and large companies required it. They have to apply it for them to know how to
properly use the limited resources that they have. In addition, this will guide them to
become more responsive, efficient and effective that will help them spur their
organization’s growth.
2. Does good governance require absolute rules that must be adopted by all organizations?
- No, not at all. Indeed, good governance follow/ are based on some principles but there are
no such thing as absolute rules on it. To have a good practice, it must be developed
timely. The approaches should be tailored to what is the needs of an organization at a
certain point in time. It must be flexible enough to cover every change it will face.
3. What is the essence of any system of corporate governance?
- The essence of good governance is safeguarding the relationship between the
organization and its shareholders, maintaining it reliable and trustworthy. This is needed
for sustainable development. Through good governance, they will establish effective
policies, common interests, and will achieve their desired performance in a sustainable
fashion. It also involves the board and the management’s freedom to steer the
organization.
4. What does the board of directors derive its authority?
- The board of directors derives its authority from the vote of its shareholders and is stated
at the Articles of Association of the company. The directors carry out such
responsibilities that ensures the growth of the company. While upholding the standards, it
must protect the shareholder’s value and at the same time, guiding the company to meet
its goals.
5. To whom is the board of directors accountable?
- The shareholders gave the responsibility to the BOD. Meaning, the board of directors are
accountable to shareholders of the business.
6. On what aspects do shareholders demand accountability from the board of directors?
- The ultimate responsibility of the Board of Directors is to secure the shareholder’s value
and interests. They are accountable to shareholders for the company’s business. They
must uphold the standards of the company, establish policies for management, and
oversight of the company. Another responsibility that they have to shareholders is to
compose and maintain a diverse, independent and highly competent board.
7. What is management’s responsibility as far as financial reporting is concerned?
 - Management is about providing accurate and timely reports. It means that it is also their
responsibility to present the financial statements with complete knowledge and
understanding. It is their job to establish and develop adequate systems for the internal
control. Even though it is the organization’s task to prepare a financial report, still, the
management needs to ensure that they are able to account for some important matters like
preparing it in compliance with the rules and regulations. In addition, they are the ones
that is in charge for the overall integrity and objectivity of financial statements.
Therefore, I must say that their responsibility is a very vital function in the company.
Trust and understanding are a key not only between them and the auditor but also
between them and the shareholders.
8. Describe the broad role of the shareholders in a corporation.
- Shareholders are the owners of the company. Their investments and financial backings
are very important in the lifetime of the company. By subscribing or obtaining shares
from the company, they became as one of the shareholders. Shareholders do not normally
have any rights to be involved directly in company management but they have the
authority to elect the board that will serve as their connection in the company
management. They also have the power to dismiss and refuse to re-elect them.
9. Describe the broad role of the Board of Directors.
- To become more efficient and effective, the elected Board of Directors will select a CEO
for the company. The CEO is accountable for assessing the overall course and strategy of
the company. Their structure and authority may differ from the other company so the
information regarding this matter is discussed in their company’s bylaws. The bylaws
will tell the Board of Directors the things that they have to follow like board meetings or
the quorum that they needed in a meeting. Also, a clear and distinctive structure is a must
for the right accountability of the positions.
10. What are the specific activities on the board of directors?
Some of the specific activities that the board must do are:
 Protecting the shareholder’s interests
 Selecting and evaluating the CEO of the company
 Establishing a reasonable and justifiable policies for the company
 Governing the organization
 Delegating a level of authorities
 Recruiting or recommending auditors
 Assessing the performance of the organization
 Approving and monitoring plans, budgets and policies

Multiple Choice Questions:

1. B. Board of Director
2. D. Audit Committee of the Board of Directors
3. B. Securities and Exchange Commission
4. B. Internal Auditors
5. D. Act as conduit between the board and the organization.