COMPILATION OF QUIZZES:
SEATWORK 1
1.) The separation of the roles of Chairman of the Board
and the CEO is considered
A.
B.
C.
D.
A rule
A best practice
A legal requirement
An unusual setup
2.) Which of the following is not one of the governance
roles?
A.
B.
C.
D.
Policy making
Executive activities
Accountability
Strategy formulation
3.) The agency theory recognizes that both the principal
and the agent are
A.
B.
C.
D.
strangers
together
human beings
economic men
4.) Which model of corporate governance emphasizes
the importance of banks?
A.
B.
C.
D.
German Model
US Anglo Saxon Model
Japanese Model
Philippine Model
5.) Cost of arrangements that help align the interest of
shareholders and managers
A.
B.
C.
D.
Monitoring costs
Residual costs
Finance costs
Bonding costs
6.) The committee ensures and strengthens
transparency and financial reporting
A.
B.
C.
D.
Risk Committee
Nomination Committee
Audit Committee
Remuneration Committee
7.) Which is not part of the corporate governance
triangle?
A.
B.
C.
D.
Main Bank
Board of Directors
Shareholders
Management
8.) Which of the following is not a principle related to
Board’s Governance Responsibilities?
A.
B.
C.
D.
Establishing a Competent Board
Reinforcing Board Independence
Establishing Board Committees
Enhancing Company Disclosure Policies and
Procedures
9.) Concerned with leading the company, and
monitoring and controlling the decisions of
management and ensure that the business meets its
objectives.
A.
B.
C.
D.
Board of Directors
CFO
COO
CEO
10.) A system by which organizations are directed and
controlled
A.
B.
C.
D.
Internal Controls
Risk Management
Ethics
Corporate Governance
11.) Which of the following is one of the ways to align
the interest of the principal to the agent?
A. Give management company shares as part of
compensation
B. Pay senior managers a fixed salary regardless of
performance
C. Hire an external auditor
D. Issue an annual report to shareholders
12.) Committees set up by the board, and consisting of
selected directors, which are given responsibility for
monitoring a particular aspect of the company’s affairs
A.
B.
C.
D.
Executive Directors
Board committees
Board of Directors
Non Executive Directors
13.) Which model of corporate Governance emphasizes
worker rights?
A.
B.
C.
D.
German Model
Japanese Model
US Anglo Saxon Method
Philippine Model
14.) This refers to the comply or explain approach of
Corporate Governance
A.
B.
C.
D.
Rules Based
Principles Based
All choices refer to comply and explain
Sarbanes Oxley
15.) Which of the following is not a type of board
structure?
A.
B.
C.
D.
Multi Tier
Unitary
Principles Based
All choices are board structure
Long Quiz 2: Corporate Governance
1.) The board of directors may grant stock options to
managers in order to
A.
B.
C.
D.
Comply with a legal requirement
Align the interest with that of shareholders
Use as a substitute for bonus
Save compensation costs
2.) A board committee is best described as a subset of
the board formed to achieve which one of the following
outcomes?
A. Enhance the effectiveness of the board
B. Being independent by having exclusively
independent auditors
C. Report to the shareholders on specific issues
D. Enable directors to reduce their individual
liability
3.) Which one of the following is not a function of the
board of directors of a large public company?
A. Managing the recurring operations of the
business
B. The oversight of management in the application
of policies and guidelines about the principal
risks faced by the company
C. The selection of auditors
D. Monitoring of the CEO’s performance
4.) Which of the following is the best description of
Conflict of Interest?
A. a situation in which a person is in a position to
derive personal benefit from actions or
decisions made either in their official or
unofficial capacity
B. a situation in which a person or organization is
involved in singular interests, financial or
otherwise and serving one interest could
involve working against another
C. a situation in which a person’s ability to act
with independence and impartiality is
hindered by a countervailing interest held in a
cause which could be the beneficiary decisions
made
D. a situation in which the concerns or alms of two
different parties are compatible
E.
5.) What is meant by the separation of ownership and
control?
A. That those who control the company should be
separate to those who own it
B. The owners and controllers of companies
should not act in concert to defeat resolution
C. That the owners of companies have become
separated from those who control companies
D. That the law should seek to keep the owners
and controllers of company apart in order to
avoid an over concentration of power
6.) Which of the following is true?
A. Corporate governance addresses the principal
agent relationship between management and
directors on the one hand and the relationship
between the company and suppliers on the
other
B. It is the responsibility of the internal auditor to
set the objectives for the company
C. The management board approves the mission,
vision, objectives, and strategy of the entity
D. Conflicts of interest between management and
stakeholders can result in bankruptcies or
major fraud
7.) Which of the following is not a benefit of having
NEDs?
