Corporate Governance, Business Ethics, Risk
Management, and Internal Control
AC 57
Chapter 1, 2 & 3 (Part 1) Exam
Name: _______________________________________
Date : _______________________________________
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. All independent directors are non-
executive directors.
_________2. Internal control 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. Rule of law means that the information is
freely available and directly accessible to those who will
be affected by such decisions and their enforcement.
_________4. Effectiveness and efficiency are
synonymous.
_________5. The basic principles of effective corporate
governance are threefold—transparency and disclosure,
accountability and responsiveness.
_________6. The purpose of corporate governance is to
diminish shareholders’ value and protect the interests of
other stakeholders by improving the corporate
performance and accountability.
_________7. Governance starts with the
shareowners/owners delegating responsibilities through
an elected board of directors to management and, in
turn, to operating units with oversight and assistance
from internal auditors.
_________8. Shareholders can be anyone who is
influenced, whether directly or indirectly, by the actions
of a company.
_________9. External auditors perform audits of
companies for compliance with company policies and
laws, audits to evaluate the efficiency of operations, and
periodic evaluation and tests of control.
Corporate Governance, Business Ethics, Risk
Management, and Internal Control
AC 57
Chapter 1, 2 & 3 (Part 1) Exam
Name: _______________________________________
Date : _______________________________________
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. All independent directors are non-
executive directors.
_________2. Internal control 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. Rule of law means that the information is
freely available and directly accessible to those who will
be affected by such decisions and their enforcement.
_________4. Effectiveness and efficiency are
synonymous.
_________5. The basic principles of effective corporate
governance are threefold—transparency and disclosure,
accountability and responsiveness.
_________6. The purpose of corporate governance is to
diminish shareholders’ value and protect the interests of
other stakeholders by improving the corporate
performance and accountability.
_________7. Governance starts with the
shareowners/owners delegating responsibilities through
an elected board of directors to management and, in
turn, to operating units with oversight and assistance
from internal auditors.
_________8. Shareholders can be anyone who is
influenced, whether directly or indirectly, by the actions
of a company.
_________9. External auditors perform audits of
companies for compliance with company policies and
laws, audits to evaluate the efficiency of operations, and
periodic evaluation and tests of control.
_________10. Approving annual financial reports and – Christopher Robin
other public documents is a specific responsibility of
_________10. Approving annual financial reports and
management.
other public documents is a specific responsibility of
_________11. The independent director is expected to management.
act as a conduit between the board and the
_________11. The independent director is expected to
organization.
act as a conduit between the board and the
_________12. One of the principles established in the organization.
SEC Code of Corporate Governance under disclosure
_________12. One of the principles established in the
and transparency is that a company should maintain a
SEC Code of Corporate Governance under disclosure
comprehensive and cost-efficient communication
and transparency is that a company should maintain a
channel for disseminating relevant information.
comprehensive and cost-efficient communication
_________13. The SEC Code of Corporate Governance is channel for disseminating relevant information.
arranged as follows: Principles, Recommendations, and
_________13. The SEC Code of Corporate Governance is
Best Practices.
arranged as follows: Principles, Recommendations, and
_________14. An example of a conglomerate is M. Best Practices.
Montesclaros Holdings, Inc.
_________14. An example of a conglomerate is M.
_________15. A non-executive director is a director Montesclaros Holdings, Inc.
who has executive responsibility for the day-to-day
_________15. A non-executive director is a director
operations of a part or the whole of the organization.
who has executive responsibility for the day-to-day
_________16. The Chief Financial Officer who is also a operations of a part or the whole of the organization.
member of the Board of Directors is a non-executive
_________16. The Chief Financial Officer who is also a
director.
member of the Board of Directors is a non-executive
_________17. Internal control is a process effected by director.
an entity’s Board of Directors, management, and other
_________17. Internal control is a process effected by
personnel, applied in strategy setting and across the
an entity’s Board of Directors, management, and other
enterprise that is designed to identify potential events
personnel, applied in strategy setting and across the
that may affect the entity, manage risks to be within its
enterprise that is designed to identify potential events
risk appetite, and provide reasonable assurance
that may affect the entity, manage risks to be within its
regarding the achievement of entity objectives.
risk appetite, and provide reasonable assurance
_________18. One of the grounds for the permanent regarding the achievement of entity objectives.
disqualification of a director is any person judicially
_________18. One of the grounds for the permanent
declared as insolvent.
disqualification of a director is any person judicially
_________19. The characteristic of good governance declared as insolvent.
where fair legal framework is enforced impartially is rule
_________19. The characteristic of good governance
of law.
where fair legal framework is enforced impartially is rule
_________20. The management is the major of law.
representative of stockholders to ensure that the
_________20. The management is the major
organization is run according to the organization’s
representative of stockholders to ensure that the
charter and that there is proper accountability.
organization is run according to the organization’s
-end of quiz- charter and that there is proper accountability.

“You’re braver than you believe, stronger than you -end of quiz-
seem, and smarter than you think.”
“You’re braver than you believe, stronger than you
seem, and smarter than you think.”

– Christopher Robin