Corporate Governance, Business Ethics, Risk
Management, and Internal Control operations, and periodic evaluation and tests of
AC 57
Chapter 1, 2 & 3 (Part 1) Make Up Exam
Name: ___________________________________
Date : ___________________________________
I. Modified True or False. Write “True” in the blank
if the underlined word/s make/s the statement true
and write the correct answer, if otherwise.
_________1. Some independent directors are non-
executive directors.
_________2. Risk management is the process of
decision-making and the process by which
decisions are implemented or not implemented
through the exercise of power or authority by
leaders of the country and/or organizations.
_________3. An independent director is expected
to apply expertise and skills in the corporation’s
interest.
_________4. One of the questions addressed by
the principle of accountability is that, “Does it
create an environment to take risk?”
_________5. The right of shareholders can be
effectively upheld through establishing an audit
committee.
_________6. The SEC Code of Corporate
Governance, in any way, prescribes a “one size fits
all” framework.
_________7. Governance starts with the
stakeholders delegating responsibilities through an
elected board of directors to management and, in
turn, to operating units with oversight and
assistance from internal auditors.
_________8. Stakeholders or shareholders can be
anyone who is influenced, whether directly or
indirectly, by the actions of a company.
_________9. Internal auditors perform audits of
companies for compliance with company policies
and laws, audits to evaluate the efficiency of
control.
_________10. Approving annual financial reports
and other public documents is a specific
responsibility of independent director.
_________11. The stakeholder is expected to act as
a conduit between the board and the organization.
_________12. One of the principles established in
the SEC Code of Corporate Governance under
disclosure and transparency is that a company
should maintain a comprehensive and cost-efficient
communication channel for disseminating relevant
information.
_________13. The SEC Code of Corporate
Governance is arranged as follows: Principles,
Recommendations, and Applications.
_________14. A related party is a group of
corporations that has diversified business activities
in varied industries, whereby the operations of
such businesses are controlled and managed by a
parent corporate entity.
_________15. An executive director is a director
who has no executive responsibility and does not
perform any work related to the operations of the
corporation.
_________16. The Chief Operating Officer who is
also a member of the Board of Directors is a non-
executive director.
_________17. Internal control is a process effected
by an entity’s Board of Directors, management, and
other personnel, applied in strategy setting and
across the enterprise that is designed to identify
potential events that may affect the entity, manage
risks to be within its risk appetite, and provide
reasonable assurance regarding the achievement of
entity objectives.
_________18. One of the grounds for the
permanent disqualification of a director is any
person judicially declared as insolvent.
_________19. The characteristic of good
governance where fair legal framework is enforced
impartially is responsiveness.
_________20. The board of directors is the major
representative of stockholders to ensure that the
organization is run according to the organization’s
charter and that there is proper accountability.
II. Essay
1. “Small business enterprises do not need good
governance.” Do you agree? Explain. (4 pts)
2. Explain the three basic principles of effective
corporate governance. (6 pts)
-end of quiz-
“You’re braver than you believe, stronger than you
seem, and smarter than you think.”
– Christopher Robin