A. NEDs can help increase market confidence in
the business especially in the earlier years of
the company’s life
B. NEDs can advise on specific issues with start-up
businesses
C. NEDs increase the board’s accountability to the
shareholders
D. NEDs can better make decision relation to the
recurring transactions of the business
8.) The cost of monitoring management is considered to
be a/n)
A.
B.
C.
D.
Agency cost
Bankruptcy cost
Transaction cost
Institutional cost
9.) Which of the following is not a key corporate factor
driving the need for better governance?
A. Increasing competition making high levels of
performance harder to achieve
B. Higher levels of individual taxation dissuading
potential shareholders
C. The growth in shareholder activism
D. The requirement to access lower cost debt and
equity finance
10.) Why do corporate governance problems arise as
per the agency theory?
A. Profit maximization is the main objective of
organizations
B. Stakeholders have differing levels of power
C. Managers act in their own self interest
D. Ownership and control is separated
11.) Which one of the following statements best
describes an independent director of a listed company?
A. An executive director who is a CEO but who
receives no additional remuneration for being
on the board
B. A non-executive director who receives a flat
fee for being a director and who accepts no
additional consulting, advisory or performance
related fees
C. A full time employee of a bank who is
appointed to the board at the request of the
bank (a major lender to the corporation) and is
instructed by the bank to always vote in the
interests of the corporation’s shareholders
D. A non executive director who holds 2- per cent
of the shares in the corporation
12.) Which one of the following defines non-executive
director?
A. Do not have much involvement in daily
management of the company and do not occupy an
executive management position in the company
B. Any person, other than professional adviser, with
whose instructions appointed directors of the
company normally comply
C.
D.
Who by virtue of an agreement with the company or
resolution passed by the company in general meeting or
by its board of directors of or by virtue of its
Memorandum of Agreement, is entrusted with substantial
powers of management which would not otherwise
exercisable by him
Who attend board meetings of a company and participate
in matters put before the board
13.) Which one of the following would be the best way
for a shareholder to become involved in the corporate
governance of a listed corporation in which they own
shares?
A. By selling their shares on the market because
the corporation fails to pay dividends at
appropriate level
B. By voting through proxy or by attendance at
the general meetings of the corporation
C. By overruling board decisions, including through
votes against the board in relation to nonbinding shareholder votes
D. By taking an active interest and an active role in
the management of the corporation
14.) A board member is independent when
A. She represents the company’s only majority
shareholder
B. She is a family member of the CEO
C. She is a top executive of the company
supervised
D. She has no relationship of any kind whatsoever
with the corporation, its group or the
management of either that is such to color her
judgement
15.) According to the Cadbury definition, corporate
governance is an issue of power and
A.
B.
C.
D.
Profit
Accountability
Rights
Appropriability
16.) Which of the following can be considered
opportunistic residual loss behavior by an agent?
A. Investing in technology that will substantially
reduce short term profit, but yield returns in
the long run
B. Suspending negotiations with a potential
acquisition target because it would not enhance
shareholder wealth
C. Purchase of an expensive painting for the
managing director’s office
D. All of the choices are opportunistic residual loss
behavior
17.) Which of the following is not included as one of the
main roles of a Chief Executive Director (CEO) of a listed
company?
A. To analyze the performance of the board of
directors
B. To propose and develop strategies capable of
making an acceptable return to shareholders
C. To ensure that appropriate systems are in place
for internal controls and the management of
risk
18.) Which of the following actions will not help
directors to protect themselves from non compliance
with their obligations and responsibilities?
A. Keeping themselves fully informed about
company affairs
B. Seeking professional help
C. Ensuring that regular management accounts are
prepared by the company
D. Including a disclaimer clause in their service
contracts
19.) Which one of the following statements best
describes characteristics likely found in agency
relationships?
A. Agents who are highly bonded will be
expected to try to maximize the returns of
their principal and will be expected also to
seek returns for themselves
B. It is necessary to monitor an agent extensively,
even when that agent voluntarily assumes the
imposition of higher bonding costs
C. Agents will often not provide sufficient signaling
to principals. It is principally this factor that
results in principals finding it necessary to
engage in and pay for monitoring
D. An agent will find it relatively easy to achieve
the best interest of the principal in an agency
relationship
20.) Which one of the following would not be an
example of Agency cost?
A.
B.
C.
D.
Audit fees
Delegated authorities
Information symmetry
Dividends
21.) According to the Agency Theory
A.
B.
C.
D.
