Corporate Governance, Business Ethics, Risk Management and Internal Control

Name: ___________________________________ Section: ____________ Schedule: _____________ Class number: _______ Date: _______________ LEARNING OBJECTIVE: This assessment measures the competence of the student in terms of his/her application of knowledge and skills in the following topics: 1. Corporate Governance 2. Business Ethics 3. Risk management 4. Internal Control CORPORATE GOVERNANCE, BUSINESS ETHICS, RISK MANAGEMENT AND INTERNAL CONTROL 1. of a. b. c. d. Which of the following is not crucial to the integrity and efficiency capital markets and economic growth? Sustainability and financial health of public companies. Public trust. High stock prices. Investor confidence. 2. Investors should rely on which of the following to make rational, informed investment decisions? a. Accurate financial statements and reports. b. Former employees. c. Internet “blogs” and message boards. d. Insider information. 3. Conflicts of interest among corporate governance participants are referred to as an: a. “Anything you can do, I can do better” problem. b. Alignment problem. c. Agency problem. d. There are no conflicts of interest among corporate governance participants. 4. a. b. c. d. The primary mission of a public company is to: Make money now without planning for the future. Keep management happy. Create sustainable and enduring corporate value. Remain idle and complacent with current performance. 5. Congress passed the Sarbanes-Oxley Act of 2002 to: a. Enhance the burden of financial reporting. b. c. d. Establish a new regime of investor protection. Increase the workload of auditors of public companies. Provide more protection to the managers of public companies. 6. Suppliers and customers reward good corporate performance by: a. Actively and favorably doing business with the company. b. Investing in the company at the lower desired rate of return of investment. c. Disinvesting or demanding a higher rate of return on their investment. d. Giving extra benefits to the management of the company. 7. a. b. c. d. The primary stakeholders are: Customers. Suppliers. Shareholders. Creditors. 8. Research suggests that firms with ____ perform better, especially when collaboration among top management team members is important. . greater emphasis on stock options. a. larger proportion of insiders on the board of directors. b. smaller pay gap between the CEO and other top executives. c. benchmarking used for top executive pay. 9. The separation between firm ownership and management creates a(n) ____ relationship. . agency a. governance b. control c. dependent. 10. Monitoring by shareholders is usually accomplished through: . management consultants. a. government auditors b. the firm’s top managers c. the board of directors. 11. Executive compensation is a governance mechanism that seeks to align managers’ and owners’ interests through all of the following EXCEPT: . bonuses. a. long-term incentives such as stock options. b. Salary. c. penalties for inadequate firm performance. 12. Which of the following is not responsibility of audit committee? a. Management compensation. b. Relations with independent auditor. c. Monitoring management. d. Reviewing corporate reporting process. 13. An independent director is expected to except: a. Apply expertise and skills in the corporation’s best interest. b. Assist management to keep performance objectives at the top of its agenda. c. Respect the collective cabinet nature of the board’s decision. d. Act as conduit between board and organization. 14. __________ can be considered to be a high-level statements of corporate governance good practices and are applicable to all companies. a. b. c. d. principle. recommendations integrity honesty 15. All of the following are except Principles of Good Corporate Governance a. Establishing a competent board. b. Forming Complex Roles and Responsibilities of the Board. c.Launching Board Committees d.Promotion Commitment 16. Which of the following statements is true about ethical decision making in business? a. Ethical decision making is not limited to the type of major corporate decisions with dramatic social consequences. b. Every employee does not face an issue that requires ethical decision making. c. All ethical decisions can be covered by economic, legal, or company rules and regulations. d. Ethical decision making should not rely on the personal values and principles of the individuals involved. 17. Which of the following statements is true about ethical decision making in business? a. Ethical decision making is limited to the type of major corporate decisions with social consequences. b. At some point, every worker will be faced with an issue that will require ethical decision making. c. All ethical decisions can be covered by economic, legal, or company rules and regulations. d. Ethical decision making should not rely on the personal values and principles of the individuals involved. 18. Which of the following statements is true about ethical decision making in business? a. Ethical decision making is limited to the type of major corporate decisions with social consequences. b. Every employee does not face an issue that requires ethical decision making. c. All ethical decisions can be covered by economic, legal, or company rules and regulations. d. Ethical decision making should rely on the personal values and principles of the individuals involved. 19. In a general sense, a business _____ is anyone who affects or is affected by decisions made within the firm, for better or worse. a. nominee b. stakeholder c. stockholder d. watchdog 20. Which of the following best describes a business stakeholder? a. Only the minority shareholders in a business entity b. Only those who have acquired significant shares in a firm c. Anyone who audits a firm d. Anyone who affects or is affected by decisions made within a firm 21. When the politicians and public officials are ask to be bribe. The allegation is, “There’s no escaping from it, for if you don’t pay, you are bound to fall behind” a. extortion. b. intimidation c. threat d. corruption 22. When unethical acts are discovered in a firm, in most instances: . they are caused by unwilling participants. a. the cause is due to external stakeholders. b. the perpetrators are caught and prosecuted d. there was knowing cooperation or complicity from within the company. 23. is the act of an employee exposing an employer's wrongdoing to outsiders. . Fraud. a. Whistleblowing. b. Ethical misconduct. c. Corruption. 24. Among the commitments of the Finance and Accounting Section of an organization is: . To pay taxes in compliance with all laws. a. To have appropriate tools to receive, monitor and act on internal and external complaints of employees. b. To communicate rules and guidelines on giving gifts, entertainment tokens of hospitality and contributes to/from public or private organization. c. To prohibit contracting a third party to be bribe or commit corrupt practices in behalf of the company.