Information asymmetry does not exist
The management board is the agent
The management board is the principal
Self interest plays no role
22.) Directors may not be disqualified for
A. Continuing to trade when the company is
insolvent
B. Paying inadequate attention to the company
finances
C. Persistent breaches of company legislation
D. Being convicted of drunken driving
23.) Directors’ responsibilities are unlikely to include
A. A duty to propose high dividends for
shareholders
B. A duty to ensure proper accounting records are
kept
C. A fiduciary duty
D. A duty of care
24.) Why is it rational to make shareholders weak by
giving control to the managers of the firm?
A. This may be rational to the extent that
managers are answerable to the board of
directors
B. This may be rational when shareholders may be
neither qualified nor interested in making
business decisions
C. All of the choices
D. This may be rational since may shareholders
may find it easier to sell their shares in
underperforming firms than to monitor the
management
25.) Which of the following is not something performed
by the company’s board?
A. Defines the company’s strategy
B. Oversees management and ensures the quality
of information provided to shareholders and
financial markets through the financial
statements
C. Day to day supervision of the sales manager
D. Appoints the corporate officers responsible for
managing the company
26.) According to the Anglo Saxon best practice the
board represents
A.
B.
C.
D.
Shareholders
Minority shareholders
Employees
All constituencies
27.) Which of the following is not a desired quality of
someone who wishes to be a Chief Executive Officer?
A. Analytical skills in major aspects of the business’
operations and finances
B. Micro management skills that allows one to
focus solely on detailed work particularly in
the company’s products/service
C. Persuasiveness, confidence, and
communication skills most especially in dealing
with colleagues and negotiation with external
parties
D. Strategic skills that would allow for the
conception and implementation of strategic
objectives
28.) Which of the following is not valid difference
between executive and non executive directors?
A. Executive directors work full time, whereas
non-executive directors work part time
B. Non-executive directors should be independent,
whereas the executives will usually not be
C. Executive directors are involved in the
management of the company, whereas nonexecutive directors are not expected to be
involve in day-to-day management
D. Executive directors tend to be involved mainly
in policy making and planning exercises while
non-executive directors are tasked to run the
company’s business
29.) What is the meaning of OECD?
A. Organization for the Ease of Collaboration and
Development
B. Organization for Economic Co-operation and
Development
C. Organization for Economic and Cultural
Development
D. Organization for Ensuring Collaboration and
Development
30.) Which of the following is not a goal of a greater
accounting transparency?
A. All of the choices are goals of accounting
transparency
B. To reduce information asymmetry between
corporate insiders and the public
C. To discourage managerial self dealings
D. To impose more rules and harsher penalties
for their violation
LONG QUIZ 3: INTERNAL CONTROLS
1.) Which of the following is not an example of factors
that are reflected in the control environment?
A. New business models, products, or
activities that are undertaken by the
company
B. Those charged with governance actively
participate in setting the direction of the
company
C. Management’s philosophy and operating
style clearly reinforces its internal control
culture
D. A company has clear lines of
communication and policies that enforce
integrity and ethical values
2.) Which of the following is responsible for establishing
a private company’s internal control?
A.
B.
C.
D.
Management and external auditors
External auditors
COSO
Management
3.) Which of the following is a component of internal
control?
A.
B.
C.
D.
Risk awareness
Organization structure
Legal environment
Control environment
4.) Internal controls can never be considered as
absolutely effective because
A. Internal controls prevent separation of duties
B. Their effectiveness is limited by the
competency and dependability of employees
C. Controls are designed to prevent and detect
only material misstatements
D. Not all organizations have internal audit
performances
5.) These are policies and procedures that help ensure
that management directives are carried out
A.
B.
C.
D.
Control activities
Internal Control
Internal Control System
Monitoring
6.) What does PSA mean?
A.
B.
C.
D.
Philippine Standards at Auditing
Philippine Standards of Auditing
Philippine Standards on Auditing
Philippine Standards in Auditing
7.) The University of St. Joseph, a premier higher
education institution, has identified its main risk
categories as marketing especially of its core programs;
human sourcing and labor piracy. Which business
objective do these represent?
A.
B.
C.
D.
Compliance objectives
Overall objectives
Financial reporting objectives
Operational objectives
8.) A reason to establish internal control is to
A. Ensure the accuracy, reliability, and timeliness
of information
B. Encourage compliance with organizational
objectives
C. Have a basis for planning the audit
D. Provide reasonable assurance that the
objectives of the organization are achieved
9.) Which of the management’s concerns with respect
to implement internal control is the auditor primarily
concerned?
A.
B.
C.
D.
Reliability of financial reporting
Compliance with laws and regulations
Efficiency of operations
Effectiveness of operations
10.) The override resulted to process senior citizen
discounts is an example of
A. Specific authorization
B. General authorization
C. Special authorization
11.) Which of the following statements related to
application controls is correct?
A.
B.
C.
D.
Application controls relate to various aspects of the IT
function including software acquisition and the processing
of transactions
Application controls relate to all aspects of the IT function
Application controls relate to the processing of individual
transactions
Application controls relate to various aspects of the IT
function including physical security and the processing of
transaction of various cycles
12.) A company regularly compares information
about current performance to forecasts, budgets,
and previous results in order to determine company
performance. This is an example of
A.
B.
C.
D.
Preventive controls
Corrective controls
Detective controls
General controls
13.) San Jose Incorporated, a manufacturer of life sized
religious statues, observes controls such as the
management team regularly checks the organization’s
inventory, security systems are in place, and
authorization policies for the access of assets and
equipment are properly laid out. These are considered
A.
B.
C.
D.
E.
General controls
Preventive controls
Detective controls
Corrective controls
Either detective and preventive controls
14.) Which of the following is not a reason why the
effectiveness of internal controls cannot be
guaranteed?
A. The cost of putting up internal controls is
relatively expensive
B. Human factors can undermine or circumvent
the effectiveness of many internal controls
C. The occurrence of non-routine events when
controls are designed for relatively routine
behavior
D. The control can be over or under specified. An
under specified control is one which is not
capable of actually controlling the risk or
activity intended. Conversely, an over specified
control is one which over controls and may
have the effect of losing the confidence of
employees and others influenced by the control
15.) The following are examples of separate monitoring,
except
A. Independent checks performed by outsiders
B. Self-assessment performed by mangers over
the controls in their areas of responsibility
C. Evaluations built into business processes at
different levels of the entity
D. Periodic checks on operational, legal, and
financial performance and reporting
16.) An act of two or more employees to steal assets or
misstate records is frequently referred to as
A.
B.
C.
D.
Control deficiency
Collusion
Significant deficiency
Material weakness
17.) Monitoring involves assessing the
A.
B.
C.
D.
All of the three other choices
Operation of controls
Quality of internal control over time
Design of controls
18.) Internal control procedures for cash disbursements
(other than from petty cash) should not include
A. Cash disbursing function should be
decentralized as much as possible
B. Checks are signed by authorized individuals
C. All expenditures are authorized
D. All disbursements are made by check, debit
card, or credit card
19.) To segregate duties involving cash receipts, specific
responsibilities should be assigned to various
employees, except when
A. A supervisor s responsible for collecting cash at
the end of each cashier’s shift
B. Members of the accounting department are
responsible for ensuring that cash sales are
properly recorded
C. Cashiers are responsible for collecting cash and
issuing a receipt at the point of sale
D. An employee who handles credit approval
authorizes the de recognition of accounts
receivable
20.) Financial controls provide reasonable assurance on
the following, except
A. Access to assets is allowed in accordance with
general or specific authorization
B. Transactions are recorded so that assets can be
accounted for
C. Profits are maximized in the negotiations
entered into by management
D. Transactions are made only in accordance with
general or specific authorization
21.) Which of the following is not one of the primary
objectives of effective internal control?
A.
B.
C.
D.
Compliance with laws and regulations
Efficiency and effectiveness of operations
Elimination of business risk
Reliability of financial reporting
22.) When two or more persons work together to
circumvent internal control procedures is called
A.
B.
C.
D.
Reasonable assurance
Collusion
Control weakness
Management override
23.) Which of the following is not a component of SPAM
SOAP?
A.
B.
C.
D.
Organization controls
Personnel controls
Authorization and approval controls
Performance reviews
24.) Effective internal control over cash requires
segregation of duties. Which of the following duties
should be segregated?
A. Opening the mail and deposit of checks in the
bank
B. Depositing checks into the banks and recording
receipts in the accounting records
C. Both depositing checks into the banks and
recording receipts in the accounting records or
opening the mail and deposit of checks in the
bank
D. Either depositing checks into the banks and
recording receipts in the accounting records or
opening the mail and deposit of checks in the
bank
25.) One of the components of an internal control
system is information and communication systems.
Within this component, there should be a system for
reporting the following to management
A. Information about risks, the effectiveness of
controls, failures in control and the success of
action to remove weaknesses in controls and
reduce risks.
B. All of the three other choices
C. Information marketing strategies, operational
objectives, quotas and budgets, as well as new
target markets
D. Information about employees, hiring
qualifications and disqualifications, sanctions
for erring employees, and personal
misdemeanor of said employees